Lori Meadows
Student loan forgiveness is a way to reduce student loan debt, which amounts to nearly $2 trillion in the United States, affecting 43 million Americans. There are several student loan forgiveness plans available, including the Public Service Loan Forgiveness (PSLF), which is available to those who work for a qualified employer for 10 years. Additionally, the Biden administration has proposed a new plan called SAVE, which offers relief to borrowers who earn less than 225% of the poverty line. To receive loan forgiveness, borrowers may need to consolidate their federal loans, sign up for an income-driven repayment plan, and work for a qualifying employer. It's important to note that loan forgiveness is only available for federal student loans, and there may be specific requirements and restrictions depending on the program.
Characteristics and Values of Student Loan Forgiveness
| Characteristics | Values |
|---|---|
| Loan Forgiveness Options | Public Service Loan Forgiveness (PSLF), Teacher Loan Forgiveness Program, Income-Driven Repayment (IDR) Plan, Biden student loan forgiveness plan, SAVE plan, Veteran and active duty military service, and more |
| Requirements | Work for a qualified employer for a certain period (e.g., 10 years for PSLF), meet income thresholds, serve in areas of need, etc. |
| Eligibility | Federal student loans managed by the Department of Education (ED) qualify for most programs; private loans generally do not qualify |
| Application Process | Consolidate federal loans, sign up for an IDR plan, fill out employer certification forms, apply through the PSLF Help Tool or Loan Simulator |
| Cost | No fees are required to receive credit toward forgiveness; scams may involve requests for payment |
| Tax Implications | In most cases, loan forgiveness is taxable at the federal level, but through 2025, no cancellation will be considered taxable income |
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What You'll Learn
Public Service Loan Forgiveness (PSLF)
PSLF is available to those who work full time for a government or not-for-profit organisation. Public service employees can use guides to ensure they are on track for loan forgiveness. This includes firefighters, police officers, nurses, and other emergency service employees, as well as employees of any state, local, or tribal government, and certain nonprofit agencies.
To apply for PSLF, you can use the PSLF Help Tool. You will need to gather information about the payments you believe should be counted, including the dates of these payments, tax information for your public service employer, and digital proof of your employment and payments, such as W2 forms and letters or statements from the loan servicer.
Borrowers who have made 120 qualifying monthly payments under a qualifying repayment plan may be eligible for PSLF. After 20 or 25 years (240 or 300 monthly payments) of eligible payments, borrowers will see their loans forgiven.
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IDR plans
There are four IDR plans: SAVE (which replaced the REPAYE plan), PAYE, IBR, and ICR. Under these plans, the remaining balance on your loans may be forgiven after 20 or 25 years of repayment, depending on the plan. For example, under PAYE, any remaining balance is canceled after 20 years of payments, whereas under IBR, it depends on when you took out the loan—if it was after July 1, 2014, the balance is canceled after 20 years, and if it was before that date, the balance is canceled after 25 years.
It's important to note that IDR loan forgiveness is not automatic and depends on the plan you're enrolled in, the loans you have, the amount you originally borrowed, and whether the loan was for undergraduate or graduate education. You may also need to consolidate your loans first to become eligible for an IDR plan.
The Department of Education has also announced a one-time account adjustment program to help give borrowers more credit toward forgiveness through IDR. This adjustment counts any month spent in repayment, some deferment periods (prior to 2013), and some forbearance periods toward loan forgiveness.
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Loan forgiveness for specific occupations
The Public Service Loan Forgiveness (PSLF) program offers loan forgiveness for specific occupations. This program was created by the US government to incentivize college graduates to pursue careers that serve the public good. To qualify for PSLF, you must work for a qualifying employer, which includes federal, state, local, and tribal governments in the US, as well as tax-exempt nonprofits that meet specific criteria. Additionally, you must work full-time, defined as at least 30 hours per week, and make 120 qualifying monthly payments on eligible loans such as Federal Direct Loans.
Healthcare professionals, including nurses, advanced practice registered nurses, nurse faculty, physicians, dentists, pharmacists, and behavioural health professionals, have several loan forgiveness options. The Nurse Corps Loan Repayment Program offers repayment assistance for licensed registered nurses, advanced practice registered nurses, and nurse faculty working full-time in accredited nursing schools or Critical Shortage Facilities in high-need areas. The National Health Services Corps Loan Repayment Program provides similar benefits to healthcare providers working in underserved areas. State-specific options for loan forgiveness for healthcare professionals also exist, such as California's Bachelor of Science Nursing Loan Repayment Program and Kentucky's State Loan Repayment Program.
Teachers and lawyers can also benefit from loan forgiveness programs. The Public Service Loan Forgiveness program includes teachers as eligible public service workers. Additionally, volunteer lawyers working in public interest law services, such as prosecution, public defence, or legal advocacy for low-income communities, may qualify for loan forgiveness. The JRJ Grant Student Loan Program encourages lawyers to work as prosecutors or public defenders at the local, state, or federal level.
Military service members are eligible for loan forgiveness through various programs. The PSLF program includes military employment as a qualifying public service job. Additionally, military service may qualify for Perkins Loan Cancellation if the service is in a hostile fire or imminent danger pay area. Other programs specific to each branch of the military may also offer loan forgiveness.
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Loan forgiveness for veterans
Military service members and veterans in the U.S. are eligible for some educational benefits, such as the G.I. Bill, and may also be eligible for student loan forgiveness or loan discharge due to their service. Forgiveness programs usually forgive loans because of service or employment, while discharge is based on the inability to repay loans due to other issues.
Veteran and military student loan forgiveness programs include:
- Public Service Loan Forgiveness (PSLF): This program forgives the remaining balance of your federal student loans after working for a qualifying non-profit or government organization. The Department of Education allows months spent on active duty to count toward PSLF, even if the loans were in deferment or forbearance. To qualify, your loans must be federal Direct Loans, including Direct Subsidized or Unsubsidized Loans or Grad PLUS Loans.
- Total and Permanent Disability Discharge (TPD): U.S. military veterans who are totally and permanently disabled may qualify for a discharge of 100% of their outstanding federal loans. Under President Trump's first term, TPDD was expanded to make it easier for veterans to qualify for loan discharge.
- National Defense Student Loan Discharge: Service members who were in a location that qualified for hostile-fire or imminent-danger pay may be eligible for this program. Only borrowers with Perkins loans are eligible.
- Income-Driven Repayment (IDR) plans: Borrowers who have made 20 or 25 years' worth of eligible payments under an IDR plan may be eligible for loan forgiveness. Federal student loans managed by the Department of Education (ED) qualify for the one-time IDR adjustment.
- Economic Hardship Deferment: Months spent in economic hardship deferment after 2013 count toward the 20 or 25 years required for IDR forgiveness.
- Servicemembers Civil Relief Act: Military service members on active duty can have their student loan interest rates capped at 6% for both federal and private student loans.
- EDRP: Military veterans pursuing healthcare careers through the Veterans Health Administration (VHA) may qualify for up to $200,000 in loan repayment assistance. The program awards up to $40,000 annually for a maximum of five years, and the funds are tax-free.
Additionally, those whose military service finished before August 14, 2008, may have up to 50% of their loans forgiven, while those who served after that date may be eligible for 100% loan forgiveness.
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Loan forgiveness for teachers
There are several loan forgiveness programs available for teachers. Here are some options to consider:
Teacher Loan Forgiveness (TLF) Program
The TLF program offers up to $17,500 in loan forgiveness for teachers who have worked full-time for five complete and consecutive academic years at a qualifying school. Qualifying schools include certain elementary or secondary schools, or educational service agencies that serve low-income communities. To be eligible for TLF, at least one of the five years of teaching must have been after the 1997-98 academic year, and you must have been a new borrower on or after October 1, 1998. Certain highly qualified special education, secondary mathematics, or science teachers may be eligible for the full $17,500 in forgiveness, while other eligible teachers can qualify for up to $5,000. It is important to note that Direct PLUS Loans, FFEL PLUS Loans, and Perkins Loans are not eligible for forgiveness through TLF.
Perkins Loan Cancellation for Teachers
The Perkins Loan Cancellation program forgives up to 100% of your Federal Perkins Loans if you teach full-time at a low-income school or teach certain subjects. This program forgives portions of your loans in yearly increments after meeting service requirements. To apply, contact the holder of your Perkins Loan to discuss the next steps.
Public Service Loan Forgiveness (PSLF)
PSLF is another option for teachers seeking loan forgiveness. PSLF forgives the remaining balance on Direct Loans after 120 qualifying payments (a minimum of 10 years). Unlike TLF, PSLF does not require you to teach at a low-income school. Instead, it requires employment with a qualifying employer, which includes government organizations at any level (federal, state, local, or tribal) and certain nonprofit organizations. To benefit from PSLF, you must repay your federal student loans under an IDR (income-driven repayment) plan or a standard 10-year plan.
It is important to note that these programs have specific requirements and eligibility criteria, and not all loans are eligible for forgiveness. Be sure to carefully review the details of each program and consult official sources for the most up-to-date and accurate information. Additionally, many states offer their own loan forgiveness programs for teachers, especially those teaching in high-need areas. Contact your state's education agency to explore these options further.
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Frequently asked questions
The first step is to determine what type of loan you have. Only federal student loans qualify for loan forgiveness.
There are several requirements for federal student loan forgiveness, including the type of repayment plan you are on, your income, and your line of work.
You can apply for federal student loan forgiveness by filling out an employer certification form each year and submitting it to the U.S. Department of Education.
Yes, some states have their own student debt relief programs aimed at specific occupations, and there are also programs for medical and legal professionals working in areas of defined shortages.
