These 10 Loan Forgiveness Programs to Discharge Student Loans

Higher education is expensive in the United States, and because so many aspiring professionals do not have the funds needed to fully pay for college, student loans are often the next available option aside from grants and scholarships. However, some student loan repayment options can lead to significant debt and financial hardship, and because of this, many former students seek loan forgiveness or direct loan cancellation. 

While these options are not available to everyone with student loan debt, certain circumstances may qualify an individual for forgiveness, discharge, or cancellation.

What Is Student Loan Forgiveness?

Student loan forgiveness is a way for former students to reduce their student loan debt. There are a number of different types of student loan forgiveness programs, but they all provide an opportunity for former students to pay off their student loans with the federal government instead of the lender. In some cases, former students may even be able to qualify for loan cancellation, and many other types of student loan forgiveness programs offer financial incentives or job placement assistance.

The exact process and eligibility requirements vary from program to program, but the basic idea is that former students who are enrolled in a qualifying program will be eligible for forgiveness of their student loans.

What Are The Benefits Of Student Loan Forgiveness?

Student loan forgiveness programs are designed to help former students get out of debt, and the main benefit is that you will be able to avoid incurring additional debt. In addition, many programs offer financial incentives such as income tax credits or grants, and you may also be able to obtain a loan cancellation. However, not all programs are equal, and there are some important factors to consider before choosing the right program for your situation.

The factors that you should consider include:

• Whether the program has a work requirement.
• The time frame of the program.
• How much debt forgiveness you can receive, and what types of student loans qualify for forgiveness.
• How the program works.

How To Get Your Student Loans Forgiven

The first step in getting your student loans forgiven is to determine if you qualify for forgiveness. For this, you will need to search for the program that is best suited for your situation. This process is a little more complicated than it might seem at first, but here are some of the steps you should take:

Determine Your Eligibility

This can be done by visiting the Student Loan Forgiveness Database, which is a collection of programs that have been approved by the federal government. It includes detailed information about each program and its eligibility requirements. If you do not qualify for a specific program, you may be able to find one that suits your needs.

Get Approval

Each program has different requirements and eligibility requirements, so it may be necessary to contact a loan forgiveness specialist at your former school to determine if you qualify. In some cases, you may also need to provide additional documentation, such as income tax returns or financial statements.

Apply

If you have been approved for a loan forgiveness program, you will need to fill out the necessary paperwork and provide supporting documentation. This can be done by contacting the department of education or by filling out a student loan forgiveness application.

Permanent Disability Discharge

An individual who becomes fully disabled, either mentally or physically, may qualify to have the remaining balance on their student loan canceled. Documentation proving disability must be provided to qualify, and once the loan is discharged, the US federal government can and may monitor the individual’s finances and disability benefits for three years. 

If the federal government agency finds that the requirements are not met during this monitoring period, the direct loan may be reinstated. 

Disabled veterans can typically have their student loans discharged, and the process is usually completed automatically unless the veteran declines due to state tax liabilities.

Borrower Defense to Repayment

If a student borrower has been defrauded by the college they attend, the student may qualify for a debt relief program. The individual will first need to complete and file a Borrower Defense to Repayment Discharge Claim with the Department of Education and, if the student qualifies, they may have their loans automatically discharged by the Department of Education. If the institution involved was part of a widespread fraud scandal or misrepresentation claim, approval is much more likely to be granted.

Institution Closure Discharge

If the student’s college or university closes during their attendance (which must be within 120 days of enrolling or leaving without a degree), the student might qualify for student loan discharge programs. If the conditions are met, the student should then contact the company servicing their loan, explain the situation, and begin the discharge application process. Once approved, the student will no longer be expected to make loan payments and, in some cases, may even be refunded for some of their past loan payments.

Perkins Loan Cancellation

Student borrowers who have Perkins loans may have up to the complete balance canceled if they are employed in a public service position for greater than five years. In most situations, a borrower who has been approved can expect to see their loan discharged as a percentage for each year the borrower has worked in their position. 

Additionally, there is a teacher’s benefit for Perkins borrowers who work full-time as teachers in low-income public schools or those who are teaching specific subjects for a period of teaching service.

Programs for teachers like what’s mentioned above usually let individuals with qualifying payments have their loan discharged.

Teacher Loan Forgiveness

Along with the Perkins teaching benefit, employers who have been teaching full-time in low-income schools for more than five years can have up to $17,000 in federal loans forgiven. However, this federal loan forgiveness program applies only to qualifying employers who took out private student loans after October 1998.

Loan Forgiveness for Public Service

Borrowers who are working as a public service professional may qualify for loan forgiveness if certain conditions are met. Typically, if an individual with a public service job makes more than 120 student loan payments, they may have eligible loans and can have the remaining loan balance forgiven. This plan works alongside an income-driven repayment plans, and enrollment in the loan program is required for this type of national loan forgiveness option.

Nursing Loan Forgiveness

A borrower who has become a nurse may have several options for student loan forgiveness. The individual can look into any of the following forgiveness programs to determine eligibility.

• NURSE Corps Loan Repayment– This program may pay up to 85% of a nurse’s unpaid student debt if it qualifies.
• Perkins Loan Cancellation 
• Public Service Loan Forgiveness– Typically, the same criteria that applies to other public service professionals will apply to nurses. This public service loan forgiveness route is most common, being that not very many nurses have Federal Perkins loans and the NURSE Corps program is difficult to qualify for.

Income-Driven Loan Forgiveness

An income-driven repayment plan is sometimes available to individuals who are paying off a high eligible student loan balance for a period of time. While each plan does not necessarily remove student loan debt, there are options to cap the loan payments at a small percentage of one’s monthly income. 

In other types of income-based repayment plan, the remaining loan balance on a borrower’s account may be forgiven after 20-25 years.

These eligible repayment plan options are often ideal when it comes to borrowers that are paying significant balances in comparison to their income level.

Military Student Loan Forgiveness

Military personnel may qualify for loan forgiveness programs that apply to their specific branch. Applying for student loan forgiveness programs through the Federal Student Loan Repayment Program may make it to where a service-person is no longer expected to repay the balance of their education loans due to their duty and their year — long period of service in the US military.

State-Sponsored Repayment Assistance Programs

Certain states offer federal programs to help certain types of professionals get rid of their student debt. These plans often apply to eligible teachers, nurses, doctors, legal professionals, and similar public service positions. To determine whether options are available for certain types of professionals, it’s a good idea to get in contact with the higher educational service agency in the student loan borrower’s state of residence.

If you have incurred significant federal student loan debt, and you would like to determine which options you have, take the time to fill out this form and check your relief availabilities. 

Are Parent Borrowers Eligible for Loan Forgiveness or Discharge?

Parent borrowers may be eligible for student loan forgiveness or discharge. Additionally, some state governments may have other options for discharging student loans to parents who are employed in the public sector.

Parent PLUS loans are eligible for student loan forgiveness and discharge. The following are some student loan forgiveness and discharge programs for parent borrowers:

Borrower Defense to Repayment
Total and Permanent Disability (TPD) discharge
Public Service Loan Forgiveness

Generally, the Parent PLUS loans program has fewer repayment options than other loan forgiveness programs, but the Parent PLUS loans program does offer one repayment option that may be of benefit to parents. The option allows parents to make monthly payments that are applied to the parent’s loan after it is discharged.

Parents can get a lower interest rate when the loans are refinanced via a private loan, and parents may also be eligible for a grace period when the loans are refinanced.