What Is Student Loan Forgiveness?

How Does Student Loan Forgiveness Work?

The U.S. Department of Education offers multiple forgiveness and discharge programs. Depending on the program you qualify for, you may be able to get a set amount of your debt forgiven or even the entire balance once you meet the program's requirements.

In most cases, you need to have federal direct loans to qualify, though some programs are also available to borrowers with federal family education loan (FFEL) program loans and Perkins loans.

If you're eligible for a program that requires direct loans and you have FFEL or Perkins loans, you may be able to use the direct loan consolidation program to qualify.

Note, however, that there are no forgiveness programs available to borrowers with private student loans.

Who Qualifies for Student Loan Forgiveness?

The terms and conditions for each federal student loan forgiveness program, including who qualifies, can vary. In general, though, options are available to the following types of borrowers:

• Teachers
• Government employees
• Nonprofit employees
• Borrowers with disabilities
• Deceased borrowers
• Borrowers on an income-driven repayment plan
• Borrowers who have been defrauded

In rare instances, it's even possible to have federal student loans discharged in bankruptcy.

Types of Student Loan Forgiveness

Here's a quick summary of some of the main ways you can get some or all of your federal student loan debt forgiven.

Public Service Loan Forgiveness

The Public Service Loan Forgiveness program (PSLF) is designed to help college graduates who work for a government agency or eligible nonprofit organization. Once you meet all the requirements for PSLF, the remaining balance of your loans will be fully forgiven.

To qualify, you must:

• Get on an income-driven repayment plan and make 120 qualifying monthly payments.
• Work full time for a U.S. federal, state, local or tribal government or an eligible nonprofit.
• Have federal direct loans (if you don't, you can consolidate your student loans through the direct loan consolidation program).

Note that PSLF is not automatic; you must apply and regularly certify your employment to stay on track.

Teacher Loan Forgiveness

If you're going into education, you may qualify for the Teacher Loan Forgiveness program, which caps your forgiveness potential based on the subject area you teach.

If you meet the program's requirements and teach math or science in a secondary school or special education at all levels, you can qualify for up to $17,500 in forgiveness. All other teachers can qualify for up to $5,000 in forgiveness.

To qualify for Teacher Loan Forgiveness, you must:

• Be employed full time by an elementary school, secondary school or educational service agency that serves low-income students for at least five years.
• Have at least a bachelor's degree and full state certification as a teacher (you'll be disqualified if your certification or licensure requirements are waived on an emergency, provisional or temporary basis).
• Have federal direct or FFEL program loans.

As with PSLF, you'll need to apply for the Teacher Loan Forgiveness program. Also, keep in mind that if you qualify for both programs, you can't receive credit for both simultaneously.

Income-Driven Repayment Plans

Income-driven repayment plans are available for all federal student loan borrowers, though the plans you're eligible for can vary based on your loan type and financial situation.

Regardless of which plan you choose, your monthly payment may be reduced to 5% to 20% of your discretionary income. The new SAVE repayment plan may even reduce your payments to zero based on your income. Depending on which plan you choose, you may receive forgiveness of your remaining balance after 10 to 25 years of making payments.

Eligibility requirements can vary depending on the plan, but some details include:

• You must have federal direct or direct PLUS loans (if you don't, you can consolidate your student loans through the direct loan consolidation program).
• Only one plan, the income-contingent repayment plan, is available to parents.
• You must recertify your income and household size each year.

To get on an income-driven repayment plan, you must apply with your federal loan servicer.

Death or Disability Discharge

Federal student loans are dischargeable after the borrower or the student on whose behalf a borrower took out a federal loan dies. A family member or representative must request forgiveness and provide one of the following:

• An original death certificate
• A certified copy of the death certificate
• An accurate and complete photocopy of one of those documents

You may also be eligible for a full discharge if you become totally and permanently disabled and have direct, FFEL or Perkins loans. To qualify, you must provide documentation from one of the following:

• The U.S. Department of Veterans Affairs
• The Social Security Administration
• An authorized medical professional

Borrower Defense Loan Discharge

You may be able to get some or all of your loans forgiven if any of the following are true:

• Your school misled or lied to you about something that was central to your decision to enroll.
• Your school engaged in aggressive or deceptive recruitment.
• Your school breached its contract with you.
• A court has ruled that your school violated certain laws.
• Your school is subject to certain disciplinary actions from the Department of Education.

Only direct loans and parent PLUS loans associated with the school are eligible. If you believe you qualify, you must submit an application.

Under related programs, you may receive forgiveness if your school falsely certified your ability to obtain a federal student loan or if you withdrew from school and the institution didn't return your loan funds to the loan servicer as required.

Pros and Cons of Student Loan Forgiveness

While the idea of having your student loans canceled sounds like a no-brainer, there are some advantages and disadvantages to these programs. Here's what to consider.

Pros

• You can get up to 100% of your debt discharged. Most federal student loan forgiveness programs provide complete forgiveness of your balance once you've met the program requirements.
• You can minimize monthly payments. If you qualify for student loan forgiveness, getting on an income-driven repayment plan can make your payments more affordable until you meet other requirements for cancellation.
• Many programs don't come with a federal tax bill. In general, the IRS considers canceled or forgiven debt to be taxable income, which can result in a sizable tax bill. With most federal student loan forgiveness programs, however, the forgiven balance is not subject to federal income taxes through 2025. Some states, however, may still require you to pay taxes.

Cons

• You may be stuck in a career you don't want. Some of the major programs require you to work in a specific career or field for several years. If you want to switch to a different career or employer for a better opportunity or career trajectory, you may lose your eligibility.
• Eligibility criteria can be strict. Depending on the program, it can be overwhelming to keep track of all the requirements, some of which include annual certifications. If you can't keep up, you may be disqualified.
• Some programs may become taxable. While federal student loan forgiveness programs are currently not subject to federal income tax, that may change in 2025 unless Congress extends the provision. If you're just starting on your journey to forgiveness, you may not be eligible until after that date.

How to Get Help With Your Student Loans

Whether or not you qualify for student loan forgiveness, relief may still be years away. If you need assistance with your student loan debt right now, here are some potential options.

Deferment and Forbearance

Both federal and private loans are eligible for deferment and forbearance, though terms can vary by lender for private loan borrowers.

You typically need to show evidence of financial hardship to get approved, but if you do, your lender or servicer will pause your payments for a period as you get back on your feet.

Different Repayment Plans

If you have federal student loans, you may be able to choose from several different repayment plans, with terms ranging from 10 to 30 years.

Also, remember that income-driven repayment plans link your monthly payment to your discretionary income, which can make them more affordable, and they also offer forgiveness after a certain period.

Private student loan companies may be willing to work with you on a modified repayment plan, but this option is rare.

Student Loan Repayment Assistance Programs

Many states and federal agencies offer loan repayment assistance programs, primarily to federal loan borrowers. These programs don't count as forgiveness because the funds aren't coming from the Department of Education.

But if you're a military service member, teacher, health care professional or in the legal field, research your options. Additionally, some private employers also offer student loan repayment assistance as an employee benefit. Check with your employer to see if it's an option now or in the future.

Refinance Your Student Loans

Student loan refinancing is the process of replacing one or more existing student loans with a new one through a private lender. If your income and credit are in great shape, you may be able to get a lower interest rate than what you're paying now. You may also have the option to extend your repayment term, which can also help reduce your payment.

If you have federal student loans, it generally doesn't make sense to refinance them with a private lender, especially if you're working toward forgiveness or want access to generous relief programs. If you have private student loans, however, refinancing can help you get better terms or more flexibility with your monthly payments.

Maintain Good Credit as You Pay Down Student Loan Debt

Paying off student loans can take time, even if you're getting help. As you work on tackling your student debt, it's important to make building a positive credit history a priority.

Monitor your credit regularly to keep track of your credit score and to pinpoint areas of your credit report where you can improve.

While your credit score may not impact your current student loans, it can give you access to more affordable credit options in the future.