Student loan forgiveness programs that could erase your debt

Student loan forgiveness has been in the news for several years.

During and immediately after the pandemic shutdown, the U.S. Department of Education paused student loan payments. Then there are the Biden-Harris Administration’s ongoing attempts to provide debt relief and forgiveness to students. In 2023, student loan debt totaled $1.7 trillion.

While some student loan forgiveness is still being debated, there are current student loan forgiveness programs you might be eligible for. If you carry a William D. Ford Federal Direct Loan (Direct Loan) or Federal Family Education Loan (FFEL), you have options to help you pay down or eliminate your debt.

What is student loan forgiveness?

Student loan forgiveness means you don’t have to pay back some or all of your debts. Other names used are student loan cancelation or student loan discharge.

Student loan forgiveness is different from repayment. For example, many federal student loans offer income-driven repayment plans (IDRs). IDRs calculate the amount you owe as 10 percent to 20 percent of your discretionary income. Your monthly payment could even be $0 if your income is low enough.

Common IDR plans include:

• Income-Contingent Repayment (ICR) Plan
• Pay as You Earn (PAYE)
• Saving on a Valuable Education (SAVE) Plan — formerly REPAYE

Income-driven repayment plans also have a “forgiveness” component. Depending on your plan, that loan will automatically be discharged after a certain number of payments.

Student loan forgiveness options

If you don’t want to wait 20 years to reduce or eliminate what you owe, here are other options to help discharge that debt sooner.

Public Service Loan Forgiveness

Public Service Loan Forgiveness (PSLF) is a common method of forgiving remaining Direct Loan program balances. If you meet this program’s qualifications, you could save tens of thousands of dollars.

Your loan could be discharged through PSLF if all of the following are true:

• You’re in the Direct Loan Program
• You make 120 qualifying payments through an IDR
• You work full-time for an eligible employer

Eligible employers under this plan include:

• U.S.-based government organizations at any level, including the military
• Tax-exempt 501(c)(3) organizations
• Other nonprofit organizations that provide qualifying public services, such as emergency management, public safety, law enforcement or public service law

You could also qualify for PSLF if you’re a health care provider working with any of the above organizations.

Groups that don’t count as qualifying employers under PSLF include for-profit organizations (even government contractors), partisan political organizations or labor unions.

Medical school loan forgiveness

Undergraduate school can be steep enough. If you add medical school to the list, your debt could be astronomical. If you’re a doctor or other health care provider facing this issue, you could find relief from the following programs:

• National Health Service Corps Loan Repayment Program
• Indian Health Service Loan Repayment Program
• State Student Loan Forgiveness Programs
• NHSC Rural Community Loan Repayment Program
• NHSC Students-to-Service Loan Repayment Program

To take advantage of any of the above plans, you’ll need to commit to working in underserved regions and areas facing a shortage of health care providers. Doing so could be well worth it. In addition to using your skills to help others, you could knock off as much as $50,000 in medical school debt.

Nursing school loan forgiveness

The forgiveness programs for doctors mentioned above can also help forgive student debt generated from nursing school.

The Nurse Corps Loan Repayment Program is available through the Health Resources and Services Administration website. Applications are accepted annually, and if you’re approved, it could pay up to 85 percent of your nursing school debt.

To qualify for this program, you need to be a licensed registered nurse, an advanced practice registered nurse or a nurse faculty member. You also need to work for at least two years in a health care facility with a critical shortage of nurses (also known as a critical shortage facility).

Teacher loan forgiveness

As a teacher with a bachelor’s or master’s degree, you’re likely eyeing a fair amount of student debt. One way to cancel loans is to meet the requirements of the PSLF mentioned above. Another is to apply to the Teacher Loan Forgiveness (TLF) Program. You could qualify for the entire $17,500 debt forgiveness if you teach full-time for five consecutive academic years in a low-income school or educational service agency.

But just because you say you’re a teacher doesn’t mean that the Department of Education considers you one. The ED defines a teacher as someone involved with direct classroom teaching or classroom-type teaching in a non-classroom setting.

Additionally, that teacher must meet all the following qualifications:

• Have a bachelor’s degree
• Be state-certified as a teacher
• Have no waiver of certification or licensure requirements for emergency or provisional reasons

In other words, if you’re a tutor or non-state-certified instructor, you won’t meet the requirements to qualify for the TLF program.

Perkins Loan Program cancellation

The Perkins Loan Program no longer exists, as it was phased out in 2017. While operational, the program provided low-interest ,rate subsidized loans to undergraduate and graduate students with extreme financial need.

However, you could discharge your remaining student loan balance as a Perkins Loan borrower. To do this, you must work in a public service job for at least five years. Examples include education, law enforcement, nursing or medical technician, military service or AmeriCorps/PeaceCorps volunteer.

The Perkins Loan Program discharge differs from other forgiveness in that it occurs in increments rather than as a lump sum.

Military loan forgiveness

If you serve in the military, you could have access to various loan forgiveness options, including the PSLF.  Additional forms of student loan relief include:

• Student loan interest rate reduction under the Servicemembers Civil Relief Act (SCRA)
• Loan deferment, forbearance, interest suspension or cancellation while on active duty
• Specific assistance/forgiveness programs offered through the five military branches

The available debt forgiveness programs differ based on your status, circumstances and branch of the military. Some benefits could also be retroactive.

Total and Permanent Disability Discharge Program

The total amount of your Direct Loan, FFEL or Perkins Loan could be forgiven if you have a permanent, total disability under the Total and Permanent Disability Discharge (TPD) Program. You can demonstrate total disability by obtaining information from the U.S. Department of Veteran Affairs (VA), the Social Security Administration (SSA), or a medical professional.

Additional discharge options

In addition to the program mentioned above, what you owe could be discharged under the following scenarios:

Your school closed

You might qualify for loan forgiveness if your school shut down while you were enrolled in a program. Your debt might also be forgiven if the school closed while you were on an approved and temporary leave of absence or if the shutdown occurred within 180 days after you left. Under these circumstances, your loan could be discharged one year following the school’s closure.

Your school engaged in misconduct

Let’s say you enrolled in a school’s program based on misleading promises (like a job following graduation) or misrepresentation. Under these circumstances, you could qualify for a Borrow Defense Loan Discharge, which forgives the remaining balance of what you owe.

Your state might help

While student loan forgiveness programs are geared toward the paydown or discharge of federal loans, many states provide assistance as well. Some states are willing to pay down student debt as long as you demonstrate proof of residency. Others offer repayment programs based on careers (health care or law) and/or public service in typically underserved areas.

When you don’t qualify for forgiveness

The above loan forgiveness methods pertain to government-backed programs like Direct Loans, FFEL and Perkins Loans. But what happens if you don’t qualify for any of the above? Your best bet is to discharge your student debt faster through the following methods:

• Refinance the loan. Consider refinancing if you have good credit or a trusted family member who can co-sign a private loan on your behalf. A refinance could provide a lower interest rate or enable you to consolidate multiple student loans.
• Pay above the minimum. You owe a certain amount on your loan each month, but nothing says you can’t pay more than that. If you have the money to do so, spend a little more than the minimum, directing the extra toward the loan’s principal.
• Increase your payments. If you have the means, consider paying your loan every other week rather than monthly. This means 13 full payments annually rather than 12 — and a quicker paydown.

The bottom line

If you’re stuck in a morass of student debt and unsure how to handle it, options are available to help discharge part or all of your loan. Researching and applying for what’s available can help reduce thousands of dollars of debt

Frequently asked questions

• Will the Biden-Harris administration cancel student loans?

  The administration has offered several student loan cancelation plans, some of which have succeeded and others have been rejected. The most recent plan aims to provide relief to over 25 million people through a student loan balance reset. Whether this plan goes through is uncertain.
  

• Can private student loans be forgiven?

  In most cases, private lenders don’t offer debt discharge programs. Some might offer to pause your loan (known as forbearance) if you are in a bad financial situation and unable to make the payments.
  

• Do student loan forgiveness scams exist?

  Unfortunately, such scams are common. Be wary of companies that contact you out of the blue, claiming they can erase all of your debt. Other warning signs include requests for FSA ID login information, lofty promises and messages with unusual capitalizations or incorrect grammar. These companies are in it for the money and don’t have your best interests at heart.