Janice Lozano
While there are legal ways to get out of paying student loans, such as loan forgiveness programs, there is no simple way to avoid paying them altogether. Defaulting on federal student loans can have serious consequences, including wage garnishment, and it can also impact co-signers. For those struggling to make payments, there are options for relief, including income-driven repayment plans and loan refinancing. Additionally, those with total and permanent disabilities may qualify for loan discharge.
| Characteristics | Values |
|---|---|
| Work in the public sector | May be eligible for loan forgiveness through the Public Service Loan Forgiveness program |
| Have a total and permanent disability (TPD) | May qualify to have federal student loans discharged |
| Teach at a low-income school or educational agency | May qualify for the federal Teacher Loan Forgiveness Program |
| Teach mathematics, science, or special education | May qualify for up to $17,500 in student loan relief |
| Serve as firefighters, nurses, military personnel, or volunteer with the Peace Corps | May be eligible for partial or full cancellation of federal Perkins Loans |
| Work for a qualifying government or nonprofit employer | May be eligible for loan forgiveness after 10 years of payments |
| Have cosigners | Cosigners will be equally responsible for debt repayment |
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What You'll Learn
Public Service Loan Forgiveness
While there is no simple way to get rid of student loans without paying, there are forgiveness options if you qualify. One of the most easily accessible student loan forgiveness programs is the Public Service Loan Forgiveness (PSLF) program.
The PSLF program is a forgiveness program for US federal student loans. To qualify for the PSLF program, you must make on-time monthly payments for 10 years while working full-time for a qualifying government or nonprofit employer, or volunteering full-time with AmeriCorps or the Peace Corps. Qualifying employers include government organizations (federal, state, local, or tribal) and not-for-profit organizations designated as tax-exempt 501(c)(3) under the tax code. Not-for-profit organizations that aren't designated as 501(c)(3) but have a primary purpose of providing public services (such as emergency management or public safety) may also qualify.
It's important to note that rejected applicants often have non-qualifying repayment plans, the wrong type of student loans, or work for non-qualifying employers. Additionally, any payments made toward FFELP loans will not count toward Public Service Loan Forgiveness. To gain eligibility, FFELP loans can be consolidated into the Direct Loan Program, but past payments made toward FFELP loans will not be considered qualifying payments.
Teachers at low-income schools or educational agencies may qualify for the federal Teacher Loan Forgiveness Program. Most subjects will qualify for up to $5,000 in loan forgiveness, while teaching mathematics, science, or special education may qualify for up to $17,500 in relief. The Teacher Cancellation program may also cancel up to 100% of Perkins Loans for teachers at public or nonprofit elementary or secondary schools serving low-income families.
Those with a total and permanent disability (TPD) may qualify to have their federal student loans discharged. This requires documentation from the US Department of Veterans Affairs (VA), the Social Security Administration (SSA), or a physician certifying that the borrower is unable to engage in gainful employment due to a physical or mental impairment.
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Total and permanent disability
If you have a total and permanent disability (TPD), you may qualify to have your federal student loans discharged. This is a type of student loan forgiveness for borrowers who cannot work due to a physical or mental impairment. To be granted forgiveness, you must prove that you are unable to work due to a physical or mental impairment.
To qualify for a TPD discharge, you need to show documentation from one of the following three sources:
- The U.S. Department of Veterans Affairs (VA)
- The Social Security Administration (SSA)
- A physician
The VA and SSA have internal processes for receiving a disability determination. You can also qualify for TPD discharge by having a physician certify that you are unable to engage in gainful employment due to a physical or mental impairment that may be expected to result in death or has lasted or is expected to last for at least 60 months.
You can apply for a disability discharge through Federal Student Aid's Disability Discharge website or submit a paper application to the Department of Education. You will need to attach supporting documentation of your eligibility for discharge. You can also ask for a 120-day payment pause while you gather your application materials. During the processing of your application, you will not be required to make any payments.
If you are approved for TPD discharge based on SSA documentation or a licensed medical professional's certification, you may have to go through a three-year monitoring period after your loan is discharged. During this period, if you request a new Direct Loan, Perkins Loan, or TEACH Grant, you must resume repayment on the previously discharged loans or acknowledge that you are once again subject to the terms of your TEACH Grant service obligation before you can receive the new loan or grant.
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Teacher Loan Forgiveness Program
While there are no simple or illegal ways to get rid of student loans without paying, there are a few loan forgiveness programs available for teachers. These programs are designed to incentivize teaching in low-income schools, high-need areas, or specific subjects. Here is some information about the Teacher Loan Forgiveness Program (TLF) and how it works.
The TLF is a federal program that provides loan forgiveness for teachers who work in low-income schools or educational agencies. To qualify for this program, you must teach low-income students full-time for five consecutive years. The amount of loan forgiveness depends on the subject area taught. Most subjects qualify for up to $5,000 in loan forgiveness, while teaching mathematics, science, or special education may qualify you for up to $17,500 in loan relief.
Perkins Loan Cancellation
The Perkins Loan Cancellation is a type of loan forgiveness program that specifically targets Federal Perkins Loans. This program can forgive up to 100% of your Perkins Loans if you teach full-time at a low-income school or teach certain subjects. Perkins Loan cancellation forgives portions of your loans in yearly increments, with 15% canceled per year for the first and second years of service, including the interest accrued during that year. To apply for this program, contact the holder of your Perkins Loan.
Public Service Loan Forgiveness (PSLF)
PSLF is another option for teachers, although it is not exclusive to the teaching profession. This program requires 120 qualifying payments (a minimum of 10 years) while working full-time for a qualifying government or nonprofit employer. Unlike TLF, PSLF does not require you to teach at a low-income public school, but you must have Direct Loans or consolidate other federal loans to qualify.
State and Local Programs
In addition to federal programs, many states and local education agencies offer loan forgiveness programs for teachers, especially those teaching in high-need areas. For example, the Teacher Loan Repayment Program (TLRP) in New Mexico aims to increase the number of teachers in designated high-need positions by providing repayment of principal and interest accrued on federal loans obtained for teacher education. An Advisory Committee reviews applications and investigates the qualifications of each applicant, and awards are dependent on the specific needs of the school and the teacher's total education indebtedness.
In summary, while there is no way to illegally avoid paying student loans, there are legal options for loan forgiveness, especially for teachers. These programs vary in their requirements and benefits, so it is important to carefully review the details of each program before making a decision.
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Federal Teacher Cancellation Program
While there are some legal ways to avoid paying back student loans, there is no simple way to get rid of student loans without paying. One way to do this is through the Federal Teacher Loan Forgiveness Program.
Federal Teacher Loan Forgiveness Program
This program is for teachers who work at a low-income school or educational agency. To qualify, you must have taught low-income students full-time for five consecutive years. The amount of forgiveness varies depending on the subject area taught. Most subjects qualify for up to $5,000 in loan forgiveness, while mathematics, science, and special education teachers may qualify for up to $17,500 in loan relief.
Perkins Loan Cancellation
The Teacher Cancellation program may cancel up to 100% of your Perkins Loans if you are a public or nonprofit elementary or secondary school teacher for low-income families. Perkins Loan cancellation forgives portions of your loans in yearly increments. Up to 15% of the loan may be canceled per year for the first and second years of service, including the interest accrued during that year.
PSLF vs TLF
The PSLF (Public Service Loan Forgiveness) Program forgives the rest of your loan after 10 years of making payments while working full time for a qualifying government or nonprofit employer. The TLF (Teacher Loan Forgiveness) Program forgives up to $17,500 of your Direct Subsidized and Unsubsidized Loans and Subsidized and Unsubsidized Federal Stafford Loans after five complete and consecutive years of teaching at a qualifying school. Certain highly qualified special education and secondary mathematics or science teachers can qualify for up to $17,500 in forgiveness.
It is important to note that you must have Direct Loans to qualify for PSLF. If you consolidate your Perkins Loans into a Direct Consolidation Loan, they will no longer qualify for Perkins Loan cancellation. In some cases, you may be able to take advantage of both programs, but your decision to take advantage of one program may impact your ability to take advantage of another.
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Bankruptcy and federal loans
While it is challenging, it is not impossible to discharge student loan debt through bankruptcy. Bankruptcy is often viewed as a last resort due to its potential negative impact on your credit score and the costs and time associated with filing. However, if you are overwhelmed by debt, consulting a bankruptcy attorney about your options may be worthwhile.
To discharge student loans in bankruptcy, you must demonstrate undue hardship. The court will evaluate your financial situation, including income, expenses, dependents, and job prospects, to determine whether repayment would impose an unreasonable burden. The Department of Justice (DOJ) will ask you to complete an attestation of undue hardship, and if they agree that you are experiencing undue hardship, they will recommend a full or partial discharge to the judge.
Even if the DOJ does not recommend discharging your loans, the judge can still find that you have an undue hardship and discharge them. For example, a 50-year-old borrower earning $8.50 per hour was granted a discharge due to their inability to pay off the loans and meet their basic needs, trapping them in a "cycle of poverty." Similarly, a borrower with a medical condition who received Social Security benefits was able to demonstrate to the judge that their illness would likely prevent them from working, resulting in a discharge.
If you have federal loans, there are alternatives to bankruptcy for discharging your student debt. For instance, if you have a total and permanent disability (TPD), you may qualify for a discharge by providing documentation from the U.S. Department of Veterans Affairs (VA), the Social Security Administration (SSA), or a physician. Additionally, if you attended a for-profit college that misled you about job prospects and earning potential, you may be able to discharge your loans in bankruptcy. Other circumstances that may lead to a discharge without bankruptcy include fraudulent loans, school misconduct or false certification of eligibility, the school's failure to refund your servicer after withdrawal, and the death of the borrower or student for whom a PLUS loan was taken out.
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Frequently asked questions
If you have federal loans, they are protected from bankruptcy, so you will be stuck with them until they are paid. The government can garnish your wages, and if you have any cosigners, they will be equally on the hook.
There is no simple way to get out of paying student loans without paying. However, there are some loan forgiveness programs that you might qualify for.
The Public Service Loan Forgiveness program forgives the loans of people who have worked in the public sector for 10 years. The Teacher Loan Forgiveness Program is another option for teachers at low-income schools or educational agencies.
Depending on your employment or volunteer service history, you may qualify for partial or full cancellation of your federal Perkins Loans. Those who have served as firefighters, nurses, military personnel, or Peace Corps volunteers may be eligible for loan cancellation. If you have a total and permanent disability (TPD), you may also qualify to have your federal loans discharged.
Income-driven repayment plans set your monthly payment as a percentage of your discretionary income. This makes your payments more affordable, and the remaining balance can be forgiven at the end of your repayment period.
