Student loans can be a huge financial burden. Many people struggle to pay back their loans. They are interested in student loan forgiveness programs. Student loan forgiveness allows you to have some or all of your student debt canceled. Here is a guide to help you understand if you qualify for student loan forgiveness.
What is Student Loan Forgiveness?
Student loan forgiveness is when you are no longer required to repay some or all of your student loan debt. The government offers student loan forgiveness programs. They do this as an incentive. The incentive encourages people to take certain jobs. Or it encourages them to repay their loans through specific repayment plans. When part or all of your loan is forgiven, you are no longer responsible for repaying that amount.
Types of Student Loan Forgiveness Programs
There are a few main types of student loan forgiveness programs. The government offers them. Here are some of the main options:
- Public Service Loan Forgiveness (PSLF) – This is for people who work full-time for a government or qualifying nonprofit organization. You must make 120 qualifying payments. It would help if you did this while working full-time for a qualifying employer.
- Teacher Loan Forgiveness – This is for teachers who teach full-time for five consecutive years. They must teach in certain low-income schools. They must also meet other requirements. You may be eligible for forgiveness of up to $17,500.
- Income-Driven Repayment (IDR) Forgiveness – If you repay your loans through an IDR plan for 20-25 years, you may qualify. You must meet repayment term requirements. If you have a remaining balance at the end of the term, the balance is forgiven.
- Perkins Loan Cancellation – Teachers, nurses, law enforcement, and other public servants may be eligible. It is for Perkins Loan cancellation. Check with your school.
- Borrower Defense to Repayment – If your school misled you or engaged in other misconduct, you may qualify. You may be eligible for forgiveness.
- Closed School Discharge – If your school closes while you’re enrolled, you may qualify. You may also qualify if your school closes shortly after you withdraw.
There are a few other rare forgiveness options. But these are the main programs offered by the government.
Do I Qualify for Student Loan Forgiveness?
Whether you qualify for student loan forgiveness depends on your situation. Here are some key criteria that programs look for:
- Type of Loan – Most forgiveness programs only apply to federal direct loans. Perkins loans often need to be qualified. FFEL and private loans are also often not eligible.
- Type of Job – For PSLF and Teacher Loan Forgiveness, you must work full-time. It would help if you worked for a qualifying employer. This includes a nonprofit or government agency.
- Repayment Plan – For IDR forgiveness, you must be on an approved IDR plan. You must meet repayment term requirements.
- Payments – For PSLF, you must make 120 qualifying payments. It would help if you did this while working for a qualifying employer.
- Employment Dates – You must work the required amount of time in qualifying employment. Teaching programs require five consecutive years.
Consider what types of loans you have. Also, look at your job, employer, repayment plan, and work history. This will help you determine if you may qualify for forgiveness. Reach out to your student loan servicer if you need clarification.
How to Apply for Student Loan Forgiveness
If you believe you meet the requirements, here is how to apply:
- Contact your servicer – Let your loan servicer know you plan to pursue loan forgiveness. Make sure your loans and employment qualify.
- Submit paperwork – This is required for PSLF and Teacher Loan Forgiveness. It documents your eligible employment. Submit annually or when changing jobs.
- Complete the application – Once you meet all requirements, complete the forgiveness application. Submit it for the specific program.
- Keep making payments – Keep making qualifying payments until notified of approval.
- Track progress – Keep copies of all forms. Track qualifying payments, employment, and requirements.
Recertifying employment annually is key. Contact your servicer right away if circumstances change.
Other Forgiveness Options
If you do not qualify for federal programs, here are some other options:
- State or local programs – Many states and cities offer student loan repayment help. This is especially common for teachers and public servants.
- Employer programs – Some employers may offer student loan repayment benefits. Government agencies and nonprofits most likely offer these.
- Refinancing – You can refinance your student loans to a lower interest rate or monthly payment. This won’t lead to forgiveness but can reduce costs.
- Scholarships – Look for scholarships and grants to help repay loans. Employers and private organizations offer some.
- Negotiate with your servicer – You can negotiate a lower monthly payment. Or negotiate for more favorable repayment terms.
- Loan repayment programs – Ask your servicer if they offer any discharge or repayment help options.
Make sure to research any non-federal programs fully. Learn about eligibility and any obligations. Get help from a financial advisor if needed.
Tips for Meeting Forgiveness Requirements
Here are some tips to improve your chances of qualifying:
- Apply for income-driven repayment plans as early as possible. This will help you meet term requirements.
- Submit employment certification forms annually. Refrain from letting gaps in employment documentation occur.
- Make sure to recertify income on time each year for income-driven plans.
- Stay with qualifying employers and repayment plans. Job or repayment plan changes can impact eligibility.
- Keep detailed records of all payments, employment, forms submitted, and communications with servicers.
- Contact your servicer right away if you lose qualifying employment or have other status changes.
- Review all paperwork thoroughly and submit documents as early as possible.
- Enroll in auto-debit or set payment reminders to avoid missing qualifying payments.
Mistakes to Avoid with Loan Forgiveness
It’s easy to make mistakes when pursuing student loan forgiveness. Here are some common errors to avoid:
- Need to meet recertification deadlines for income-driven repayment plans. This can lead to higher payments and affect eligibility.
- Need for more employment certification forms. It would help if you recertified employment annually.
- Changing to a non-qualifying repayment plan. Make sure you stay on an income-driven plan.
- Not submitting forms on time or accurately. Typos and missing information can delay processing.
- Making extra payments or paying ahead. This can cause issues tracking qualifying payments.
- Consolidating loans after making qualifying payments. It will reset your payment count.
- Letting loans go into default. This disqualifies you from forgiveness programs.
- Leaving a qualifying employer before meeting term requirements.
- Remember to update your servicer on changes in income, employment, or family size.
- Not enrolling in autopay. Missed payments don’t qualify.
Double-check all paperwork, dates, and details when pursuing forgiveness. Get help from your servicer to avoid errors.
Maximizing Your Chances for Forgiveness
Here are some tips to maximize your chances of getting loans forgiven:
- Enroll in autopay and electronic communication. This prevents missed notices or payments.
- Complete and submit certification forms as soon as eligible. Get them in early.
- Recertify income on time each year for income-driven plans to avoid payment spikes.
- Review your account online regularly for accuracy on payment counts, employment, etc.
- Save copies of all paperwork and communications. Be organized in case issues arise.
- Notify the servicer immediately of any changes to your name, address, income, or employment.
- Stick with qualifying employment and loans. Make changes cautiously.
- Set calendar reminders for key deadlines.
- Submit the forgiveness application and related docs as soon as you hit forgiveness milestones.
Can I qualify if I have private student loans?
Unfortunately no. Private student loans do not qualify for federal programs. Only federal direct loans qualify.
Do Parent PLUS loans qualify?
In most cases, Yes. Parent PLUS loans qualify for IDR plans. They qualify for Public Service Loan Forgiveness when consolidated into a federal direct consolidation loan.
Can I qualify if I’m on an extended repayment plan?
Extended repayment plans do not qualify for PSLF or IDR forgiveness programs. It would help if you were on an income-driven repayment plan that covers a set term.
What if I have Perkins loans?
Perkins loans qualify for certain cancellations like Teacher Loan Forgiveness. They qualify when consolidated into a federal direct loan. Check with your school on Perkins’ cancellation.
Do I still qualify if I’ve had hardship deferment or forbearance?
Yes, deferment and forbearance periods still count towards requirements for PSLF and IDR forgiveness. Make sure to get your hardship status approved.
Can I qualify if I’m self-employed?
For PSLF, you must be a full-time employee. Contractors and self-employed individuals do not qualify. For IDR, your income from self-employment would be used to set your payment amount.
The government offers excellent student loan forgiveness programs. But the rules can be complex. Take time to understand your specific loans, job, repayment plan, and work history. This will help you determine if you qualify. Submit all paperwork accurately and on time. Stay current on any changes or new programs.
Refinancing and repayment help are options if you do not qualify for forgiveness. The key is keeping payments affordable based on your situation. Call your servicer to discuss the best repayment options.