“These payments are as much as my rent.”
“My student loans are ruining my life.”
“I’ll never get out of debt.”
If any of these phrases sound familiar to you, you’re not alone. Over 44 million people are burdened with student loan debt. In fact, the average college graduate leaves school with $39,400 in student loans. With so much debt, it’s difficult to pursue your financial goals, like buying a home or traveling.
But what if there was a way to get rid of your loans entirely? No, it’s not a pipe dream or some kind of scam. There are several different legitimate ways to get some or all of your loans forgiven. Here is what you need to know about loan forgiveness programs and what student loans are eligible.
1. Public Service Loan Forgiveness
If you have federal student loans and work for a non-profit organization or government agency, you may qualify for Public Service Loan Forgiveness (PSLF). Under this program, public servants can get their loans discharged after making 120 qualifying payments while working for an eligible employer. The total remaining balance of your loans will be eliminated, tax-free.
To qualify for PSLF, you must work full-time for an eligible non-profit or government agency. Religious-based non-profits do not count toward PSLF.
You also must have Direct Loans, such as:
- Direct Subsidized and Unsubsidized Loans
- Direct PLUS Loans
- Direct Consolidation Loans
If you have Perkins or Family Education Loans, you’re not eligible for PSLF unless you consolidate them first with a Direct Consolidation Loan.
If you’ve made 10 years of qualifying payments toward your student loans — and payments made under income-driven repayment plans count — then you can complete the PSLF application.
2. Income-driven repayment plan forgiveness
If you can’t afford your student loan payments, income-driven repayment (IDR) plans can provide much-needed relief. Under an IDR plan, your loan servicer extends your repayment plan to 20 t0 25 years and caps your monthly bill at a percentage of your discretionary income. Depending on your income, family size, and loan balance, you could qualify for a payment as low as $0.
As an added bonus, after 20 to 25 years of making payments, depending on which plan you’re on, the remaining loan balance will be forgiven. You’ll owe taxes on the forgiven amount, but it can still be a hefty cost savings.
There are four different IDR plans:
- Income-based repayment (IBR): If your loans were taken out after July 1, 2014, your monthly payment will be 10 of your discretionary income, but will never exceed what you would’ve paid under a standard 10-year repayment plan.
- Income-contingent repayment (ICR): Your monthly payment will be the lesser of 20 percent of your discretionary income or what you would pay on a repayment plan with a fixed repayment term of 12 years.
- Pay As You Earn (PAYE): With PAYE, your payment will be 10 percent of your discretionary income, but will never be higher than your payment would be under a standard 10-year repayment plan.
- Revised Pay As You Earn (REPAYE): Under this plan, your payment will generally be 10 percent of your discretionary income.
If you have Direct Loans, you may qualify for one or more of the four IDR plans. If you have Perkins or FFEL loans, you can qualify for an IDR plan by consolidating your loans with a Direct Consolidation Loan first.
You can apply for an IDR plan online.
3. Teacher Loan Forgiveness
If you’re a teacher and work for a qualifying school for at least five years, you may be able to qualify for Teacher Loan Forgiveness.
The amount of forgiveness you get is dependent on what subject you teach; secondary school teachers in select subjects can receive up to $17,500 in loan forgiveness, while other teachers may qualify for only $5,000.
Only certain loans are eligible for loan forgiveness:
- Direct Subsidized or Unsubsidized Loans
- FFEL Loans
Direct PLUS Loans or Perkins Loans don’t qualify for the program. After teaching for five years, you can apply for Teacher Loan Forgiveness online.
4. Career-specific forgiveness programs
If you have private student loans, you’re not eligible for federal forgiveness programs. However, you may be able to get forgiveness through career-specific programs. If you have private loans or a mix of private and federal loans, there are several career repayment assistance programs you should know about.
John R. Justice Student Loan Repayment Program
If you’re a lawyer that decides to become a public defender you can qualify for up to $10,000 a year in student loan repayment assistance, up to a maximum of $60,000, through the John R. Justice Student Loan Repayment Program. That aid is valid for both federal and private student loans.
National Health Service Corps (NHSC) loan repayment assistance
If you’re a licensed healthcare provider, you can get up to $50,000 in student loan repayment assistance for both federal and private student loans through the National Health Service Corps Program. You must be a licensed primary care physician, dentist, or mental or behavioral health clinician. To qualify for loan assistance, you must commit to working for at least two years at an eligible institution.
Nurse Corps Loan Repayment Program
If you’re a registered nurse, nurse practitioner, or nurse faculty member and work in an underserved area, you could qualify to have up to 60% of your loans forgiven under the Nurse Corps Loan Repayment Program if you agree to work two years. Commit to working a third year and you could get an additional 25% discharged.
Tackling your debt
If you qualify for loan forgiveness, you can get significant relief from your student loans. You could end up getting some or all of your loans discharged, eliminating the need to repay your loans.
However, not everyone will qualify for loan forgiveness programs. If you aren't eligible but still need help tackling your loans, check out our app to get personalized recommendations and assistance with your debt.