Many learners must take out student loans to pay for their education. However, student loans often carry high-interest rates, which lead to large monthly payments after graduation. By exploring student loan forgiveness and cancellation programs, students can help ease the financial burden.
Student loan forgiveness and cancellation vary from student loan discharge. Fraud victims or individuals who cannot repay their loans due to a disability or bankruptcy may qualify for discharge.
Student loan forgiveness or cancellation typically occurs when an individual works in a qualifying field for a set number of years. The U.S. Department of Education (ED) uses the same definition for the terms student loan forgiveness and student loan cancellation, but different loans qualify for each classification. Keep reading to learn more about these programs, including who qualifies for each type.
Student Loan Forgiveness Programs
Individuals who qualify for a student loan forgiveness program do not need to pay back a portion or all of their loans to the federal government. Direct loans, Federal Family Education Loan Program loans, and Perkins Loans all qualify for certain types of loan forgiveness programs. See below for more information on these plans.
Income-Driven Repayment Plans
While the federal government does not technically classify income-driven repayment plans as a type of loan forgiveness, this plan can lower monthly payments to $0. Borrowers may qualify for one of four income-driven repayment plans:
- The Revised Pay As You Earn Repayment Plan requires individuals to pay just 10% of their discretionary income.
- The original Pay As You Earn Repayment Plan requires monthly payments that total 10% of discretionary income. However, this never amounts to more than the 10-year Standard Repayment Plan amount.
- The Income-Based Repayment Plan allows borrowers who received their loan after July 1, 2014 to pay 10% or 15% of their discretionary income, but this never totals more than the 10-year Standard Repayment Plan amount.
- The Income-Contingent Repayment Plan requires borrowers to pay either 20% of their discretionary income or repayment plan with a fixed payment over 12 years.
Public Service Loan Forgiveness
Individuals who work in public service or public school positions may qualify for public service loan forgiveness. These programs can reduce or eliminate debt. The Teacher Loan Forgiveness Program forgives up to $17,500 for full-time teachers who work for five consecutive academic years. However, this only applies to educators who teach at low-income schools or educational service agencies.
Teachers can find out whether their school classifies as a low-income school by using the Teacher Cancellation Low Income Directory. Individuals must wait to apply for this scholarship until they complete the required five consecutive years of teaching.
Similarly, individuals who work for a nonprofit or a U.S. federal, state, local, or tribal government may apply for the Public Service Loan Forgiveness program. This type of forgiveness excuses the remaining loan balance on a direct loan after the qualifying individual makes 120 monthly payments under a qualifying monthly payment plan.
Student Loan Forgiveness Programs for Nurses
Nurses can qualify for a federal student loan forgiveness program under the Public Service Loan Forgiveness program or the Nurse Corps Loan Repayment Program. The Public Service Loan Forgiveness program may apply to nurses who do not default on their loans and who make 120 payments under a qualifying payment plan. However, recipients must work for a nonprofit healthcare organization while making payments.
The Health Resources and Services Administration oversees the Nurse Corps Loan Repayment Plan. Registered nurses, advanced practice nurses, and even some nurse faculty may receive up to 85% of their loans forgiven. Recipients must work for a minimum of two years at a critical shortage facility to qualify. A critical access hospital, disproportionate share hospital, free clinic, or residential nursing home may all qualify as a critical shortage facility.
Some nurses may also qualify for state-level loan forgiveness or the Perkins Loan cancellation.
Student Loan Forgiveness for Doctors
Doctors can qualify for student loan forgiveness through the National Institutes of Health Loan Repayment Programs and the Public Service Loan Forgiveness program.
The Health Loan Repayment Programs award doctors with U.S. citizenship loan payment assistance. To qualify, applicants must possess debt that totals at least 20% of their base salary. Some repayment programs require a research component in an approved area. Certain Health Loan Repayment program applications open on September 1 and close on November 15, but others open on January 2 and close on June 1.
The Public Service Loan Forgiveness program applies to doctors who work full time at a nonprofit healthcare organization while making 120 payments under a qualifying payment plan. Individuals who have defaulted on their loans may not qualify for this payment program. Doctors can apply for the Public Service Loan Forgiveness program by mailing an application with employer certification to the ED.
Student Loan Forgiveness for Lawyers
The federal and state government also offer student loan repayment and forgiveness programs. The United States Department of Justice provides an Attorney Student Loan Repayment program. Applications open annually each spring. Applicants can use this worksheet to learn if they qualify.
Additionally, the United States Department of Justice administers the John R. Justice Program through the Bureau of Justice Assistance. This program gives loan repayment assistance to public defenders and local and state prosecutors who commit to working in the field for at least three years. The program posts an annual April deadline.
The American Bar Association assists legal professionals with loan repayment by listing other repayment options. Lawyers seeking student loan cancellation or forgiveness can use this webpage as a resource. The site lists information on Statewide Loan Repayment Assistance programs in addition to federal loan forgiveness programs.
Niche Student Loan Forgiveness Programs
Some individuals may qualify for a niche student loan forgiveness program. While learners can apply for more than one type of student loan forgiveness program, they can typically only accept one program. Read on to learn more about student loan forgiveness for military members and state-sponsored forgiveness programs.
The U.S. government also provides forgiveness, benefits, and payment plans exclusively for military professionals. Through the Servicemembers Civil Relief Act, qualifying military professionals receive an interest rate cap of 6% during active duty. Thanks to the Military Service Deferment program, students can defer loan repayment during certain periods of active duty and immediately after active duty.
Individuals serving in an area classified as hostile may qualify for 0% interest for up to 60 months. Depending on the branch of the military in which service members work, the Department of Defense may pay the entirety of their loans.
Individuals working in the United States military can also qualify for student loan forgiveness through the Public Service Loan Forgiveness program. Military members with a disability that occurred during service may also qualify for student loan discharge. Thanks to the HEROES Act
Waiver, active duty participants benefit from waived documentation requirements for loan repayment plans.
While the ED sponsors plans for federal loans like the William D. Ford Federal Direct Loan Forgiveness Program, states also provide student loan forgiveness programs.
Individuals should check with their own state's department of higher education to learn about specific loan forgiveness programs. Most states award loan forgiveness for qualifying healthcare workers.
For example, the Missouri Department of Health and Senior Services offers the Primary Care Resource Initiative for Missouri program. This initiative features a competitive application process. Missouri residents attending school in Missouri to pursue a career in the healthcare field may qualify for loan forgiveness through this organization.
States like California also offer loan forgiveness for medical professionals. For example, the California State Loan Repayment Program assists healthcare workers who work in high-need areas. Applicants must submit all the required forms before the annual September deadline.
Student Loan Cancellation Programs
While the ED defines student loan forgiveness and student loan cancellation in the same way, cancellation generally refers to a situation in which an organization forgives most or all of a loan. Learn more about the two most common federally sponsored student loan cancellation programs below.
The Perkins Loan Cancellation program is commonly known for its teacher forgiveness programs. However, individuals who work in other occupations also qualify for this type of forgiveness.
For example, early childhood education providers, child and family services workers, faculty members at tribal colleges, firefighters, law enforcement officers, public defenders, and speech pathologists all qualify. Prospective applicants can find a complete list of qualifying occupations here.
The federal government offers both partial and full cancellation programs through the Perkins Loan Cancellation program. Full cancellation typically requires at least five years of service at a qualifying employer.
However, applicants who work at a volunteer organization like AmeriCorps may only qualify for up to 70% cancellation. To apply for this cancellation, applicants must contact the school that provided the loan or to the school's Perkins Loan servicer.
The federal government also provides the Perkins Loan Teacher Cancellation Program. This program assists educators who have taught full time at a school that serves students from low-income families or who have taught full time to special education students. Additionally, teachers who instruct in a subject deemed as high need by a state education agency may also qualify.
Even school librarians and counselors can qualify for this program because the federal government defines a teacher as someone who provides elementary or secondary students with direct services that relate to teaching. Cancellation does not require certification, but the applicant must work full time for an educational institution.
The Federal Perkins Loan Forgiveness program does not apply to postsecondary educators. Recipients can earn up to 100% cancellation through this program. When reviewing the applications, the federal government considers the duties presented in the official position description.
Student Loan Discharge Programs
Student loan discharge programs vary from traditional student loan forgiveness and cancellation programs. Overall, these programs help borrowers facing emergencies or other specific situations. For example, individuals who cannot pay back their loans due to a disability may earn a student loan discharge. Borrowers who attended a closed school may also qualify for a loan discharge.
Closed School Discharges
The federal government offers loan discharge for individuals who experience a school closure during their attendance or shortly after. However, these learners and graduates do not automatically receive funds. They must take action and apply for the discharge.
Applicants must submit their academic and financial aid records to qualify for a closed school discharge. A closed school discharge can cover up to 100% of William D. Ford Federal Direct Loan and Federal Family Education Loans.
This discharge includes specific stipulations. Recipients must have been enrolled when their schools closed, been on an approved leave of absence when their schools closed, or have withdrawn at least 120 days before the schools closed.
Loan providers handle the closed school discharge application process, so individuals should contact their specific loan provider to learn more. Individuals who receive an application denial can consider a repayment plan option.
Borrower Defense Charges
Certain borrowers may also qualify for a borrower defense discharge. A borrower defense discharge provides up to 100% forgiveness for students who attended a school that misled them or violated a particular state law. However, misleading activities or misconduct must apply directly to the loan or the educational services the school offers. This does not apply to claims like harassment or injury allegations.
This application requires unique materials. For example, submitting emails from school officials, relevant promotional material, or a school course catalog can help build a successful case for a borrower defense discharge. While the appropriate agency reviews the application, the individual's loan enters a temporary forbearance, and collection efforts cease on any defaulted loans.
Another type of discharge is a disability discharge. The ED oversees the Total and Permanent Disability Discharge program. This program applies to William D. Ford Federal Direct Loans, Federal Family Education Loans, and Federal Perkins Loans. This program also excuses Teacher Education Assistance for College and Higher Education grant obligations.
To qualify, individuals must possess a permanent and total disability. Applicants must demonstrate their disability by submitting information from the U.S. Department of Veterans Affairs (VA), Social Security Administration, or a doctor of medicine or osteopathy stating their disability status. Even individuals who receive social security benefits may qualify for a disability discharge.
While the federal agency reviews the application, the applicant's loan providers must suspend collections activities on the loan for at least 120 days. A representative can also apply on an individual's behalf. Applicants can either complete an online application or print the required PDF and mail it to the ED.
Disability Discharges for Veterans
Veterans with a disability may also qualify for the Total and Permanent Disability Discharge program. The VA can provide applicants with documentation of a total and permanent disability to submit. The VA can typically provide this documentation if the disability resulted from a service-related incident. The applicant must also demonstrate a qualifying individual unemployability rating.
Veterans unable to acquire the disability documentation from the VA can also submit proof from the Social Security Administration, a doctor of medicine, or a doctor of osteopathy. Individuals who cannot complete their own form may receive assistance from a representative.
Just like all other recipients, qualifying veterans can apply this discharge to William D. Ford Federal Direct Loans, Federal Family Education Loans, and Federal Perkins Loans. This discharge excuses Teacher Education Assistance for College and Higher Education grant obligations.
Student Loan Discharge Upon Death
Student loan discharge upon death applies to borrowers who have passed away. In the unfortunate event of a borrower's death, the loans may qualify for complete cancellation.
This program prevents the borrower's debts from interfering with his or her estate. The recipient of the estate must submit required proof of death documentation. This proof of death documentation can be an original death certificate, a certified copy of the death certificate, or a clear photocopy of one of those documents.
Additionally, if a student's parent or guardian takes out a PLUS loan but passes away, the student does not have to repay the loan. Similarly, if the benefitting student passes away, the parent or guardian does not need to repay the PLUS loan.
For more information about student loan discharge upon death, individuals can contact the ED.
Final Thoughts on Student Loan Forgiveness Programs
As outlined, many graduates and current students can benefit from either student loan forgiveness, cancellation, or discharge. The ED's financial aid website serves as the best resource for learning about specific qualifications. Here, individuals can also find applications for these specific programs.
Borrowers who receive approval for one of these programs may not receive 100% loan forgiveness. However, individuals who believe they meet the outlined criteria should certainly apply to enhance their financial status.
Luckily, people who do not qualify for forgiveness, cancellation, or discharge may take advantage of the federal government's versatile repayment plan options.