Student Loan Forgiveness Programs And How They Work | Bankrate (2023)

Student loan forgiveness programs can erase some or all of your student loan debt. These programs all have unique requirements and approval standards, and some of them are available only for specific professions (i.e., teachers, military, etc.). For students willing to work in specific jobs or meet other requirements for several years, student loan forgiveness can be a huge relief — and lead to tens of thousands of dollars in savings.

The key to maximizing student loan forgiveness is understanding how your program operates and following the directions closely. Here are some of the top forgiveness programs and how they work. While not all forgiveness programs will work for every student, most borrowers can find a program to help them get at least some of their student loan debt erased.

Student loan forgiveness programs are typically dependent on service in a particular occupation, like a job in the nonprofit sector or a qualified public service position. The following programs require some time commitment before your debt is discharged, but you could see your debt forgiven after five to 25 years.

1. Public Service Loan Forgiveness (PSLF)

Public Service Loan Forgiveness (PSLF) is geared toward graduates willing to work in a qualified public service position for 10 years. The program requires full-time employment with a U.S. federal, state, local or tribal government or a not-for-profit organization. This time does not have to be spent working for the same employer.

You have to make 120 on-time payments on an income-driven repayment plan to qualify, and you generally must have either Direct Loans or a Direct Consolidation Loan for your monthly payments to count. However, the U.S. Department of Education announced new changes to the PSLF program, which will allow borrowers who made payments with an FFEL or Perkins Loan to have those payments count toward PSLF as long as they consolidate those loans and applied for PSLF before Oct. 31, 2022.

If you can meet all of the requirements for this program, you can have your remaining loan balance forgiven after 120 qualifying payments.

2. Teacher Loan Forgiveness

Teacher Loan Forgiveness is offered to teachers who have “been employed as a full-time, highly qualified teacher for five complete and consecutive academic years” at a low-income school or educational service agency. At least one of those years must be after the 1997-98 academic year, and the loans must have been made before the end of the five years you spent in qualifying teaching service.

If you qualify for this relief, you can receive up to $17,500 in loan forgiveness, depending on what subjects you teach. Secondary-school mathematics and secondary-school science teachers, as well as all special education teachers, can qualify for the full $17,500 in loan forgiveness. Teachers in other subjects can receive up to $5,000 in loan forgiveness.

3. Nurse Corps Loan Repayment Program

If you’re a licensed registered nurse, an advanced practice registered nurse or a nurse faculty member with qualifying nursing debt, you may be eligible for the Nurse Corps Loan Repayment Program. Additional requirements include working full-time in an eligible high-need nursing area and a degree from an accredited school.

Upon qualification for this program, you can have 60 percent of your loans forgiven after two years of service. Once you complete the first two years of the program, you can apply for a third year of service and have another 25 percent forgiven.

4. Income-driven repayment plans

Income-driven repayment plans (IDR) can lead to forgiveness of your remaining student loan balance after many years of reduced payments. The most common plans are Pay As You Earn (PAYE), Revised Pay As You Earn (REPAYE), Income-Contingent Repayment (ICR) and Income-Based Repayment (IBR).

Each plan requires you to pay a percentage of your discretionary income for 20 to 25 years before receiving loan forgiveness for the remaining balance. To qualify for income-driven repayment plans, you must have eligible federal student loans and recertify your income yearly.

5. Student loan forgiveness for military members

If you’re a current service member or veteran, there are plenty of ways to get the government to pay some of your federal student loans.

One option is the National Defense Student Loan Discharge benefit, which can help military members get some or all of their Perkins Loans canceled if they qualify for hostile-fire or imminent-danger pay. If the borrower’s military service ended before Aug. 14, 2008, they could qualify for up to 50 percent forgiveness; if their military service began on or after that date, they could qualify for up to 100 percent forgiveness.

National Guard members may also be eligible for the Student Loan Repayment Program, which grants up to $50,000 in student loan forgiveness after completing an eligible service contract.

6. Forgiveness programs for doctors

If you’re a doctor, you may be able to receive some student loan relief by qualifying for a loan forgiveness program. Most loan forgiveness programs for medical professionals require you to work in a high-need area for a few years, but the forgiveness amounts you can qualify for tend to be high.

For example, the National Health Service Corps Loan Repayment Program offers up to $50,000 of forgiveness in exchange for two years of full-time work and up to $25,000 for half-time work in an approved position.

Other loan forgiveness programs for doctors include the Indian Health Service Loan Repayment Program and the U.S. Department of Health and Human Services Health Resources and Services Administration Primary Care Loans program.

Several branches of the military, including the U.S. Army, the U.S. Navy and the U.S. Air Force, have loan forgiveness programs for health professionals who serve in the military. Doctors are also eligible for PSLF if they work for a qualifying employer.

7. Loan forgiveness programs for lawyers

There are also quite a few forgiveness programs aimed at lawyers with student loan debt, although some are administered through specific law schools and limited to their students. Numerous state-based loan repayment assistance programs also exist, so check which of these options may be available to you.

On a national level, students can consider the Attorney Student Loan Repayment Program, which could forgive up to $6,000 of student loan debt each year and up to $60,000 in total.

8. Loan forgiveness programs for AmeriCorps

Borrowers serving full-time in AmeriCorps are eligible for Public Service Loan Forgiveness. Additionally, the Segal AmeriCorps Education Award is granted to individuals who meet and complete the approved terms of national service in the AmeriCorps program. This award can be put toward your education costs at any approved postsecondary educational institution or GI Bill-approved program.

You can also use funds from the award to repay qualifying student loans. The amount equals the maximum amount of a Pell Grant, which is $7,395 for the 2023-24 award year. This amount can change from year to year.

Individuals who have completed their service in an approved AmeriCorps program can also be eligible to have up to 100 percent of interest payments accrued during their time of service paid for by the Office of the National Service Trust (also known as the Trust). This is only possible for those who have completed their term of service and have earned the Segal AmeriCorps Education award.

9. Student loan discharge programs

Student loan discharge is when you’re no longer required to make loan payments due to unforeseen circumstances like a school closure or a total and permanent disability. There are a few instances where your student loans could be completely discharged. Here are some examples and what you should know about discharge programs.

Perkins Loan cancellation

Under certain circumstances, your Perkins Loan can be discharged. Here are some circumstances where you might qualify for Perkins Loan cancellation:

• You’re a special education teacher or teacher in a field of expertise with a shortage of qualified teachers in your state.
• You’re a teacher in a school that serves students from low-income families.
• You volunteer or hold another eligible job under the Perkins Loan cancellation program. These jobs include firefighters, law enforcement officers, public defenders, speech pathologists and more.

The application for the cancellation can be made to your school’s Perkins Loan servicer. Your school or servicer can walk you through the application process and guide you through the specific documentation necessary. If you qualify, you may be able to cancel up to 100 percent of your Perkins Loan.

Closed school discharge

If you currently have a Direct Loan, a FFEL Loan or a Federal Perkins Loan, you may be eligible for 100 percent discharge of your federal student loans. Here are the circumstances where full discharge is possible:

• Your school closed within 120 days of your withdrawal (before July 1, 2020) or within 180 days of your withdrawal (on or after July 1, 2020).
• Your school closed while you were enrolled.
• You were on an approved leave of absence when your school closed.

Contact your loan servicer if any of these circumstances apply to you. Your servicer can provide you with information about the application process for getting your loans discharged, as well as what to do if your application gets denied.

Borrower defense to repayment

If your school misled you, engaged in misconduct or violated certain state laws, you may be eligible for federal student loan forgiveness. If you’re deemed eligible, you may be able to have all or part of your federal Direct Loans forgiven or be reimbursed for the money you’ve already paid toward your loans.

To qualify for borrower defense, you can apply through the online application on the Federal Student Aid website. You may need to submit extra electronic documentation during the application process, so review the required documentation before applying.

Total and permanent disability discharge

If you’re totally and permanently disabled, you may qualify for federal student loan relief based on your disability. Applicants need to complete and submit a TPD discharge application, along with any required documentation and send it to disability discharge servicer Nelnet. When you apply, you’ll likely need to provide documentation from a physician, the Social Security Administration or the U.S. Department of Veterans Affairs.

You can also be released from any TEACH grant obligations if you meet one of the above requirements. For more information on how to contact Nelnet and apply for a TPD discharge, visit the Federal Student Aid’s TPD information resource center.

Discharge due to death

Federal student loans will be fully discharged after the borrower’s death once proof of death is submitted. If your parents took out a PLUS loan on your behalf, that can also be discharged with the correct documentation.

If you’re planning on applying for a student loan discharge due to death, you’ll need to provide a death certificate or a certified copy of the certificate. Contact your loan servicer for the documentation and submission requirements.

What to do if you don’t qualify for student loan debt forgiveness programs

If you have private student loans or your career makes it impossible to qualify for a traditional loan forgiveness program, you’ll need to pursue other options. Consider these strategies to pay off your student loans once and for all:

• Switch up your repayment plan: If you don’t qualify for federal loan forgiveness but need a lower monthly payment, see if you can play around with your repayment plan. Federal loans offer plans that let you repay your balance for up to 30 years, which could significantly lower your monthly bill.
• Refinance your student loans: Refinancing your private student loans can be a smart idea if you have good or excellent credit or a co-signer. Private lenders can offer extremely low interest rates, and you can choose a repayment plan that works for your needs and budget.
• Pay more than the minimum: If you want to ditch your loans as fast as possible and cut down on interest charges, consider paying more than the minimum each month. You’ll need to notify your loan servicer and specify that you want your overpayment to go toward the principal of your loan balance and not toward your next payment.

Next steps

If you qualify for student loan forgiveness or discharge, conducting the proper research and ensuring that you have the approved documentation can help you get the forgiveness you need. The application process can vary based on the situation, so contact your loan servicer if you have any questions.

If you’re still having trouble paying your student loans but don’t qualify for a forgiveness program, refinancing your student loans can save you money by lowering your interest rate and consolidating multiple loans into a single monthly payment.

Frequently asked questions

• The Biden Administration proposed a student debt relief plan that is currently being challenged in court. There has been a significant focus on improving existing programs — broadening eligibility requirements or automating the forgiveness process for programs like TPD discharge, borrower defense to repayment and Public Service Loan Forgiveness.

• There are fraudulent companies that claim that they can help you apply for loan forgiveness or cancellation if you pay them a one-time or ongoing fee. If you are contacted by a company saying that you’re eligible for loan forgiveness and promising to help you apply, this is likely a scam. They will take their fee but not offer any loan forgiveness.Some companies may even pretend that you can’t receive loan forgiveness unless you use their services. This is another false claim. While loan forgiveness programs can be complicated, borrowers are able to file for loan forgiveness themselves without third-party intervention. When in doubt, contact your loan servicer directly to see which programs you may be eligible for.

• Federal and private student loans have many differences. While the occasional court ruling impacts private student loans, as with the Navient settlement in 2022, this is a rare occurrence. While programs are established for federal loan forgiveness and cancellation, private lenders do not tend to afford the same allowances.