Ibrahim Gardner
Student loan debt is a growing concern, with one in five Americans carrying student debt, and many graduates struggling to make payments. While defaulting on loans can have serious consequences, there are several legal ways to avoid paying back student loans, including loan forgiveness and discharge programmes. These programmes are often aimed at teachers, public sector workers, and those with disabilities.
| Characteristics | Values |
|---|---|
| Loan forgiveness | Public Service Loan Forgiveness program, Teacher Loan Forgiveness Program, Teacher Cancellation program, Borrower defense to repayment, Closed school discharge, TPD discharge |
| Loan cancellation | Federal Perkins Loans |
| Loan deferment | Contact your servicer |
| Loan forbearance | Contact your servicer |
| Affordable repayment plans | Contact your servicer, Income-Driven Repayment plans, Income-Contingent Repayment (ICR) |
| Modified repayment plans | Graduated repayment |
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What You'll Learn
Loan forgiveness for public sector workers
If you work in the public sector, you may be eligible for the Public Service Loan Forgiveness (PSLF) program, which can erase your student loan balance. PSLF is a federal program that forgives your student loan debt after 10 years' worth of monthly payments (120 payments) while working full-time for a public service employer. Qualifying employers include:
- Government organizations at any level (federal, state, local, or tribal)
- Not-for-profit organizations designated as tax-exempt 501(c)(3)
- Religious organizations
- AmeriCorps
- The Peace Corps
Additionally, if you have Perkins loans, you may qualify for Perkins loan cancellation after at least four to seven years of public service, depending on your job type. You can still participate in PSLF with your other federal student loans.
For teachers, there is also the federal Teacher Loan Forgiveness Program (TLF). To qualify, you must teach low-income students full-time for five consecutive years in certain elementary or secondary schools or educational service agencies. The amount of forgiveness varies depending on the subject area taught, with most subjects qualifying for up to $5,000 in loan forgiveness, and mathematics, science, or special education teachers qualifying for up to $17,500.
It is important to note that there are other legal ways to get out of paying your student loans, such as having a total and permanent disability (TPD) or applying for borrower defense if there are legal grounds for discharging your federal Direct Loans.
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Loan forgiveness for teachers at low-income schools
If you are a teacher at a low-income school, you may be eligible for the federal Teacher Loan Forgiveness Program (TLF). This program offers loan forgiveness of up to $17,500 for teachers of mathematics, science, or special education, and up to $5,000 for other qualifying teachers. To qualify for the TLF Program, you must meet the following requirements:
- Teach full-time for five complete and consecutive academic years at an elementary school, middle school, high school, or educational service agency that serves low-income students.
- Have only Direct Loans or FFEL Stafford Loans that were issued after October 1, 1998.
- Be a highly qualified teacher, which typically requires a bachelor's degree, state certification, and a high level of competency in your subject area.
It is important to note that the TLF Program has specific requirements, and not all teachers may meet the eligibility criteria. Additionally, you cannot receive benefits under both the TLF Program and the PSLF Program for the same period of teaching service. The PSLF program may be a better option if you plan to teach or work in public service for at least ten years, as there is no cap on the amount of loan forgiveness.
If you have a total and permanent disability (TPD), you may also qualify for a TPD discharge, which applies to federal student loans. This option is available for those with physical or mental disabilities that severely limit their ability to work. Documentation from relevant authorities or a physician is required to apply for a TPD discharge.
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Loan forgiveness for military service members
Military service members and veterans are eligible for several educational benefits, including student loan forgiveness. The U.S. Department of Education and Department of Defense offer special benefits for military service members with federal student loans.
The first of these is the Public Service Loan Forgiveness (PSLF) program. Under PSLF, federal student loan borrowers can have the remaining balance of their loans forgiven after working for a qualifying non-profit or government organization for a total of 10 years. Qualifying employers include government organizations (federal, state, local, or tribal), not-for-profit organizations designated as tax-exempt 501(c)(3) under the tax code, and not-for-profit organizations that are not designated as 501(c)(3) but have a primary purpose of providing public services.
The second option is the Total and Permanent Disability Discharge (TPDD), which applies to veterans who are totally and permanently disabled and can qualify for a discharge of 100% of their outstanding federal loans. To apply for a disability discharge, you must provide documentation of your disability from the U.S. Department of Veterans Affairs (VA), the Social Security Administration (SSA), or a physician.
Service members who served in a location that qualified for hostile-fire or imminent-danger pay may be eligible for the National Defense Student Loan Discharge. Only borrowers with Perkins loans are eligible for this program. Those whose military service ended before August 14, 2008, can have up to 50% of their loans forgiven, while those who served after that date can have 100% of their loans forgiven.
Additionally, under the Servicemembers Civil Relief Act (SCRA), military service members on active duty can have their student loan interest rates capped at 6% for both federal and private student loans. If you served for 12 months or more in a hostile area, you may qualify for a 0% interest rate on your federal loans for up to 60 months, which can be applied retroactively even if you're no longer in the military.
Finally, the HEROES Act prevents service members from incurring additional student debt while deployed. Most loan repayment or forgiveness programs only apply to borrowers with federal student loans, but military service members or veterans with private student loans can consider student loan refinancing to manage their debt more effectively.
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Loan forgiveness for those with a total and permanent disability
If you have a total and permanent disability (TPD), you may be able to get your federal student loans discharged. This applies to both physical and mental disabilities that severely limit your ability to work now and in the future.
To apply for a disability discharge, you must provide documentation of your TPD. This can come from the U.S. Department of Veterans Affairs (VA), the Social Security Administration (SSA), or a physician. The VA and SSA have internal processes for determining eligibility for a disability. Alternatively, a physician can certify that you are unable to engage in gainful employment due to a physical or mental impairment that may result in death or has lasted or is expected to last for at least 60 months.
In some cases, you may not need to apply at all. The Department of Education regularly receives information from the VA and SSA about borrowers with eligible disabilities. If you are identified as having a qualifying disability, the Department of Education may automatically cancel your loans under the TPD program.
It is important to note that if you receive a TPD discharge, you will not be subject to a post-discharge income monitoring period. This means that once your loans are discharged, you will not have to pay them again, even if your income changes. However, if you apply for additional financial aid within three years of receiving a TPD discharge, your loans may be reinstated.
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$6.99
Loan deferment or forbearance
If you need to take a break from making payments on your student loans, you may be considering loan deferment or forbearance. Both options can help you avoid defaulting on your loan, but neither is a good long-term solution.
Loan Deferment
Loan deferment is generally a better option than forbearance if you have subsidized federal student loans or Perkins loans and are unemployed or facing significant financial hardship. You may also qualify for loan deferment if:
- You are attending school at least half-time.
- You are receiving state or federal assistance.
- Your monthly income is less than 150% of your state's poverty guidelines.
- You are on active military duty or in the Peace Corps.
- You are undergoing treatment for cancer.
One of the main advantages of loan deferment is that if you have subsidized federal student loans or Perkins loans, interest will not accrue during the deferment period. This means that the amount you owe at the end of the deferment period will be the same as when it began.
Loan Forbearance
Loan forbearance is typically a better option if you do not qualify for deferment and your financial challenges are temporary. For example, if you have unexpected medical bills to pay, you could put your loans into forbearance, allowing you to use the money from your student loan payment to cover those expenses. However, interest will continue to accrue during the forbearance period, and you will be responsible for paying it.
In summary, loan deferment and forbearance can both provide temporary relief from student loan payments, but deferment is generally preferable if you qualify as it may allow you to pause interest accrual. However, if you do not qualify for deferment or your financial difficulties are short-term, forbearance can be a helpful option to avoid loan default.
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Frequently asked questions
Here are some legal ways to get out of paying student loans:
- Apply for student loan forgiveness programs.
- Get a discharge due to a Total and Permanent Disability (TPD).
- Work in the public sector and qualify for the Public Service Loan Forgiveness program.
- Volunteer with AmeriCorps or Peace Corps.
- Teach at a low-income school or educational agency and qualify for the Teacher Loan Forgiveness Program.
If you don't pay back your student loans, your lender or servicer may take legal action against you or your co-signer. They may also garnish your wages or withhold your tax refund to make payments. Additionally, missing payments can hurt your credit score and result in debt collection efforts.
If you're struggling to make your student loan payments, you can contact your loan servicer to explore more affordable repayment options. For federal student loans, you may be able to lower your monthly payments by enrolling in an income-driven repayment plan or extending the repayment period. You can also look into deferment or forbearance options to temporarily postpone your payments.
The Public Service Loan Forgiveness (PSLF) program is for those working full-time in public service jobs. Qualifying employers include government organizations, not-for-profit organizations designated as 501(c)(3), and other not-for-profit organizations providing public services. To qualify, you must make on-time monthly payments for 10 years under a qualifying repayment plan while employed full-time in a public service role.
The Teacher Loan Forgiveness Program is for teachers working in low-income schools or educational agencies serving low-income families. To qualify, teachers must teach full-time for five consecutive academic years and meet other requirements. The amount of forgiveness varies depending on the subject area taught, with higher amounts for mathematics, science, or special education instructors.
