How Forgiveness Works
Student loan forgiveness is a government process that qualifies some borrowers for forgiveness—meaning you no longer owe money and no longer need to make payments on a portion of your student debt.
However, strict rules apply to qualify. Here are the three main student loan forgiveness programs available.
Public Service Loan Forgiveness
Are you a nurse, police officer, or working in a public service career? If so, this program might be for you!
Created by the College Cost Reduction and Access Act of 2007, the Public Service Loan Forgiveness (PSLF) program was designed to encourage talented graduates to pursue careers in public service in exchange for student loan forgiveness.
To qualify you must:
Work in public service (e.g., public law, healthcare, law enforcement, or a qualified non-profit). Minimum requirement: 30 hours per week.
Make and complete ten full years (120 payments) of qualified payments.
Have federal student loans under the William D. Ford Federal Direct Loan Program (other loans may require consolidation).
- Note: Consolidating your Federal Perkins Loans into a Direct Consolidation Loan may help you qualify, but previous payments generally do not count toward PSLF after consolidation.
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Teacher Loan Forgiveness
The Teacher Loan Forgiveness program was also created under the College Cost Reduction and Access Act of 2007. It offers loan cancellation for Federal Perkins Loans and forgiveness for:
- Direct Subsidized Loans
- Direct Unsubsidized Loans
- Subsidized Federal Stafford Loans
- Unsubsidized Federal Stafford Loans
To qualify you must:
Complete five full consecutive years of teaching in a low-income community.
Have no existing defaults on your loans.
Have obtained all loans you are requesting forgiveness for before completing the five-year teaching period.
Have taught at a school listed in the Annual Directory of Designated Low-Income Schools for Teacher Cancellation Benefits.
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Income-Driven Repayment Plan
Don’t Work in Public Service? Not a Teacher?
That’s okay! If you make full, on-time payments while enrolled in an income-driven repayment plan, you may still qualify.
The last primary method of loan forgiveness applies to borrowers who:
- Have made 20 or 25 years of timely, qualified payments on their direct student loans.
- Are enrolled in an income-based repayment plan.
To qualify after 20 years:
Your repayment plan must be active and your payments must be current.
You must be enrolled in the PAYE or REPAYE repayment plan.
To qualify after 25 years:
Your repayment plan must be active and your payments must be current.
You must be enrolled in an income-based or income-contingent repayment plan.
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Student Loan Discharge
In rare cases, loans may be discharged under special circumstances
To qualify:
Permanent disability
Death of the borrower
- Other types of student loan discharge may also apply. For more information on student loan forgiveness programs, visit the Department of Education website.
- If you still have questions or want to see if you qualify for any of the forgiveness options, get started today and let DocuPop help!
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