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Ask for Student Loan Forgiveness When You Can’t Pay

You can’t wish away your student loan debt, but for some, it can be erased through student loan forgiveness programs offered by the federal government. “Forgiveness” means the lender no longer expects you to repay your student loan due to hardship or other qualifying factors. Your current or future circumstances are considered when you apply for forgiveness, including your job and employer.

Common Types of Student Loan Forgiveness

Public Service Loan Forgiveness

Some public service jobs can enjoy student loan forgiveness after just 10 years, depending on the situation and criteria. This type of forgiveness option is called Public Service Loan Forgiveness (PSLF).

In order to be eligible for PSLF, you’ll need to have a qualifying full-time job (at least 30 days a week) in a public service role. These jobs could be in a government organization (federal, state, local, or tribal) or at a non-profit organization.

Qualifying Job Examples for PSLF

A few full-time jobs that could qualify for PSLF include:
  • U.S. Military in hostile fire or imminent-danger area
  • Firefighter
  • Public school teacher
  • Law enforcement officer
  • Nurse or medical technician
  • Attorney (select positions)
  • AmeriCorps or Peace Corps volunteer

Keep in mind that labor unions, partisan political organizations, for-profit organizations, and for-profit government contractors do not qualify as employers for PSLF.

Other PSLF Qualifications

You’ll also need to make 120 qualifying monthly payments on a qualifying student loan payment plan while working full-time for a qualifying employer.

A “qualifying monthly payment” is one made during your qualifying employment for the full amount due no later than 15 days after your due date. These monthly payments must be made when you are required to make a payment (i.e., they can’t be made while you’re in school, in a grace period, or in deferment or forbearance). The 120 payments don’t need to be consecutive, so you won’t lose your previous payments if you take a job with an employer that doesn’t fit the bill.

A “qualifying repayment plan” includes all income-driven repayment plans. You cannot qualify for PSLF on a Standard Repayment plan because you won’t have any remaining balance left to forgive after the 10 years of payments.

Certain loans also don’t qualify for PSLF, like the FFEL loans or federal Perkins loans. However, if you choose to pursue loan consolidation, they may become eligible for PSLF. Just keep in mind that qualifying payments will only include those made after the consolidation loan was established, not before.

Teacher Loan Forgiveness

The Teacher Loan Forgiveness program offers student loan forgiveness to teachers, specifically to those who teach in a low-income school or educational service. This forgiveness program allows eligible full-time teachers the opportunity to have up to $17,500 in federal student loans paid off.

To become eligible for Teacher Loan Forgiveness, you’ll need to have been employed as a full-time, highly qualified teacher for five complete and consecutive academic years. Your employment must be at a low-income school or educational service agency that serves low-income students. And the loan or loans that you want to have forgiven must’ve been disbursed before the end of your five qualifying years of teaching.

While you can use both Teacher Loan Forgiveness and PSLF to get relief from your total loan balance, there is one catch. Qualifying payments made towards PSLF and Teacher Loan Forgiveness cannot be stacked. The payments you make to qualify for Teacher Loan Forgiveness cannot be used to qualify for PSLF.

Forgiveness for Income-Driven Repayment Plans

Believe it or not, your loan can be forgiven just for being on a specific payment plan. After paying 20-25 years on an income-driven repayment plan, the remaining balance is forgiven. The time frame for forgiveness varies depending on the payment plan you select. The four income-driven repayment plans that the Department of Education offers are:

  • Income-Based Repayment Plan (IBR)
  • Pay As You Earn Repayment Plan (PAYE)
  • Revised Pay As You Earn Repayment Plan (REPAYE)
  • Income-Contingent Repayment Plan (ICR)

If you’re considering income-driven repayment forgiveness, there’s one downside. You could end up paying more than you would have if you’d chosen to make your loan payments on the standard repayment plan. This is because of the increased amount of interest that builds up over 20 to 25 years instead of 10 years, especially if you’ve got a particularly high student loan interest rate.

Our handy Income-Based Repayment calculator can help you see how much you could potentially have forgiven under this program.

Get Out of Jail Free Card When Life Takes a Turn

Besides forgiveness programs or fully paying off your student loan debt, there are a few other ways to be rid of student loan liability, mainly student loan discharge and cancellation.

Student Loan Discharge

In certain situations, you can have your student loan debt discharged due to something out of your control. These types of discharge include:

  • Closed school discharge: If your school closes while you’re enrolled there or if it closes within 120 days after you withdrew, you could have up to 100 percent of your federal student loans canceled.
  • False certification discharge: If your school falsely certified your eligibility to receive a federal loan, you may be eligible for discharge.
  • Borrower defense to repayment: Say your loans were used to attend a school that misled you or engaged in misconduct in violation of certain state laws. If those actions directly related to the educational services you received or your federal student loans, you may be eligible for discharge of those specific loans.
  • Total and permanent disability discharge: If you can prove that you are totally and permanently disabled, you could have your federal student loans discharged.
  • Bankruptcy discharge: We’ll be honest – this one isn’t very common. However, it is possible that to have your federal student loans discharged in bankruptcy if you file a separate action called an “adversary proceeding.” This is an incredible difficult feat to accomplish.
  • Death discharge: If you pass away with student loan debt, your federal student loans will be discharged. Proof of death is required to complete this student loan discharge.

Each type of discharge comes with its own set of rules and regulations, so be sure to do your research before applying. They require a high burden of proof and can have extensive delays in processing. For instance, if you’re seeking a total and permanent disability discharge, you may be waiting for three years for your loan to be officially canceled.

Cancellation

In limited situations, you may be able to have your loans canceled over time.

A great example of student loan cancellation is Perkins Loan Cancellation. If you’ve got Perkins loans, you may be able to have up to 100 percent of your loans canceled if you work in a public service job for five years.  The amount canceled is incremental over those five years of service.

Private Student Loan Forgiveness

Unfortunately, these forgiveness programs apply exclusively to federal student loans. There aren’t any specific forgiveness options available to borrowers with private student loans. However, if you’re having difficulty with your private loans, student loan refinancing might be able to offer you some relief with a lower interest rate or better payment structure.

Forgive and Forget – If Possible

There is hope if your student debt hinders your ability to make ends meet. So, if you’re struggling to repay your loans, don’t hesitate. You don’t want to fall behind on payments and risk falling into delinquency or default. Speak with a Student Loan Advisor to learn if your job or life situation may be eligible for student loan debt forgiveness programs today.

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