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There are several ways that you may be able to qualify for student loan forgiveness, cancellation or discharge. Federal loan holders who meet certain requirements can even receive forgiveness for 100 percent of their student loan. Qualifying for this type of debt relief could significantly free up your personal finances, allowing you to buy a home, expand your family or better save for retirement.
Enacted in 2007, this loan forgiveness is available to any federal student loan holder who is employed by a federal, state, local government or nonprofit and working at least 30 hours a week. In addition, loan holders must have made at least 120 eligible on-time payments, which is the equivalent of 10 years of full payments. Payments made before the 2007 program was enacted do not qualify towards the 120 required for loan forgiveness. Only Direct Loans and Federal Direct Consolidation Loans qualify. You can find out more about this program by visiting StudentAid.gov/publicservice.
Teachers with at least five consecutive years of experience working for a low-income elementary, secondary or education service may be eligible to receive up to $17,500 in loan forgiveness. The program only applies to borrowers with Direct or Federal Family Education Loans (FFEL). Educators must be considered highly qualified, with at least a bachelor’s degree and a full state teaching certification.
Teachers new to their fields must also demonstrate a high level of competency in the subject matter they teach by passing a subject-specific state exam or through a university degree. Additional information about this program is available at StudentAid.gov/teach-forgive.
Certain circumstances can qualify a borrower for a discharge or cancellation of a student loan. Unlike forgiveness, in which the full amount is forgiven, a discharge or cancellation absolves the borrower of any further payment obligation. Likewise, a loan falls into this category when the borrower is no longer able to repay it. Qualifying circumstances include bankruptcy, permanent disability, false certification and death, as well as others.
If you have a Perkins Loan and are employed in public service, you may be able to have all or part of your loan discharged or canceled if you are in the Peace Corps, U.S. armed forces, child and family services, or similar employment.