The Ultimate Guide To Student Loan Forgiveness
Updated On January 20, 2022
Editorial Note: This content is based solely on the author's opinions and is not provided, approved, endorsed or reviewed by any financial institution or partner.
There are various student loan forgiveness programs ranging from Public Service Loan Forgiveness to Teacher Loan Forgiveness.
The type of student loan forgiveness may depend on whether you have a Direct Loan, a FFEL Program Loan or a Federal Perkins Loan. Since each type of student loan has different forgiveness, cancellation and discharge options, it is important to understand the types of loans you have before making any assumptions.
Anyone with student loan debt is in a race to pay off that student loan debt as quickly as possible. For borrowers with over $100,000 in debt, it can be especially daunting to pay down your debt because it seems like a never-ending pile of debt that just won’t go away.
For certain borrowers, though, their student loans can actually be forgiven. That’s right. After a certain period of time and if they meet certain qualifications, the debt will disappear and they can break free of shackles of student loan debt.
What’s the secret?
Let’s start with Direct Loan and FFEL Program Loan Forgiveness.
Top Picks For Student Loan Refinancing
Teacher Student Loan Forgiveness
Teachers are public servants who are often underpaid, but who create significant positive impact in our communities.
To give back to teaches for their selfless service to others, the federal government created a teacher student loan forgiveness program. The goal of the Teacher Student Loan Forgiveness Program to encourage promising individuals to enter into the teaching profession and to give back to their communities in low income schools.
What are eligibility requirements for Teacher Student Loan Forgiveness?
You must be a full-time teacher for five consecutive years in a designated elementary or secondary school or educational service agency that serves students from low income families. Also, your loans must have originated after October 1, 1998.
Which loans are eligible for Teacher Loan Forgiveness?
Federal direct loans and Stafford Loans are eligible for teacher loan forgiveness, whereas Parent PLUS loans are not eligible.
How much of your student loan will be forgiven?
If you are eligible, you can have up to $5,000 forgiven (up to $17,500 for elementary/secondary special education teachers and secondary math and science teachers). If you have a direct consolidation loan or FFEL consolidation loan, then only the portion used to repay the original Direct or FFEL Loan will qualify for student loan forgiveness.
How do I apply for teacher loan forgiveness?
You can apply by using the Teacher Loan Forgiveness Application.
Public Service Loan Forgiveness
What Is Public Service Loan Forgiveness?
Public Service Loan Forgiveness forgives federal student loans for borrowers who are employed full-time in an eligible state, local or federal public service job or 501(c)(3) non-profit job who make 120 eligible on-time payments after October 1, 2007. This equates to 10 years of student loan payments.
The 10 years of student loan payments can be made under several qualifying plans:
- Standard Repayment
- Income-Based Repayment (IBR)
- Pay As You Earn Repayment (PAYE)
- Revised Pay As You Earn (REPAYE)
- Income-Contingent Repayment (ICR)
Most borrowers prefer an income-based repayment plan because they can lower their monthly student loan repayment, thereby taking full advantage of the Public Service Loan Forgiveness by having a larger amount of their student loan forgiven. To qualify for public service loan forgiveness, you must make at least a majority of your student loan payments while enrolled in an income-driven repayment plan such as IBR, PAYE, REPAYE and ICR.
What are eligibility requirements for Public Loan Forgiveness?
To be eligible, a borrower must either have a direct loan or a consolidated student loan, including loans under Family Federal Education Loans (FFEL), which existed before direct loans were introduced. To remain eligible for Public Service Loan Forgiveness, FFEL (as well as Perkins Loans) must be consolidated under direct loans. You do not have to be employed at the same employer continuously for 10 years.
Which types of student loans are eligible for the Public Service Loan Forgiveness Program?
Direct loans or a consolidated student loan are eligible. This includes:
- Federal Direct Subsidized Stafford/Direct Loans
- Federal Direct Unsubsidized Stafford/Direct Loans
- Federal Direct Consolidations Loans
- Federal Direct PLUS Loans (for parents and graduate and professional students)
How much of my direct federal student loan can be forgiven through Public Service Loan Forgiveness?
100% of your student loan can be forgiven. There is no limit as there is with Teacher Student Loan Forgiveness.
How can I apply for Public Service Loan Forgiveness Program?
You will need to submit the Public Service Loan Forgiveness Employment Certification Form. Then, you should submit the form to FedLoan Servicing. FedLoan Servicing will inform you if you are eligible, how many qualifying student loan payments you have made, and how many qualifying student loan payments remain for you to qualify for Public Service Loan Forgiveness.
The chart below summarizes other key types of student loan forgiveness and student loan cancellations, including the reason for discharge and the amount of the student loan that can be discharged.
Federal Perkins Student Loan Cancellation For Teachers
Who is eligible for a Federal Perkins Student Loan Cancellation Program? How much of your student loan can be forgiven?
Federal Perkins student loans can be forgiven up to 100% for teachers who work full-time at a qualifying low income public or non-profit elementary or secondary school in subject areas such as math, science and special education for a period of five years.
How is the student loan cancellation applied over the five years?
Year 1: 15% of your student loan
Year 2: 15% of your student loan
Year 3: 20% of your student loan
Year 4: 20% of your student loan
Year 5: 30% of your student loan
How do you apply for federal Perkins student loan cancellation if you are an eligible teacher?
You should contact the school from which you borrowed your loan and the school will determine your eligibility under the program.
Student Loan Forgiveness: Summary Thoughts
It is important to understand your options with respect to student loan forgiveness. In addition to student loan forgiveness, you can consider the various student loan repayment plans, or even deferral or forbearance.Alternatively, you can look to federal loan consolidation or private student loan refinance.