Student Loan Forgiveness Relief

student loan forgiveness relief programs can help resolve your student loan debt problems.

Your financial situation is different from someone else. The student loan forgiveness relief service that works for someone may not be the best choice for someone else. You should take the time to understand all the debt relief options available to you to find the best solution for your needs and goals.

What Is Student Loan Forgiveness Relief?


Student loan forgiveness is a process that eliminates a portion of your educational loan debt without penalties. This means you are no longer obligated to make your loan payments. The Federal government offers various student loan forgiveness programs, where you qualify based on your profession or government service. Each program has their specific requirements to be eligible for this benefit. Once you are eligible for one of these forgiveness programs, the servicer of your student loan discharges the balance that you owe on the loan. It is treated as your having paid off the loan balance as required. Depending on your circumstances, you may be required to pay taxes on the amount forgiven.

Why Student Loan Forgiveness?

The Federal government offers a variety of federal student loan forgiveness programs as a means of job recruitment and employee retention. This is to to encourage students to enter relatively low-paying careers like firefighting, teaching, government, nursing, public interest law and the military. Also, is an acknowledgement by the federal government that for many, the salary you earn after earning your degree does not match the educational expenses you incurred in the process. Given that so many adults are burdened with high student loan debt, the federal government forgiveness programs serve as an indirect form of educational subsidy.

You must repay your loans even if you don’t complete your education, cannot find a job related to your program of study, or are unhappy with the education you paid for with your loan.   The list below is a quick view of the types of forgiveness, cancellation, and discharge available for the different types of federal student loans.

Public Service Loan Forgiveness

Public Service Loan Forgiveness

The Public Service Loan Forgiveness program (PSLF) offers complete loan forgiveness to those who work in the public sector. This includes non-profit employees, volunteer organizations, public school teachers and staff, and government employees to name a few.

How Much Loan Forgiveness?

Qualifying public sector employees receive complete student loan forgiveness after 10 years or 120 payments versus the standard forgiveness term of 20 to 25 years. Also there is no dollar cap on the amount of money that you can have forgiven through this student loan forgiveness program.

Any qualifying loan balance that remains after 10 years is forgiven in its entirety. The IRS does not view the forgiven debt as taxable income.

Eligibility

The PSLF program cares more about who you work for rather than what you do. To qualify, you must work or volunteer for one of the following:

  •  A government organization at any level
  •  A tax-exempt 501(c)(3) not-for-profit organization
  •  A not-for-profit organization that provides qualifying public services

You must also work full-time. You are considered a full-time worker if your employer considers you a full-time employee or if you work a minimum of 30 hours per week, whichever is greater.

Loan Requirements

You must be enrolled in one of the four Federal Income-Driven-Repayment loan plans:

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

If you have a Federal Perkins or Federal Family Education loan, they are eligible for PSLF if you consolidate them into a Direct Consolidated Loan.

How To Apply

You apply for the PSLF program after completing 120 qualifying payments while working in an eligible job. You should complete the Employment Certification form annually to verify you are making qualifying payments and every time you switch jobs.

Teacher Loan Forgiveness

Teacher Loan Forgiveness

The Teacher Loan Forgiveness program (TLF) awards educators with a principal reduction of their federal loans. It was designed to encourage students to enter the education field and to incentivize teachers to continue teaching.  It is one of the most beneficial student loan forgiveness options.

How Much Loan Forgiveness?

Qualifying teachers receive a tax-exempt principal reduction of either $5,000 or $17,500 on their federal loans. This drops their overall loan balance, making monthly loan payments smaller and thus more manageable. For some teachers, this eliminates their federal student loan balance altogether.

An additional benefit of this student loan forgiveness program is that it allows teachers to remain eligible for the Public Service Loan Forgiveness (PSLT) program. Under the PSLT program, their remaining federal loan balance would be forgiven after 10 years of on-time payments.

This means teachers get a principal reduction after five years and then complete forgiveness after an additional 10 years versus the standard forgiveness term of 20 to 25 years.

Eligibility

Qualified applicants must have worked as a teacher for five consecutive years. One of these years must be after the 1997-98 academic year.

Teachers must work at an elementary school, secondary school, or educational service agency that serves low-income or special needs students.

Teachers must also meet eligibility criteria that deem them “highly qualified.”  Highly qualified teachers must have: a) at least a bachelor’s degree; b) received full state certification as a teacher; and c) not had licensure or certification requirements waived for any reason.

Loan Requirements

The loans you want to be forgiven must have been taken out before you finish your five years of consecutive teaching service.   You can only seek forgiveness for the following loan types:

  • Direct Subsidized Loans
  • Direct Unsubsidized Loans
  • Subsidized Federal Stafford Loans
  • Unsubsidized Federal Stafford Loans
How To Apply

You apply for the Teacher Loan Forgiveness program after completing your five consecutive years of service and not before.

Forgiveness | Cancellation | Discharge

The terms forgiveness, cancellation, and discharge mean the same thing, but they are used in different ways. If you are no longer required to make payments on your school loans due to your job, this is generally called forgiveness or cancellation. If you are no longer required to make payments on your school loans due to other circumstances, such as a total and permanent disability or the closure of the school where you received your loans, this is generally called discharge.

If you have private student loans, there are no ways to get student loan forgiveness. The best bet is to consider refinancing your private student loan to lower your interest rate or change your payment terms to hopefully make your loan more affordable.

Remember, your student loan is technically an unsecured deb as no collateral was pledged to the lender to secure the loan. The only “guarantee of payment” you made to the lender was the promise of repayment from your future earnings.  However, unlike other types of unsecured debt, like your credit cards or a personal loan, student loans (federal or private) are excluded, with very few exceptions, from being discharged in a personal bankruptcy judgement.

Federal Student Loan Repayment

Federal Student Loan Repayment

The Federal Student Loan Repayment program is designed to attract top talent to serve in the public sector and encourage retention as an additional employee benefit. Federal agencies can designate funds and offer student loan repayment assistance to highly qualified candidates.

Only federal student loans are eligible for this repayment program. If you’re a federal employee and have Parent PLUS loans for your child, you still qualify for the program.

How Much Loan Forgiveness

Federal employees who are eligible receive a principal reduction of $10,000 per year (up to a maximum of six years or $60,000) on their federal loans. This will drop your overall loan balance, making monthly loan payments smaller and thus more manageable. Payments are made by the federal agency directly to your student loan holders and you will need to pay taxes on these payments.

This student loan forgiveness program allows federal employees to remain eligible for the Public Service Loan Forgiveness (PSLT) program. This means federal employees get a principal reduction on their student loan of up to $60,000, then under the PSLT program, their remaining federal loan balance would be forgiven after 10 years of on-time payments.

Eligibility

Each federal agency has their unique requirements for participating in this program. For example, you may or may not have to have completed your degree to qualify.  The federal agency that you work for decides on an individual basis.

There are more than 20 independent agencies that participate in this type of federal employee student loan forgiveness, as well as 15 cabinet-level departments.

Qualified candidates must sign a service agreement and commit to working for three years at the agency that is offering student loan repayment. In order to continue the student loan repayment assistance, employees must meet job performance standards set by their employer.

Loan Requirements

A student loan is eligible if it is made, insured, or guaranteed under parts B, D, or E of title IV of the Higher Education Act of 1965 or is a health education assistance loan made or insured under part A of title VII or part E of title VIII of the Public Health Service Act.  A summary list is noted below:

Loans made or insured under the Higher Education Act of 1965 include the Federal Family Education Loans (FFEL):

  • Subsidized Federal Stafford Loans
  • Unsubsidized Federal Stafford Loans
  • Federal PLUS Loans
  • Federal Consolidation Loans

William D. Ford Direct Loan Program (Direct Loans):

  • Direct Subsidized Stafford Loans
  • Direct Unsubsidized Stafford Loans
  • Direct PLUS Loans
  • Direct Subsidized Consolidation Loans
  • Direct Unsubsidized Consolidation Loans

Federal Perkins Loan Program:

  • National Defense Student Loans (made before July 1, 1972)
  • National Direct Student Loans (made between July 1, 1972, and July 1, 1987)
  • Perkins Loans (made after July 1, 1987)

Loans made or insured under the Public Health Service Act include the following:

  • Loans for Disadvantaged Students (LDS)
  • Primary Care Loans (PCL)
  • Nursing Student Loans (NSL)
  • Health Professions Student Loans (HPSL)
  • Health Education Assistance Loans (HEAL)
How To Apply

There is no formal application for Federal Student Loan Repayment program.

You will need to directly contact the federal agency or review their public information regarding participation in their specific student loan forgiveness program.

Disability Discharge Loan Forgiveness

Disability Discharge Student Loan Forgiveness

Total and Permanent Disability Discharge program (TPD) forgives (discharges) federal student loan borrowers from having to repay their loans on the basis of total and permanent disability.

Before your federal student loans or TEACH Grant service obligation can be discharged , you must provide information to the Department of Education to show that you are totally and permanently disabled. The Department will evaluate the information and determine if you qualify for a TPD discharge.

Some private student loan lenders also provide a disability discharge. These include Sallie Mae, Wells Fargo, Discover, and New York Higher Education Services Corp.

How Much In Loan Forgiveness?

If accepted for the disability discharge, you would receive complete loan forgiveness. You will no longer owe any money in either principal or interest.

If you received a TPD discharge of a loan before Jan. 1, 2018, the loan amount discharged may be considered income for federal tax purposes rules.

If you received a TPD discharge of a loan during the period from Jan. 1, 2018 to Dec. 31, 2025, the discharged loan amount will not be considered income for federal tax purposes.

You will not lose your eligibility for government programs like Social Security or Medicare.

Your student loan lenders are required to return any money that you paid on your loan since the start of your disability.

Eligibility

To receive immediate disability discharge, qualifying borrowers must prove that they are totally and permanently disabled. You must have documentation from the Veterans Affairs Office, the Social Security Office or your physician.

The burden of proof is high and relies heavily on that official documentation. In general, you have to have been disabled for at least 60 months or expect to be disabled for at least 60 months to qualify. Those with disabilities expected to result in death are also eligible.

Loan Requirements

TPD discharge relieves you from repaying loans made under the:

  • William D. Ford Federal Direct Loan Program
  • Federal Family Education Loan Program
  • Federal Perkins Loan Program

TPD discharge also relieves borrowers from their TEACH Grant service obligation.

How To Apply

You can start the application process online by visiting the Federal Student Aid website.

Considerations

The Standard Repayment Plan is the most popular plan for federal student and parent loans. It is a level payment plan, with up to 120 fixed monthly payments during a repayment term of up to 10 years.

An Income Derived Repayment (IDR) plan for federal student loans is different. Instead of setting monthly payments according to your student loan balance, the amount due is relative to your income. It is intended to make your payments affordable while taking income and family size into account.

The term of IDR student loans is 20 – 25 years, rather than the Standard Repayment Plan of 10 years. When combined with one of the various student loan forgiveness plans, you have the potential to have the remainder of the IDR loan forgiven after 10 years. This is a significant reduction in your student debt, regardless of whether you are obligated to pay taxes on the debt forgiven.

It is possible to have your student loans discharged through bankruptcy. However it is very rare. The Federal government has enacted legislation to specifically prevent this from occurring in a bankruptcy proceeding. This process requires proving “undue hardship” and will likely require hiring a local bankruptcy attorney.

If you can prove “undue hardship”, the court has several options. In most cases, the proceedings will result in one of the following:

    • Your loans are fully discharged, and you no longer have to make any payments.
    • Your loans are partially discharged and you must repay a portion of the loan.
    • Your loan takes on new terms like a lower interest rate or a longer repayment term. You must still repay your loan.
Loan Requirements

Both federal and private student loans can be challenged for a bankruptcy discharge.

Eligibility

To discharge your student loans through bankruptcy, you must prove that paying back your loans would be an undue hardship.

Many courts will use the Brunner Test to determine whether you meet the burden of proof for undue hardship. Other courts use the totality of the circumstances test. In this case the court will look at all relevant factors in your case to determine if it is an undue hardship for you to repay your student loan.

To pass this test, you need to meet the following three criteria:

    • Poverty. Based upon your current income and expenses, you cannot maintain a minimal standard of living for yourself and your dependents if you are forced to repay your loan.
    • Persistence. Your current financial situation is likely to continue for a significant part of the repayment period.
    • Good faith. You have made a good faith effort to repay your student loan

The best way to find out how courts in your jurisdiction define “undue hardship” is to speak with a local bankruptcy attorney.

How To Apply

Since bankruptcy does not typically include student loan debt, you will then need to file a bankruptcy adversary proceeding. This proceeding asks the court to determine whether student loan repayment would cause undue hardship. You’ll need to present evidence and prove to the court that payment of your loans will cause an undue hardship. It is likely that you ill need to retain an expert to testify about your ability to be gainfully employed in the future.

Be aware that these proceedings take a while and can get expensive. You should consider all other student loan debt relief options prior to consider bankruptcy discharge.

Closed School Discharge

This student loan forgiveness program program relieves students of their federal student debt if they are unable to attain their degree because their college or university closed down.

You will no longer have to make payments on eligible federal student loans and any payments you already made will be refunded. If you were in default on any of these loans, the loan holder will also repair your damaged credit history.

Eligibility

If your school closes while you are enrolled or within 120 days after you withdrew, you may be eligible for complete federal student loan discharge. The physical campus that you are enrolled in must be the one to close. For online schools, the college’s physical headquarters must have closed.

You may be eligible for a 100 percent discharge of your federal student loan if you were unable to complete your program because your school closed and if:

    • You were enrolled when your school closed.
    • You were on an approved leave of absence when your school closed.
    • Your school closed within 120 days after you withdrew.

You are not eligible for discharge of your loans if your school closes and any of the following is true:

    • You withdrew more than 120 days before the school closed.
    • You are completing a comparable educational program at another school. Teach-Out | Transfer | Comparable Means
    • You completed all the coursework for the program before the school closed, even if you did not receive a diploma or certificate.

If you have private student loans you will still be responsible for repaying them. Some states may have programs that assist students with private student loans in the event of a school closure. Also, some private student lenders may offer options to assist certain borrowers in this situation.

Loan Requirements
    • William D. Ford Federal Direct Loan (Direct Loan) Program loans
    • Federal Family Education Loan (FFEL) Program loans.
    • Federal Perkins Loans

You will need to continue making payment until your school loan servicer informs you in writing that you do not have to issue them anymore.

As you will not be approved for a discharge until you’ve received the official paperwork, any payments you miss after applying (but before receiving approval) could lead to financial problems.

Fed Student Loan Forgiveness Summary

Type of Forgiveness, Cancellation, or Discharge
Direct Loans
Federal Family Education Loan (FFEL) Program Loans
Perkins Loans
Public Service Loan ForgivenessXXX
Teacher Loan ForgivenessXX
Perkins Loan Cancellation (includes Teacher Cancellation)X
Total and Permanent Disability DischargeXXX
Death DischargeXXX
Bankruptcy Discharge (in rare cases)XXX
Closed School DischargeXXX
False Certification of Student Eligibility or Unauthorized Signature/Unauthorized Payment DischargeXX
Unpaid Refund DischargeXX

*FFEL Program loans and Perkins Loans may become eligible for Public Service Loan Forgiveness if they are consolidated into the Direct Loan Program.

Explore All Options

Depending on where you live and work, you could qualify for partial or total forgiveness of your student loans. If you aren’t eligible, look into other debt relief options for dealing with your student loans.

Even if you started out on a certain Federal student loan plan, you don’t have to stick with it forever. Instead, feel free to adjust your plan as your circumstances and goals change over the years.

When in doubt, contact your student loan servicer to move forward with your life.

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