Lori Meadows
Student loan forgiveness is a desirable option for many borrowers, but it's important to understand when and how it applies. While some sources may advertise loan forgiveness, official channels state that you should never have to pay for help with your student loans. The US Department of Education offers various options for loan forgiveness, including the PSLF program, which forgives loans after 120 qualifying payments (10 years) while working for a qualifying public service employer. Additionally, those with a qualifying disability may be eligible for a TPD discharge, and teachers may qualify for forgiveness of up to $17,500 if they teach full time for five consecutive academic years in certain schools. IDR plans are also available, where loan forgiveness may be granted after 20 or 25 years of payments. It's important to note that only federal student loans managed by the Department of Education qualify for the one-time IDR adjustment.
| Characteristics | Values |
|---|---|
| Who is eligible for student loan forgiveness? | Public service employees, including firefighters, police officers, nurses, teachers, and other emergency service employees. |
| What are the requirements for loan forgiveness? | - Repay your federal student loans under an IDR or standard 10-year plan. - Make 120 qualifying monthly payments. - Work for a qualifying public service employer. |
| What loans are eligible for forgiveness? | Only federal Direct Loans can be forgiven through PSLF. |
| Are there any fees associated with loan forgiveness? | No, there are no fees to receive credit toward forgiveness, and you never have to pay for help with your student loans. |
| What if my loans are in default? | You will need to rehabilitate or consolidate them to qualify for PSLF. |
| Are there any other options for loan discharge? | Yes, there are other forms of school-related discharge, such as closed school discharge or borrower defense to repayment. There are also special benefits for military service members with federal student loans, and loan discharge options for those with a total and permanent disability (TPD). |
| When will borrowers have to start repaying their loans? | Congress mandated that student and parent borrowers begin to repay their loans in October 2023, but the Biden-Harris Administration has not lifted the collections pause as of August 2024. |
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What You'll Learn
PSLF: 10 years of public service may qualify for forgiveness
The Public Service Loan Forgiveness (PSLF) Program is a federal program that forgives the remaining balance on Direct Loans after borrowers have made 120 qualifying monthly payments while working full-time for a qualifying public service employer. Qualifying repayment plans for PSLF include income-driven repayment (IDR) plans and the standard 10-year repayment plan.
To qualify for PSLF, you must work full-time for a government or not-for-profit organization. Qualifying employers include federal, state, local, or tribal government organizations, as well as certain non-profit organizations. Public service employees such as firefighters, police officers, nurses, and teachers are also eligible for PSLF.
It's important to note that only federal Direct Loans are eligible for PSLF. To benefit from PSLF, borrowers must make 120 qualifying monthly payments under a qualifying repayment plan. This typically translates to 10 years of payments. During this time, borrowers must also be working for a qualifying public service employer.
To apply for PSLF, you can use the PSLF Help Tool provided by the U.S. Department of Education. This tool will guide you through the steps to document your qualifying employment and receive credit for your monthly payments. It's important to carefully follow the requirements and provide the necessary documentation, such as proof of employment and loan payments.
In addition to PSLF, there are other loan forgiveness options available, such as the IDR plan. Under an IDR plan, your monthly payment is based on your income and family size. After making 240 or 300 monthly payments (20 or 25 years) under an IDR plan, the remaining balance on your student loans may be forgiven. It's worth exploring these options to see if you qualify for loan forgiveness or other forms of assistance.
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IDR plans: based on income, family size, and loan term
Income-Driven Repayment (IDR) plans allow you to make lower monthly payments on your federal student loans based on your income and family size. The monthly payment amount is determined by your loan servicer, who will perform the calculation to assess your eligibility.
The US Department of Education's Loan Simulator can be used to compare plans, estimate monthly payment amounts, and check eligibility. The Loan Simulator will ask for basic information about your income, family size, tax filing status, and state of residence, and then present different plan options.
IDR plans include the Income-Based Repayment (IBR) plan, which caps your payment amount at a certain percentage of your discretionary income or the amount you would pay under the 10-year Standard Repayment Plan, whichever is lower. The Pay As You Earn (PAYE) plan is another federal student loan repayment option available to some borrowers with newer federal loans. PAYE caps monthly loan payments at 10% of discretionary income, and any remaining loan balance is forgiven after 20 years of monthly payments.
The Department of Education announced in April 2022 that it would make a one-time adjustment to count any month spent in repayment, some deferment periods (prior to 2013), and some forbearance periods toward loan forgiveness. This means that some borrowers may receive additional years of credit toward loan forgiveness.
It is important to note that defaulted loans are not eligible for any IDR plans, and that loans made for parents (Plus or FFEL loans) are also never eligible, even if consolidated.
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TPD discharge: for disabilities limiting ability to work
If you are unable to work due to a disability or ongoing medical condition, you may be able to have your federal student loan debt canceled or forgiven through the Total and Permanent Disability (TPD) program.
To qualify for TPD discharge, you must be unable to engage in any substantial gainful activity, meaning you cannot perform work for pay that involves significant physical or mental activities, or a combination of both. This inability to work must be certified by a licensed medical professional, who must also confirm that your condition is due to a physical or mental impairment. This includes a wide range of conditions, such as neurological disorders, mental health challenges, autoimmune diseases, sensory impairments, and severe cases impairing motor function and cognition. ALS, epilepsy, advanced Parkinson's, and movement and muscle coordination impairments often qualify for TPD discharge.
There are a few ways to qualify for TPD discharge. Firstly, if you are a veteran with a 100% service-connected disability, you may be eligible. Secondly, if you are eligible for Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI) benefits, you may qualify. Finally, you can also qualify by having a medical professional certify the "Authorized Medical Professional Certification" section of your TPD discharge application. It's important to note that just receiving SSDI or SSI benefits doesn't automatically grant you TPD discharge.
The TPD application process can be done online or by filling out and submitting the form to NelNet, the Department of Education's TPD loan servicer. If you are applying based on your VA or SSA status, you must attach proof of your eligibility. The Department of Education may also automatically cancel your loans under the TPD program without requiring an application if they determine you are eligible based on information received from the VA or SSA. Once your loans are approved for TPD discharge, you will not have to make any further payments on those loans.
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School closure: federal loans may be discharged if school closes
If your school closes while you're enrolled or shortly after you withdraw, you may be eligible for federal student loan discharge if you meet certain requirements. This is known as a closed school discharge.
To be eligible for a closed school discharge, you must meet one of the following criteria:
- You were enrolled in the school when it closed.
- You were on an approved leave of absence when the school closed.
- You withdrew from the school within 120 days before its closure if your loans were first disbursed before July 1, 2020.
- You withdrew from the school within 180 days before its closure if your loans were first disbursed on or after July 1, 2020.
It's important to note that if you transferred credits from the closed school to a comparable program at another institution, you may not be eligible for a closed school discharge under the current rules. Additionally, if you complete your program through a teach-out agreement, you will not be eligible for loan discharge. However, you may still be eligible for Closed School relief if you transfer to a program outside of the teach-out plan.
If your closed school discharge application is approved, the Department will cancel the loans you borrowed to attend the closed school. They will also refund any payments made on those loans and delete any negative credit history associated with those loans from your credit report.
Even if you don't meet the closed school discharge requirements, you may still qualify for other federal forgiveness programs, such as Public Service Loan Forgiveness (PSLF). Additionally, if you used your GI Bill to attend the closed school, you may be able to restore some of your GI Bill benefits.
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Military service: special benefits for federal student loans
Military service members with federal student loans are eligible for special benefits from the U.S. Department of Education and Department of Defense. The Public Service Loan Forgiveness (PSLF) Program is one such benefit that applies to those who work in government roles, including the U.S. Military. This program allows for federal student loan forgiveness after 120 qualifying monthly payments (equivalent to 10 years) while working for a qualifying public service employer.
Qualifying for PSLF requires careful attention to detail. To be eligible, one must work full-time for a government or not-for-profit organization and make 120 qualifying payments under a qualifying repayment plan, such as an IDR (income-driven repayment) plan. IDR plans base monthly payments on income and family size, and the balance may be forgiven after a certain number of payments over 20 or 25 years. The PSLF Help Tool, provided by the U.S. Department of Education, can assist in determining the next steps and required documentation.
It is important to note that only federal Direct Loans can be forgiven through PSLF. Additionally, if federal loans go into default, they must be rehabilitated or consolidated to regain eligibility for PSLF. Any months spent in repayment, some deferment periods before 2013, and some forbearance periods can count toward loan forgiveness. This includes months in economic hardship or military deferments after 2013 and months in deferment prior to 2013 (excluding in-school deferment).
The Department of Education announced updates in April 2019 to bring borrowers closer to forgiveness under IDR plans. These changes included a one-time adjustment to count various periods toward loan forgiveness, benefiting borrowers with loans that have been in repayment for over 20 or 25 years. It is essential to remember that no fees are required to receive credit toward forgiveness, and anyone requesting payment for assistance with loan forgiveness is likely operating a scam.
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Frequently asked questions
No, you never have to pay for help with your student loans. If someone asks you to pay them to get loan forgiveness, it's a scam.
IDR stands for Income-Driven Repayment. An IDR plan bases your monthly payment on your income and family size. If you repay your loans under an IDR plan, your remaining balance may be forgiven after 20 or 25 years (240 or 300 monthly payments).
PSLF stands for Public Service Loan Forgiveness. PSLF allows qualifying federal student loans to be forgiven after 120 qualifying payments (10 years) while working for a qualifying public service employer. Qualifying employers include government, non-profit organizations, and the U.S. Military.
If you have a disability that severely limits your ability to work, you may qualify for a TPD discharge, which forgives your federal student loans. Additionally, if you teach full-time for five complete and consecutive academic years in certain elementary or secondary schools, you may be eligible for loan forgiveness of up to $17,500.
