Federal Student Loan Forgiveness
If you qualify for a federal student loan forgiveness program, all or some of your federal student loans could be canceled after a set period of time, and youll no longer have to repay the remaining balance. The forgiveness timeline usually requires five to 20 years of payments and varies by program.
You can be eligible for federal student loan forgiveness in several different situations. For example, you may be eligible for student loan forgiveness if you teach in low-income areas, work for the government, or volunteer for AmeriCorps or the Peace Corps.
The type of federal student loans you have will also affect your eligibility for student loan forgiveness programs. Direct Loans are eligible for the most forgiveness programs. Other types of loans such as Federal Family Education Loans , Parent PLUS Loans, or Perkins Loans may also be eligible depending on the program. To find out if you qualify for any student loan forgiveness programs, or to apply, contact your loan servicer.
Its important to note that under certain loan forgiveness programs, the forgiven amount may normally be subject to income taxes. But a provision in the American Rescue Plan Act, which Congress passed in 2021 in response to the COVID-19 pandemic, excludes all forgiven federal loan balances from being taxed through Dec. 31, 2025.
Types Of Student Loan Forgiveness For Federal Employees
There are two different student loan forgiveness programs that may help federal employees repay their student loans.
Nonprofit Employees With Student Loan Debt:
Make sure you have the correct loan type and then are on track for eligibility by submitting the Employment Certification for Public Service Loan Forgiveness form . Submit this form periodically during employment once you do this, the student loan program will contact you to let you know if your loan repayments are on track to qualify as PSLF payments. Learn more:
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You Have Direct Loans And Youve Already Had Some Pslf Employment Certified
If youve already applied for PSLF and had at least some employment certified, the Department will award any additional payments we can without further action from you. If necessary, Federal Student Aid may contact you to ask you to certify additional months of employment. You should look out for an email from Federal Student Aid in the coming weeks to let you know how many additional payments we have preliminarily determined to be qualifying. You dont need to do anything until you receive an updated payment count or other communication from us.
If you know that you have qualifying employment that you have not yet certified with us, we recommend you certify that employment now by using the PSLF Help Tool at www.StudentAid.gov/pslf.
Which Types Of Employment Qualify
There are dozens of careers that apply to the PSLF program. In fact, in many cases, the particulars of your role are not considered. If you work for a non-profit designated by the federal government as tax-exempt, or for a state or federal agency in any capacity, you can qualify for this benefit. The major exception to this is work for any religious institution, labor union or partisan political organization. Even employment with certain private organizations can qualify for the PSLF program, provided that your employer offers some benefit to the public. According to the U.S. Department of Education, the following are considered public services:
- Early childhood education
- Public education or library services
- Public interest legal work
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National Health Service Corps
The National Health Service Corps is a competitive program that recruits fully trained and licensed health professionals to provide primary health services in selected high-need communities. Professionals selected for this program may receive funds to be applied to the principal, interest, and related expenses of government loans and certain commercial loans.
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Student Loan Forgiveness For Physicians Assistants
Although they often take on considerable student loan debt to earn their masters degrees, physician assistants often dont earn as much as doctors or dentists.
Fortunately, student loan repayment assistance and even forgiveness may be available.
Here are some of the best options:
- PSLF: Physician assistants working for the government or qualifying nonprofits may be eligible for 100% forgiveness after making 120 monthly payments in an income-driven repayment plan.
- The National Health Service Corps Loan Repayment Program : Provides physician assistants up to $50,000 in loan repayment in exchange for two years of service at approved sites that provide free or discounted services to Medicare beneficiaries and others.
- State-based physician assistant loan forgiveness: To attract and retain physician assistants, many states provide student loan forgiveness.
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Student Loan Forgiveness For Teachers
There are many federal, state, and local programs that provide student loan forgiveness for teachers. Keep in mind, though, that some programs only provide partial forgiveness.
Programs that offer student loan forgiveness for teachers include:
- PSLF: As government or nonprofit employees, many teachers can qualify for PSLF after making 120 monthly payments in an income-driven repayment plan.
- Federal Teacher Loan Forgiveness Program: You may qualify for up to $17,500 in federal loan forgiveness after teaching full-time for five consecutive years in a low-income school or agency.
- Perkins Loans Teacher Cancellation: Up to 100% of your federal Perkins loans can be forgiven if you teach for five years in a school serving low-income families serve as a special ed teacher or teach a high-need subject like math, science, or a foreign language.
- TEACH Grant program: You can get up to $4,000 in TEACH grants per year to help pay for your teaching degree. That money doesnt have to be repaid if you fulfill your obligation to teach at least four years in a high-need field or in schools that serve low-income families.
- State-based teacher loan forgiveness: In the hopes of attracting and retaining young teachers, a number of states operate their own forgiveness programs for teachers.
Tell Me More About What Jobs Best Qualify
The chance at public student loan forgiveness is ideal for all government workers. Also, This includes all federal, state and local government entities, organizations and agencies.
The main thing is to remain working full time and make the required 120 payments. Because, after of which you will receive government employee student loan forgiveness and/or public servant loan forgiveness.
Here are some of the more common public service occupations for public service loan forgiveness or PSLF forgiveness
- Teachers
- Peace Corp
Also note that you do not have to perform all of your public services all at the same organization. Or even the same position to stay eligible for your forgiveness.
You actually can mix it up, you can do a couple of years as a teacher. Then serve as a guidance counselor and finish up your last couple of years as a policemen. And, still get your loan forgiveness after 10 years.
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Student Loan Forgiveness Alternatives
The qualifying standards for student loan forgiveness eliminates many of the 45 million borrowers, but there are other avenues to pursue that might make repaying your debt a little less challenging.
The most obvious one for federal loans is to sign up for one of the income-based programs. These programs adjust your monthly payment based on your income, so if youre not making much, you arent required to pay much.
The historically low interest rates in 2020 were a prime time for borrowers to examine whether refinancing their student loans made sense. Some borrowers were able to get rates at 3% APR and that reduced their monthly payment to a manageable level. Be aware, however, that if you refinance a federal student loan, you will lose the many options federal programs offer.
If your money crunch is temporary, you can ask that your loans be deferred or place in forbearance. This allows you time to reorganize financially so you can meet monthly payment responsibilities.
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Alternative Student Loan Repayment Plans If You Don’t Qualify For Forgiveness
While many student borrowers have qualified for forgiveness programs under the Biden administration, millions more still owe a collective $1.75 trillion worth of student loan debt, according to the Federal Reserve. Additionally, borrowers with private student loans don’t qualify for federal debt relief measures. If you don’t qualify for student loan relief, consider the following debt repayment strategies:
- Income-driven repayment plans . Federal student loan borrowers can enroll in an IDR plan to limit their monthly student loan payments to 10-20% of their discretionary income.
- Employer-assisted student loan repayment. Some companies will match contributions to your student loan payments, similar to a 401 matching program.
- Student loan refinancing. Refinancing to a private loan with a lower interest rate may help you lower your monthly payments, pay off debt faster and save money over the life of the loan.
It’s important to note that refinancing federal loans into a private student loan will make you ineligible for certain government protections, such as IDR plans and select student loan forgiveness programs like PSLF. But if you don’t plan on utilizing these benefits, it may be worthwhile to refinance for better terms while interest rates are near all-time lows.
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Who Is Eligible For Student Loan Forgiveness
The government had restricted eligibility for the Public Service Loan Forgiveness program to only certain types of federal student loans and specific repayment plans.
But through October 2022, borrowers who have made 10 years worth of payments while in a qualifying job such as positions in federal, state or local governments, a nonprofit organization or the U.S. military will now be eligible for loan relief no matter what kind of federal loan or repayment plan they have.
Past loan payments that were ineligible before will now count, moving some borrowers closer to forgiveness. That is expected to especially help those borrowers with Federal Family Education Loans.
Among other changes, the department will allow military members to count time on active duty toward the 10 years, even if they put a pause on making their payments during that time.
The Federal Student Loan Repayment Program: How It Works
The government launched the federal student loan repayment program as an employee incentive. Agencies can use it to recruit and retain top talent.
Under the program, the government agency you work for will make payments possibly as a lump sum to your student loan servicer. You could receive up to $10,000 a year to help pay off your student loans.
In return, the agency will ask you to sign a service agreement stating youll continue to work there for at least three years. If you leave your job early or if youre fired for misconduct or poor performance, youll likely have to reimburse the agency for any money it has already paid. If you take unpaid leave, the time away from work does not qualify as part of your service term.
A 2019 OPM report to Congress noted that 34 agencies provided 10,206 employees with more than $74.9 million in student loan benefits in 2017. The U.S. Department of Defense paid out the most at more than $18 million.
Heres a look at the top payments by agency in 2017:
- Department of Defense: $18 million
- Department of Justice: $15 million
- Department of State: $10 million
- Securities and Exchange Commission: $6.8 million
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A Perform Volunteer Work
These volunteer groups offer loan forgiveness:
- AmeriCorps. Serve for 12 months and get up to $7,400 in stipends plus $4,725 to be used towards your loan.
- Peace Corps. Volunteers may apply for deferment of Stafford, Perkins and Consolidation loans and partial repeal of Perkins Loans . Volunteers help real people with two years of service in more than 70 developing countries.
- Volunteers in Service to America . Volunteer with private, non-profit groups that help wipe out hunger, homelessness, poverty and illiteracy. Provide 1700 hours of service and receive $4,725.
Student Loan Repayment Assistance Programs For Other Careers
Most state LRAPs award loan assistance to professionals in exchange for two years of service. The most common occupations are doctors, nurses, teachers and lawyers, but some other career paths qualify, too.
Several LRAPs for doctors, for instance, help out pharmacists and veterinarians. Other programs, like the Alfond Leaders Program in Maine, award people in STEM careers.
Even if youre not a doctor, nurse, teacher and lawyer, check your states offerings to find out if it has a loan repayment assistance program for you.
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Borrower Defense To Repayment
If you believe that the school you attended misled you or engaged in misconduct in violation of certain laws, the federal student loans you obtained to attend that school may be eligible for forgiveness, called Borrower Defense to Repayment. Learn more about the process, eligibility requirements and how you can apply.
Student Loan Forgiveness Programs
Income-driven repayment forgiveness. The federal government offers four main income-driven repayment plans, which allow you to cap your loan payments at a percentage of your monthly income. When enrolled in one of these plans, your remaining loan balance will be eligible for forgiveness after 20 or 25 years, depending on the plan. These plans are most beneficial for those with large loan balances relative to their income. Only 32 borrowers have received loan forgiveness through income-driven repayment forgiveness, according to the National Consumer Law Center. This forgiveness was made tax free retroactive to Dec. 2020 through the end of 2025, as part of the March 2021 American Rescue Plan. However, most borrowers will not qualify for forgiveness through income-driven repayment until the early 2030s.
Public Service Loan Forgiveness.Public Service Loan Forgiveness is available to government and qualifying nonprofit employees with federal student loans. Eligible borrowers can have their remaining loan balance forgiven tax-free after making 120 qualifying loan payments. Until Oct. 31, 2022, the Education Department has expanded which payments on federal student loans count toward PSLF through a limited waiver now, payments on FFEL and Perkins loans, late payments and payments made on any repayment plan will retroactively count as qualifying payments.
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Biden Cancelled $15 Billion Of Student Debt For Borrowers But You Can Still Apply Now
In the Departments example, if a borrower consolidates two FFEL loans one with 50 qualifying payments and the other with 100 qualifying payments assuming the two repayment periods overlap , the Department would credit the new Direct consolidation loan with 100 total payments. The Department gets to 100 not by combining the payments from both loans, but by crediting the Direct consolidation loan with a payment count that reflects the one underlying loan that has more qualifying payments than the other.
But what happens if the repayment periods for multiple loans being consolidated dont overlap? On or about March 17, the Department updated its guidance to provide more clarity. If your repayment history does not overlap for each loan, the consolidation loan may be credited with more than the loan with the largest number of payments. So using a similar example one FFEL loan has 50 qualifying payments, and the other FFEL loan has 70 qualifying payments the Direct consolidation loan could have up to 120 total payments towards PSLF if none of the prior payments on those two loans overlapped during the same time period.
The Departments new guidance may allow many more borrowers to qualify for student loan forgiveness under the waiver.
Borrowers can review the Departments guidance on the Limited PSLF Waiver program here.
Do Student Loan Forgiveness Programs Call You
Student loan forgiveness programs typically donât call. If youâre receiving phone calls promising you loan forgiveness, chances are that itâs a scam. During the pandemic, financial scams have been on the rise. People are financially vulnerable and looking for debt relief wherever they can find it. Before you respond to a call, email, or letter with your personal information, confirm who the communication is coming from. If itâs not the Department of Education or your student loan servicer, you donât have to respond.
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How Do You Apply For Public Service Loan Forgiveness
Fill out and submit the Employment Certification Form each year, or as you change jobs.
FedLoan Servicing will review your information and let you know if you qualify. They might ask for more information, like pay stubs, W-2s or other documentation.
FedLoan Servicing will let you know how many qualified payments you have made, and how many payments you will need to make until you qualify for forgiveness.
Currently, there is no limit on the amount forgiven under PSLF. The full amount of your federal student loans is eligible for forgiveness.
Limited Public Service Loan Forgiveness Waiver Opportunity
On Oct. 6, 2021, the U.S. Department of Education announced a change to the Public Service Loan Forgiveness program rules as a result of the COVID-19 national emergency. Throughout the pandemic, the U.S. Department of Education has provided a variety of benefits to borrowers.
Now, for a limited period of time, borrowers may receive credit for past payments made on loans that would otherwise not qualify for PSLF.
Please visit the Federal Student Aid website for a complete listing of new rules around qualifying payments, waiver requirements, the employment verification process, and more.
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