Student loans can be a challenge to pay back. Debts are often large, and starting off a career with major debts can be a detriment to achieving other financial goals, especially if you have a low starting salary. But the good news is you might qualify for student loan forgiveness.
Although not everyone can meet student loan forgiveness requirements, programs exist that are designed to assist debtors with student loan repayment. Student loan forgiveness eligibility generally requires you to work in public service, education or a few other select careers. Here’s a look at how to get student loans forgiven.
Qualification Requirements for Student Loan Forgiveness Programs
Instead of dutifully chipping away at a mountain of educational debt, you might be able to do something to scale it back permanently. Here’s information on the qualification requirements for various types of student loan forgiveness programs:
1. Public Service Loan Forgiveness
Your student loan balance can be forgiven after you make 120 qualifying payments while working full time for a qualifying public service employer, such as a government or nonprofit organization. File an application form as soon as possible if you’re working for a qualifying employer ; otherwise, some of the payments you have already made might not qualify, and you’ll have to begin the 120-payment period from scratch.
2. Teacher Loan Forgiveness
Qualifying teachers are eligible to have as much as $17,500 of student loan debt forgiven. Qualification requirements for this forgiveness program are lengthy and include the following:
- You must teach in a low-income school or educational service agency on a full-time basis for five complete and consecutive academic years.
- You must meet the definition of a “highly qualified” teacher – meaning you have attained at least a bachelor’s degree, you received full state certification as a teacher, and you did not have certification or licensure requirements waived.
- To receive full forgiveness benefits of $17,500, you must teach science, mathematics or special education. Otherwise, the maximum forgiveness is $5,000.
The NURSE Corps, a division of the federal government’s Health Resources Services Administration, will repay up to 85 percent of your unpaid nursing education debt if you meet various requirements, which include the following:
- You must be a licensed registered nurse, an advanced practice registered nurse or a nurse faculty member.
- You must have received your nursing education from an accredited, U.S.-based school of nursing.
- You must work full time in an accredited school of nursing – for nursing faculty – or an eligible Critical Shortage Facility in a high-need area if you are a registered nurse or advanced practice nurse.
A CSF is a public or private nonprofit healthcare facility that serves an area with insufficient primary care or mental health facilities.
You’re eligible for a 60 percent repayment of your loans if you meet the requirements and serve two years at an approved site. An additional 25 percent – for a total of 85 percent – can be earned with an additional year of service.
4. Income-Driven Repayment Plans
Four federal student loan forgiveness programs are classified as income-driven repayment plans, which are designed to ease your debt burden if your income is insufficient to maintain payments. The four current plans are:
- Pay-As-You-Earn Repayment Plan (PAYE)
- Revised Pay-As-You-Earn Repayment Plan (REPAYE)
- Income-based Repayment Plan (IBR)
For all plans, payments are calculated as a percentage of your discretionary income. Although the formulas can be complicated, generally you’ll pay 20 percent of your discretionary income for an ICR and 10 to 15 percent for the other three types of plans. Repayment periods are 20 to 25 years, with any remaining balance forgiven at the end of the repayment period. Most borrowers with eligible federal student loans can qualify under at least one of these programs.
5. Military Student Loan Forgiveness and Assistance
As a member of the U.S. military, you have access to a wide range of loan forgiveness and assistance benefits, including the following:
Most of the programs require you to be on active duty and provide official documentation to qualify. Some programs – such as the 0 percent interest benefit – require service in a hostile area.
6. Discharge Provisions for Direct Loans, FFEL Loans and Federal Perkins Loans
Certain life conditions can make you eligible for the discharge of some or all of your outstanding student loans. For example, if you die or endure a total and permanent disability, you can usually qualify for a 100 percent discharge of your federal student loans. The same is true in certain unusual situations as well, such as if a school closes while you are still enrolled or not more than 90 days after you withdrew or if a school falsely certifies your ability to take out a loan.
Bankruptcy is an interesting case when it comes to student loans. Although a successful bankruptcy discharge typically eliminates most unsecured debt, student loans are only discharged if a court orders that repayment would create an undue hardship for the debtor.
Reviewing Your Options
Opportunities exist for many student loan borrowers to reduce or fully discharge loan balances. Also, some states might offer additional loan forgiveness options that the federal government does not.
To qualify for any of these options, you must meet specific – and often rigorous – requirements, and you must file the required documentation with the appropriate agency. Restrictions are extensive, so thoroughly research all student loan forgiveness programs before you apply.