Your Guide to Student Loan Forgiveness

Student loan forgiveness may be an option you've considered before when it comes to determining how you will get rid of your student loans once and for all. If you don't have a lot of extra money to put toward your loans and you may qualify for a student loan forgiveness program, it's a debt relief option you should consider.

The Department of Education has specified the circumstances under which federal loans can be forgiven. Learning about the way student loans work can help you understnad how to get your loans forgiven. While forgiveness can be a great option to make your loans disappear, it isn't always the easiest process. Here are several methods of student loan forgiveness to take into account.

Public Service Student Loan Forgiveness

If you have Direct Federal loans and work for a government funded employer, you may qualify for public student loan forgiveness. Working for the Federal, state or local government, a non-profit, or in public services is the first step. In order to qualify, you need to make at least 120 qualified payments for at least 10 years.

Since the standard repayment term is usually 10 years, this may seem like a long time to some borrowers. If you have a longer term with a larger balance, you may find relief in this option. Currently, there is no limit on the amount of student loans that can be forgiven per borrower and forgiveness is not taxable income. The key is to make sure that you are enrolled in a qualifying repayment plan and you make qualifying monthly payments and stay with a qualifying employer for the 10-year period.

Teacher Student Loan Forgiveness

The government understands that teachers often opt to take lower paying jobs in the industry out of their passion for the work, despite having to fund their expensive education, training and other credentials. Teaching is a notable and needed profession in society and student loan forgiveness programs geared toward the profession can help graduates manage their student loans better and possibly eliminate them.

The Teacher Loan Forgiveness Program will forgive between $5,000 and $17,500 for eligible Stafford loans if you teach for five consecutive years in a teacher shortage or Title 1 area. Student loan forgiveness for teachers can vary depending on where you live, along with what and whom you teach. If you have Perkins loans, you have the option to have 100 percent of your eligible loan balance forgiven after five years. It's important to check with your state to see what options are available to you.

Forgiveness for Medical Professionals and Acts of Service

As you can probably tell, the government likes to provide loan forgiveness options to people who work in fields that are a necessity and make a difference in the lives of others. Some of the high-need low-paying jobs leave borrowers stuck with high student loans bills that they can't afford.

If you are a health care professional and choose to work at a site that provides health care services to American Indian and Alaska Native Committees for a minimum of two years, you can receive up to $40,000 forgiven. Joining the National Health Service Corps for two years can qualify you to have up to $50,000 of your student loans forgiven. Both of these options help borrowers with private and federal loans.

AmeriCorps is a service program helping nonprofits, schools, public agencies, and community and faith-based groups across the nation. AmeriCorps members can receive a varied amount toward their student loans based on the year and program served. Last year, the maximum award amount was about $5,700.

Student loan forgiveness depends heavily on what your profession is and where you live. There are a variety of programs available aside from the widely-known option – public service loan forgiveness. If you believe you might qualify for a forgiveness program, check with your state and a federal loan repayment expert who can help you determine your options based on your needs and situation.

School Closure

Borrowers are entitled to apply for loan forgiveness if they did not complete their programs of study because their schools closed while they were enrolled (or on leave of absence). Borrowers should contact their loan servicers (the entity that is billing for the loan) for details on the discharge process. Borrowers can log in to My Federal Student Aid to find their loan servicer and contact information.

Institutional Errors

Student loans are forgiven for the following educational institution errors:

  • The school falsely certified the borrower's eligibility to receive the loan.
  • The school signed the borrower's name on a loan application or promissory note without borrower authorization, or endorsed a loan check or signed for an electronic funds transfer unless loan proceeds were delivered to the borrower or credited to the borrower's account.
  • The borrower's loan was certified and he or she was a victim of identity theft.
  • Borrowers are disqualified from employment in the occupation for which they were trained because of a mental or physical condition, age, criminal record or other reason.
  • If the borrower withdrew and the institution did not pay a refund to the borrower, to the Department of Education or to the lender, the amount of the unpaid refund can be forgiven.

The borrower should contact their loan servicer to find out what paperwork is necessary and how to proceed. Borrowers can log in to My Federal Student Aid to find their loan servicer and contact information.

Total and Permanent Disability (TPD)

Borrowers must submit information to the Department of Education showing that they are totally and permanently disabled; the Department of Education reviews the information to determine if the borrower is eligible for loan forgiveness. Three primary sources of disability information are:

  1. For Veterans, documentation from the U.S. Department of Veterans Affairs that certifies TPD.
  2. For Social Security Disability Insurance (SSDI) recipients, a copy of a Social Security Administration notice of award.
  3. A physician certification of TPD.

More detailed information is available on the Federal Student Aid website.

Bankruptcy

Forgiveness through bankruptcy is not automatically granted. The borrower must meet all the following criteria to be considered for loan forgiveness to the satisfaction of the bankruptcy court:

  • Loan repayment would not allow you to maintain a minimal standard of living, AND
  • There is evidence that the hardship will continue, AND
  • The borrower made a good-faith effort to repay the loan before declaring bankruptcy (usually at least five years).

More detailed information is available on the Federal Student Aid website.

The best way to understand federal student loan forgiveness options and how to proceed if you think you might be eligible is to make sure you thoroughly understand how student loans work and how to access reliable student loan information. The links in this article take you to the most reliable and up-to-date Internet information on loan forgiveness. Your loan servicer can also provide information about loan forgiveness that is specific to your situation.

Get loan offers customized for you today.