Your Free Guide to Student Loan Forgiveness Programs

Your Free Guide to Student Loan Forgiveness Programs

You will learn about:
  • What a student loan is
  • The different types of student loans
  • The federal student loan debt relief program

55 min – Estimated reading time

Your Free Guide to Student Loan Forgiveness Programs

Your Free Guide to Student Loan Forgiveness Programs

What is a student loan?

Colleges, universities, technical schools, and other educational institutes are often expensive to attend. Most students need funding outside of their family’s savings to pay for school expenses. 

A student loan is borrowed money for education-related expenses. Students and/or their families often borrow money from a lender to pay for the following costs: 

  • Tuition 
  • Enrollment fees 
  • Housing for on and off campus living expenses, such as rent
  • Education-related books, equipment, and supplies
  • Laboratory and other classroom fees while pursuing a certificate or degree

After a student leaves school, he or she must repay the loan amount (known as the principal) plus interest charges according to the loan’s terms. An interest charge is a fee for borrowing money, and it is a percentage of the remaining principal.

Student loan requirements vary by type (federal or private) and lender. The government funds and oversees federal student loans. Private lenders, like banks, fund and administrate private loans. 

Federal student loans have more academic requirements, while private lenders focus more on credit scores and the ability to repay student loans. Government student loans also have different terms than private loans. Federal loans are subject to government policies, including student debt forgiveness. 

For instance, the federal government suspended federal student loan repayments, interest, and collections in 2020 through August 2022. Borrowers did not have to pay or accumulate interest during that period. 

Federal Student Loans

A federal student loan is one that is originated by the federal government. These types of loans have government-regulated requirements and repayment options.

General Requirements for Federal Student Loans

In order to take out a federal student loan, you must generally meet the government’s requirements. These include the following:

  • You have a high school diploma, GED certificate, or completed homeschooling
  • The cost to attend your school is more than your expected family contribution (EFC). Your EFC is determined by the federal government, which takes into account your family size, income, and other factors provided on your Free Application for Federal Student Aid (FAFSA).
  • You are a U.S. citizen or eligible noncitizen. You are an eligible noncitizen if you have a permanent resident alien number.
  • You have a Social Security number (SSN). However, there are exceptions for students from the Republic of the Marshall Islands, Federated States of Micronesia, or the Republic of Palau.
  • You are enrolled in or received acceptance into an accredited institution. 
  • Your attendance status is at least half-time.
  • You maintain the institute’s standard for satisfactory academics. The standard varies by school or university but is usually a 2.0 cumulative grade-point average (GPA).
  • You have a high school diploma, GED certificate, or completed homeschooling
  • The cost to attend your school is more than your expected family contribution (EFC). Your EFC is determined by the federal government, which takes into account your family size, income, and other factors provided on your Free Application for Federal Student Aid (FAFSA).
  • You are a U.S. citizen or eligible noncitizen. You are an eligible noncitizen if you have a permanent resident alien number.
  • You have a Social Security number (SSN). However, there are exceptions for students from the Republic of the Marshall Islands, Federated States of Micronesia, or the Republic of Palau.
  • You are enrolled in or received acceptance into an accredited institution. 
  • Your attendance status is at least half-time.
  • You maintain the institute’s standard for satisfactory academics. The standard varies by school or university but is usually a 2.0 cumulative grade-point average (GPA).

Types of Federal Student Loans

The government runs several different federal student loan programs. The U.S. Department of Education currently provides loans under the William D. Ford Direct Loan Program

However, former federal loans are still eligible for certain forgiveness programs, including:

  • Federal Perkins – These loans were for students who demonstrated exceptional financial need, but the program ended in September 2017.
  • Stafford – These subsidized and unsubsidized loans were for students at schools that participate in the Federal Family Education Loan (FFEL) Program, but the program ended in July 2010.
  • Federal Family Education Loan Program (FFEL) – These loans were the same as Direct Loans, except the funding came from private lenders instead of directly from the government.  The program ended in 2010.

Direct Subsidized Loans

Direct Subsidized Loans are available for undergraduate students who are enrolled at least half-time at a four-year college or university, community college, or trade, career or technical school. Students must demonstrate financial need for education expenses, but do not need a credit check or cosigner to qualify. 

The federal government sets a maximum amount for Direct Subsidized Loans, and the amount considers your undergraduate year. However, your school determines the actual loan amount, which can be up to 150 percent of the cost of the academic program. 

The 2022 annual limits for Direct Subsidized Loans are as follows: 

  • First-Year – $3,500
  • Second-Year – $4,500
  • Third-Year and Beyond – $5,500
  • Aggregate Total – $23,000

The current fixed interest rate for undergraduate students is 3.73%.

“Subsidized” means the government pays the interest charges for the period when you are enrolled at least half-time in an accredited institution. This significant benefit can save you hundreds to thousands of dollars throughout your loan term, since your loan is not accruing interest. 

The U.S. Department of Education also pays the interest on Direct Subsidized Loans for the six months immediately after you leave school – known as the Grace Period – and during times of deferment (pauses on student loan repayment).

Direct Unsubsidized Loans

Direct Unsubsidized Loans are available to undergraduate, graduate, and professional students, and they are not based on financial need. Borrowers do not need a credit check or cosigner.

Direct Unsubsidized Loans do not have the same loan limits as Direct Subsidized Loans, so students can usually borrow more money. The maximum amount for Direct Unsubsidized Loans depends on your education year and dependency status.

The table below provides the current 2022 annual limits for Direct Unsubsidized Loans:

Dependent StudentsIndependent Students
First Year$5,500$9,500
Second Year$6,500$10,500
Third Year and Beyond$7,500$12,500
Graduate or ProfessionalN/A$20,500
Aggregate Total$31,000$57,500 for undergraduate students$138,500 for graduate or professional students

The current fixed interest rate for Direct Unsubsidized Loans is 3.73% for undergraduate students and 5.28% for graduate or professional students. 

As an “unsubsidized” loan, you are responsible for paying interest throughout the loan term, even when you are enrolled full-time. However, the government does not require you to make any payments until after your Grace Period ends. You can start your monthly payments while you are a student or postpone interest payments while you are in school and for six months after leaving school. 

Nevertheless, all postponed interest charges “compound,” or add to your principal amount. Interest will also continue during deferment periods, unless the government determines otherwise.

Direct PLUS Loans

Direct PLUS Loans are available to graduate students and parents of dependent undergraduate students who are enrolled at least half-time. Financial advisors commonly call these “grad PLUS loans” and “parent PLUS loans” to distinguish borrowers. 

To qualify for a Direct PLUS Loan, you must meet the general federal student loan requirements and have adequate credit. If you have a poor credit history, you typically will not meet the criteria for a PLUS loan unless you take one of the following actions:

  1. Obtain an endorser (otherwise known as a cosigner) who does not have an adverse credit history. If you are a parent taking out a PLUS loan, the endorser cannot be the child on whose behalf you are borrowing.
  2. Appeal to the Department of Education citing extenuating circumstances for your adverse credit history.

An adverse credit history includes high-balance delinquent accounts, bankruptcy, foreclosure, repossessions, wage garnishment, tax liens, charge-off accounts, and other markers. If you have an adverse credit history, you may need a cosigner or documentation that explains how you plan to alleviate the circumstances. 

The government sets a fixed interest rate for all federal student loan borrowers, so your credit does not influence the loan terms. The current Direct PLUS Loan interest rate is set at 6.28%.

The maximum Direct PLUS Loan amounts are based on the cost of attendance as determined by the school. The total amount of money a borrower can take out through a Direct PLUS Loan is also affected by the amount of any other financial aid awards the student has received.

Loan repayments start as soon as you receive a Direct PLUS loan. However, your loan is automatically on deferment while you are in school and for six months after leaving school if you are a student (not a parent) borrower. Interest charges, on the other hand, continue to accrue and add to your principal balance. 

Direct Consolidation Loans

Direct Consolidation Loans combine multiple federal student loans into one. Loan consolidation reduces the number of monthly payments and can lower your overall monthly payment total. Depending on the loan terms, consolidation may also significantly reduce the total amount of interest you pay. 

The government offers student loan consolidation at no additional cost. A Direct Consolidation Loan interest rate is the weighted average of all the combined student loans. The interest rates of higher balance loans will contribute more to the consolidated rate.

Consider the following examples:

·      10-year Direct Subsidized Loan (1) for $12,000 at 3.5 percent interest 

o   Monthly payment $118 

o   Total interest $2,239

·      10-year Direct Unsubsidized Loan (2) for $8,000 at 3.5 percent interest 

o   Monthly payment $90 

o   Total interest $2,891

·      10-year Direct PLUS loan (3) for $25,000 at 7 percent interest 

o   Monthly payment $370

o   Total interest $19,376

By paying student loans individually, the borrower spends $578 monthly and will ultimately pay $24,506 for interest charges over 10 years. 

With a Direct Consolidation Loan, the fixed interest rate averages 5.44 percent, and the loan term could extend up to 25 years. The new monthly payment could be: 

·      $274 for a 25-year term and total interest paid $37,419.

·      $308 for a 20-year term and total interest paid $28,927.

·      $366 for a 15-year term and total interest paid $20,926.

·      $487 for a 10-year term and total interest paid $13,443.

If the borrower keeps to a 10-year term, they could save $91 each month and $11,063 in total interest. Longer term lengths could lower monthly payments but add to interest charge totals.

Private Student Loans

Private student loans are funded by financial institutions, not the federal government. For example, many banks, online lenders, and credit unions offer private student loans.

General Requirements for Private Student Loans

In order to take out a private student loan, you must meet the requirements determined by the private lender. These often include the following stipulations:

  • You are 18 years old or have an adult co-signer
  • You are a U.S. citizen with a Social Security number (SSN) or an eligible legal noncitizen with appropriate resident documents
  • You meet the lender’s credit limits, such as having a credit score over 580 or a co-signer with adequate credit

Private student loan requirements focus more on your credit score and history. Private lenders like banks, credit unions, schools, and even state agencies set their eligibility criteria for private student loans, so requirements can vary. 

You may consider a private loan if you are ineligible for federal loans, like if you plan to enroll in a non-accredited institution or for less than half-time. Private loans are also not based on financial need.

Private loans could also be beneficial if interest rates are lower, such as refinancing after improving your credit history. You may also qualify for higher loan limits if you need additional funds while in school, such as for meals and transportation. 

However, keep in mind that private lenders do not follow federal student loans’ deferment or debt forgiveness mandates. Private loan repayment plans are less flexible than government loans, and borrowers have fewer protections. 

Differences Between Student Loan Forgiveness, Cancellation and Discharge

You are generally not required to repay your student loan if the government or lender forgives, cancels, or discharges it in full. While all three terms seem interchangeable, the difference is the qualifying reason for the debt relief. 

Student loan forgiveness and student loan cancellation usually occur because the borrower has fulfilled an obligation.  The government recently announced a new Federal Student Loan Debt Relief program that forgives up to $20,000 in eligible federal student loan debt for qualified borrowers. Learn more about this program in the Federal Student Loan Debt Relief Program section of this guide.

There are other federal student loan forgiveness programs that are available for qualifying public workers, teachers, and other professions. Certain types of government loans may be up for cancellation based on volunteer service. 

Student loan discharge typically occurs under other circumstances outside of the borrowers’ power. Examples of reasons for student loan discharge include school closure, permanent disability, and death. 

Can private student loans be forgiven?

Private lenders rarely forgive private student loans. Banks and other private lenders do not follow the federal student loan forgiveness, cancellation, or deferment policies. Generally, the only reasons lenders may discharge private student loans are death or permanent disability. 

The borrower’s death usually forces lenders to forgive the deceased’s debt. However, a co-signer may still be responsible for the remaining balance depending on the death discharge policy. Likewise, a surviving spouse or the child may need to repay the debt. For more information, see the “Discharge Due to Death” section of this guide. 

Total and permanent disability may qualify the borrower for forgiveness of certain private student loans. Lenders and some states provide student loan disability discharge when the borrower or their representative proves they cannot work due to a disability. Refer to the “Total and Permanent (TPD) Discharge” section of this guide for more information.

Declaring bankruptcy may not cancel your private student loans. The borrower must complete additional steps to erase student loans, including having a separate trial. See the “Discharge Due to Bankruptcy” section of this guide for more information.

Alternatively, you may be able to consolidate your loans with a private or personal loan to decrease the number of monthly payments. A lower interest rate can also lower your total amount paid. Although consolidation does not erase your debt, it could reduce the total amount of money you would spend and make repayment easier.

Types of Federal Student Loan Forgiveness Programs

Federal Student Loan Debt Relief Program

What is the Federal Student Loan Debt Relief program?

The Federal Student Loan Debt Relief program is a new initiative announced in August 2022. It is a three-part plan that aims to help Americans who borrowed federal money for college to reduce the total amount of their student loan debt. 

The first and largest part of the plan cancels (sometimes referred to as ‘discharges’ or ‘forgives’) up to $20,000 in federal student loan debt for Pell Grant recipients, and up to $10,000 in federal student loan debt for non-Pell Grant recipients.

The total amount of student loan debt that may be canceled depends on how much eligible federal student debt the borrower has. 

For example, if you received a Pell Grant and have federal student loan debt totaling $18,000, you may qualify to receive a cancellation of $18,000. Since your total amount of debt is less than the $20,000 maximum for Pell Grant recipients, it would completely eliminate your federal student loan debt.

However, if you did not receive a Pell Grant and have federal student loan debt totaling $18,000, you may only qualify to have the maximum of $10,000 of your debt canceled. This means you would still have $8,000 left to repay ($18,000 student loan debt – $10,000 canceled = $8,000 balance). 

The second part of the plan is to reduce monthly student loan payments for current and future borrowers, based on the borrower’s income. 

The third part of the plan focuses on providing aid to borrowers who work(ed) at a nonprofit, serve(d) in the military or serve(d) in a federal, state, tribal or local government agency. It works alongside the Public Service Loan Forgiveness (PSLF) program by ensuring that these individuals receive proper credit toward loan forgiveness. To learn more about the PSLF program, refer to the Public Service Loan Forgiveness section of this guide.  

Additionally, the program aims to make the cost of higher education more affordable by holding schools, colleges and universities accountable when they increase tuition costs.

According to the White House, if all eligible borrowers claim their student debt cancellation, 43 million borrowers would get student debt relief. Of those borrowers, 20 million would have the balance of their student debt completely canceled. 

Income Requirements for Federal Student Loan Debt Relief 

The Student Loan Debt Relief program is an income-driven program. This means that in order to qualify, borrowers must make less than a certain amount of money. 

The following categories of individuals can qualify for this program:

  • Individuals who earned less than $125,000 in 2020 or 2021 (it does not have to be for both years)
  • Families who earned less than $250,000 in 2020 or 2021 (it does not have to be for both years)

Types of Student Loans That Can Qualify for Student Loan Debt Relief

The Federal Student Loan Debt Relief program only applies to federal student loans. Federal student loans are educational loans that are provided through the federal government rather than through a bank or private student loan company. 

Private student loans do not qualify for relief under this program. For more information on the differences between federal and private student loans, see the Federal Student Loans section of this guide. 

Please note the program only applies to federal student loan balances that were held before June 30, 2022.

Federal Student Loan Debt Relief is available for the following types of federal student loans: 

  • William D. Ford Federal Direct Loan (Direct Loan) Program loans
  • Federal Family Education Loan (FFEL) Program loans held by the Department of Education (ED) or that are in default at a guaranty agency
  • Federal Perkins Loan Program loans held by ED
  • Parent PLUS loans
    • Borrowers applying for debt relief for these types of loans will need to apply using the parents’ income, not the borrower’s income
  • Graduate PLUS loans
  • Defaulted loans
    • This includes ED-held or commercially serviced Subsidized Stafford, Unsubsidized Stafford, Parent PLUS, Graduate PLUS and ED-held Perkins loans
  • Consolidation loans
    • These only qualify if the consolidated loans were ED-held loans and were disbursed before June 30, 2022 
  • Consolidation loans consisting of only FFEL and/or Perkins loans not held by ED, as long as the borrower applied for consolidation before September 29, 2022

Do Defaulted Student Loans Qualify?

Eligible federal student loans in which the borrower has defaulted may be eligible for cancellation under this program. If, after the cancellation, a borrower still has a balance, the borrower may be able to regain some benefits through another federal program called Fresh Start. 

Under Fresh Start, eligible borrowers may be able to get renewed access to federal student aid and other government loans. Also, collection activity will be stopped and they can get the opportunity to rehabilitate loans. 

Additional benefits that begin in late 2022 include reporting defaulted loans as “current” to credit reporting agencies, and borrowers may be able to get out of default through income-driven repayment plans. If you qualify for this program, the Department of Education will reach out to you with instructions. 

Types of Borrowers That Can Qualify for Student Loan Debt Relief

Student debt relief is generally available to current and past students, as well as those who attended college but did not graduate. Similarly, parents who took out a Parent PLUS loan for their child may be eligible for this program. However, the income limit qualification will be applied to the parents’ income, not the student’s.

Some individuals applying for student debt relief may be identified as dependent borrowers. These individuals may still be eligible for relief, but eligibility is based on one or both of their parents’ income, not their own. 

For purposes of this program, the following characteristics generally apply to dependent students:

  • Were enrolled as an undergraduate student between July 1, 2021, and June 30, 2022
  • Were born after January 1, 1998
  • Are not married

Other criteria that determines if you are a dependent are based on your answers on the Free Application for Federal Student Aid (FAFSA), such as whether you are working on a master’s or doctorate degree, if you have children or other people that you support, if you are in the military or a veteran, if you were in foster care, homeless or an emancipated minor.   

Sometimes, both a parent and a student have eligible loans. In this case, both the parent and the student should each submit separate student loan debt relief applications.

Learn About Applying for Student Loan Debt Relief

The Department of Education may notify some borrowers that their application for student loan debt relief is being automatically processed, with no need for them to do anything. However, since the program is still new, this might not always be the case. If you don’t receive any notification and you think that you may qualify, you should apply. 

Currently, the only way to apply for student loan debt relief is to complete the online application. You can access the application on the Federal Student Aid website here: https://studentaid.gov/debt-relief/application

To complete the application, you will to provide all of the following information:

  • Borrower’s name
  • Borrower’s Social Security number (SSN)
  • Borrower’s date of birth
  • Contact information, including phone number and email address

You will also be asked to affirm that you met one of the following criteria for 2020 or 2021: 

  • You made less than the required income to file federal taxes.
  • You filed as a single tax-filer AND made less than $125,000.
  • You were married, filed your taxes separately, AND made less than $125,000.
  • You were married, filed your taxes jointly, AND made less than $250,000.
  • You filed as a head of household AND made less than $250,000.
  • You filed as a qualifying widow(er) AND made less than $250,000.

You won’t need to attach or submit any supporting documents to the form. The federal government analyzes all applications and will determine your eligibility based on its student loan records and IRS records. If the government needs more information, it will contact you. Anyone who lies on this form is subject to penalties for perjury, including fines, imprisonment or both. 

Application Deadlines

Applications for Federal Student Loan Debt Relief are only being accepted until December 31, 2023. As of this writing, this is a one-time student debt relief program, not an ongoing program. No applications will be accepted after this deadline has passed.

Beware of Scams

The only agencies that may contact you regarding the Federal Student Loan Debt Relief program are:

  • The Department of Education
  • Your student loan servicer

If you get a notification from a company saying that they can get you a federal loan discharge, forgiveness, cancellation, or debt relief for a fee, it is likely a scam. You do not need to pay a fee to apply for the Federal Student Loan Debt Relief Program. 

According to the Department of Education, the following email addresses are the only ones with legitimate reason to contact you regarding federal student debt relief:

After You Apply

Once you have submitted the application form, you will receive an email confirmation. The government will review your application and contact you if they need more information. For example, they may want documentation to verify your income, information about your parent’s income if you were a dependent student, if they can’t find your loan records based on the information you provided or if they determine that you don’t have any eligible federal loans. 

If you get a request for more information, the request should notify you how and when to submit the requested information. Failure to follow these instructions may void your application. If you don’t hear back from the government, you don’t need to do anything further.

The ED will notify you if your application is approved. Then, it will work with your student loan servicer(s) to apply the debt relief to your balance. You may receive a notification from your servicer letting you know if your loans are paid in full or if there is a remaining balance. If there is a balance, the servicer will let you know the amount of your new monthly payment once payments resume after December 31, 2022.

Refunds for Past Payments

While the amount of relief you will get is limited by the total amount of your eligible loans, there is one circumstance in which you might be able to get more. If you made voluntary payments on your eligible loans during the payment pause between March 13, 2020 and December 31, 2022 and your current loan balance is below the amount of debt relief you could receive ($20,000 for Pell Grant recipients or $10,000 for non-Pell Grant recipients), you can be automatically refunded for the amount you paid during the payment pause, up to the remaining amount of your eligible debt relief. This only applies if your application for student debt relief is approved. 

Remaining Student Loan Balance

If the total balance of a borrower’s eligible student loans is more than $20,000 for Pell Grant recipients or more than $10,000 for non-Pell Grant recipients, he or she will still have a remaining balance after the debt relief is applied. However, since the new balance of student loan debt will be lower, the monthly payment can be recalculated based on that new balance. 

Student loan servicers are responsible for determining the amount of the new payment. Note that borrowers do not need to make any payments until after the payment pause ends, which is currently set for December 31, 2022. 

Public Service Loan Forgiveness (PSLF)

The Public Service Loan Forgiveness Program eliminates the current balance of certain federal student loans upon completion of qualifying employment or volunteer work. The government does not have a maximum amount for the PSLF program, so your forgiveness amount depends on your repayment plan and remaining balance.

Program Requirements for PSLF

In order to qualify for loan forgiveness through the PSLF program, you must meet the following general qualifications:

  1. You volunteered or worked for a qualifying organization. 
    1. If your eligibility is based on volunteer work, it must have been full-time with either AmeriCorps or Peace Corps.
    2. If your eligibility is based on employment, it must be for one of the following entities:
      1. A qualifying non-profit organization with tax exemption under Section 501(c)(3)*
      2. The U.S. federal, state, or tribal government
        1. Teaching services typically count toward the PSLF requirement. See the “Teacher Loan Forgiveness” section of this guide to learn more about dual-eligibility for both PSLF and Teacher Loan Forgiveness.
      3. A branch of the U.S military

* A non-profit organization that does not have tax exemption under Section 501(c)(3) may still qualify for PSLF if it provides at least one of the following public services:

  • Emergency management services
  • Military service on behalf of the U.S. armed forces or the National Guard
  • Public safety
  • Law enforcement, including crime prevention, control or reduction of crime, or the enforcement of criminal law
  • Public interest law services, including legal services provided by an organization that is funded in whole or in part by a local, state, federal, or tribal government
  • Early childhood education, including licensed or regulated child care, Head Start programs, and state-funded pre-k
  • Public service for individuals with disabilities and the elderly
  • Public health, including nurses, nurse practitioners, nurses in a clinical setting, and full-time professionals engaged in health care practitioner occupations, health support occupations, and counselors, social workers, and other community and social service specialist occupations as such terms are defined by the Bureau of Labor Statistics
  • Public library services
  • School library or other school-based services

The following types of employers do not qualify for PSLF:

  • Labor unions
  • Partisan political organizations
  • For-profit organizations, including for-profit government contractors

Note: Only your employment status with your direct employer counts for the PSLF program. For instance, if you are a contractor directly employed with a for-profit business but are doing work for another qualifying business, your employment does not qualify for PSLF.

  1. You worked full-time. Full-time work is 30 or more hours a week. Hours can be combined from one or more qualified employers if you have multiple part-time jobs, as long as the total number of hours equates to at least 30 per week. 

If you work for a non-profit organization, you can count any time spent on religious instruction, worship services, or any form of proselytizing as a part of your job responsibilities toward meeting the full-time employment requirement.

  1. Your student loans are Direct Loans. PSLF is only available for the following federal student loans from the William D. Ford Direct Loan Program:
    1. Direct Subsidized Loans
    2. Direct Unsubsidized Loans
    3. Direct PLUS Loans
    4. Direct Consolidation Loans*

* If you have a Direct Consolidation Loan, only payments made on this loan count toward the 120 qualifying loan payment requirement (explained below). Any payments made on the individual loans before consolidating do not count. 

However, if you consolidate these loans into a Direct Loan before October 31, 2022, you may be able to receive qualifying credit for payments made on those loans through the limited PSLF waiver. Learn more about this temporary waiver on the Federal Student Aid website here: https://studentaid.gov/announcements-events/pslf-limited-waiver 

  1. You made 120 qualifying loan payments. Making additional monthly payments will not qualify you for PSLF faster. A monthly payment qualifies for the PSLF program if it meets all of the below requirements:
    1. The payment occurred after October 1, 2007
    2. The payment is part of an income-driven repayment plan, such as:
      1. Revised Pay As You Earn Repayment Plan (REPAYE Plan)
      2. Pay As You Earn Repayment Plan (PAYE Plan)
      3.  Income-Based Repayment Plan (IBR Plan)
      4. Income-Contingent Repayment Plan (ICR Plan)
    3. The payment did not occur during periods when you are not required to make a payment, such as while in school, during the Grace Period, forbearance, or standard deferments
    4. Each payment was for at least the full amount required for that payment
    5. The payment was made on time or no later than 15 days after the due date
    6. You made the payment while you had full-time employment with one or more qualified employers

Deferred monthly payments may count as qualifying payments during periods of administrative loan forbearance. This is when the government mandates payment and/or interest suspensions.

For instance, COVID-19 Emergency Relief and Federal Student Aid suspended loan payments, interest accumulation, and collections from March 13, 2020, to August 31, 2022, as of this writing. If all requirements are met, you could receive up to 30 qualifying credits towards PSLF without making a single loan payment.

If you’d like to make payments on your loans in order to count them toward the 120-payment requirement, contact your loan servicer to request a deferment waiver.

How to Apply for PSLF

The PSLF Form records your qualified employment progress. You will need to send employment certifications verifying you worked for qualified employers during the 120 months of payments. 

Since you must make at least 120 qualifying payments, it takes a minimum of 10 years to qualify for PSLF. You must be working for a qualifying employer at the time you submit the PSLF form for forgiveness and at the time the remaining balance on your loan is forgiven (if you are approved). 

You do not have to wait until you make 120 qualifying payments. You can complete the PSLF form while you are making payments and working for a qualifying employer. Then, the Department of Education uses the form to notify you whether you are making qualifying payments. The earlier you submit the PSLF form, the earlier you can know whether you are making qualifying payments.

You can download a PDF of the PSLF form here: https://studentaid.gov/sites/default/files/public-service-application-for-forgiveness.pdf 

You can submit the PSLF form in one of three ways: 

  1. Annually to keep track of your progress, so you save time and frustration later. 
  2. When you switch employers, so you avoid having to get employment documents after you leave. 
  3. At the time of your application, which is at least 10 years of employment records.

Once you submit the form, if you do not have 120 qualifying payments, your loans will switch over to the PSLF servicer. From there, the servicer determines how many qualifying payments you have already made and how many you still need to make. 

The number of qualifying payments you made only updates after submitting another PSLF form documenting a new period of qualifying employment.

How to Complete the Employment Certification

The PSLF form serves as the application and verifies your employment. You can use it to find out if your employer is PSLF-qualified or find the total number of qualifying payments you have made.  

You can print the PSLF form to complete it entirely by hand, or you can use the online PSLF Help Tool to partially complete the form before printing it for your employer to sign. 

You can access this tool on the Federal Student Aid website here: https://studentaid.gov/pslf/ 

To complete either application method, you must provide information about your employment, including all current and/or previous qualified employers. Below are the details you will need to provide on the form:

  1. Your full name
  2. Residential address
  3. Social Security number (SSN)
  4. Date of birth
  5. Contact information
  6. Names, addresses, Federal Employer Identification Numbers for all qualifying employers or volunteer organizations
  7. Your employment dates
  8. Full- or part-time status
  9. Average hours worked per week

Section 4 of the PSLF form requires some information from your employer or direct supervisor. Therefore, you must provide the form to your direct supervisor or your employer’s human resource department to certify your employment. 

Then, you can submit the completed PSLF form in one of the following ways:

  1. By mail to:

U.S. Department of Education

FedLoan Servicing

P.O. Box 69184

Harrisburg, PA 17106-9184

P.O. Box 69184 

  1. By fax to (717) 720-1628
  1. Digitally through https://accountaccess.myfedloan.org/authentication/?returnKey=FILE-UPLOAD (if FedLoan is already your loan servicer)

Teacher Loan Forgiveness

The Teacher Loan Forgiveness Program forgives up to $17,500 on certain federal student loans for qualified teachers. The program also forgives the remaining balances on federal consolidation loans. 

This program is separate from Public Service Loan Forgiveness (PSLF), but it is possible to qualify for loan forgiveness through both programs. However, you cannot qualify using the same period of teaching service. 

In other words, if you worked for five consecutive years to satisfy the employment requirement for the Teacher Loan Forgiveness Program, you cannot count any payments made during this period toward the 120 required payments of the PSLF program. You would need to make 120 more qualifying payments to also satisfy the PSLF requirement. 

Program Requirements for Teacher Loan Forgiveness

To have your loans forgiven through the Teacher Loan Forgiveness Program, you must meet the requirements determined by the federal government. These requirements are listed below:

  1. Be a highly qualified teacher

You must hold at least a bachelor’s degree, have received full state certification, and not lose certification or licensing on an emergency, provisional, or temporary basis. Teacher’s aides do not qualify for this program. 

  1. Have worked full-time for five consecutive years.

Full-time work is an entire academic year, and you must work for at least five consecutive years for a qualified employer. At least one of these five years must be after the 1997-98 academic year. Incomplete academic years may still count if you completed at least half the year, the employer considers your contractual requirements to be fulfilled, and the separation reason was for one of the following reasons: 

  • You went back to school at least half-time to study a related field.
  • You experienced a condition covered by the Family and Medical Leave Act of 1993 (FMLA), such as having a baby or adopting a child. 
  • You served as an active-duty member of a U.S. reserved armed forces component for more than 30 days.
  1. You were employed at a low-income school or educational service agency.

The annual Teacher Cancellation Low Income (TCLI) Directory publishes schools and agencies that serve low-income populations. 

  1. You have student loans that are qualified for forgiveness.

Your loan must be in good standing and not in default. You must receive your federal student loan before the end of your fifth qualifying year of employment. The following student loans qualify for the Teacher Loan Forgiveness Program:

  • Direct Subsidized Loans 
  • Direct Unsubsidized Loans
  • Direct Consolidation Loans
  • Subsidized Federal Stafford Loans 
  • Unsubsidized Federal Stafford Loans
  • Federal Consolidation Loans

Direct PLUS and Federal Perkins loans are not eligible for Teacher Loan Forgiveness. However, Perkins Loans have a cancellation option for teachers (read in the next section)

  1. Meet the October 1998 requirement.

You must not have had an outstanding balance on Direct Loans or FFEL loans on or before October 1998, and you must have received your first loan after October 1, 1998. 

Maximum Teacher Loan Forgiveness Amounts

The maximum amount of money that you can forgive through the Teacher Loan Forgiveness Program is either $5,000 or $17,500, depending on the subject area. Your employment history also determines your forgiveness amount. 

You may qualify for forgiveness of up to $17,500 if you meet one of the following criteria:

  • You worked as a full-time highly qualified teacher of mathematics or science at the secondary level
  • You worked as a full-time highly qualified special education teacher at the elementary or secondary level and taught children with disabilities using your special education training background

You may qualify for forgiveness of up to $5,000 if you meet any of the following criteria:

  • You worked as a full-time highly qualified teacher at an elementary school or educational agency and taught reading, writing, mathematics, and other core curriculum subjects
  • You worked as a full-time highly qualified teacher at a secondary school or educational agency and taught a subject relevant to your academic major

How to Apply for Teacher Loan Forgiveness

After completing qualified teaching services for five years consecutively, you can submit a completed Teacher Loan Forgiveness Application to the company that receives your loan repayments. If you have multiple loans, you need to send the application to each loan servicer. 

You can download the Teacher Loan Forgiveness Application by navigating to the Federal Student Loan website, scrolling to the section titled “How and when do I apply for teacher loan forgiveness?” at the bottom of the page, and clicking the blue link that reads “Teacher Loan Forgiveness Application”: https://studentaid.gov/manage-loans/forgiveness-cancellation/teacher 

The application requires you to provide personal information, including your name, address, Social Security number (SSN) and contact details. You also need to fill out the sections verifying your eligibility, including:

  • The employer, such as an elementary or secondary school or educational service agency.
  • Your employment, like being a special education, mathematics, or science teacher. 
  • Previous submissions (if applicable).

To complete section 5 of the form, you must give the form to your Chief Administrative Officer (CAO) to certify your employment. Once finished, you can submit the form to your lender, who applies forbearance of principal and interest while your application is in process. You can stop your monthly payments, and any additional payments you make can reduce your loan forgiveness amount.  

Perkins Loan Teacher Cancellation

The Perkins Loan Teacher Cancellation program can forgive up to all of your remaining balance on your Federal Perkins Loan. Eligibility for this program is based on your employment or volunteer service with a qualifying organization. 

Program Requirements for Perkins Loan Teacher Cancellation

To have your loans canceled through the Perkins Loan Teacher Cancellation program, you must meet the requirements determined by the federal government. These requirements are listed below:

  1. You worked as a full-time teacher

You do not need state certifications or licenses to qualify for cancellation, as long as your employer considers you a full-time employee. However, you may not qualify if you are an administrator, curriculum specialist, supervisor, or researcher who does not provide direct student services. You must also meet one of the below requirements

  1. You worked in a school with a majority of low-income students
  2. You worked as a special education teacher
  3. You taught mathematics, science, foreign languages, bilingual education, or another field with a shortage of qualified teachers, as your state determines 
  1. You taught for at least one academic year

The program does not have daily or hourly employment requirements, but your school must consider you a full-time teacher for one full school year or you must have multiple part-time teaching positions that equal full-time. 

  1. You worked in a public or nonprofit elementary or secondary school.

A nonprofit school must have the IRS tax exemption 501 (c)(3), and the state must consider preschools and pre-kindergartens part of its education programs for those positions to qualify. You may qualify if you worked as a special education teacher for infants, toddlers, and minors with disabilities. 

How to Apply for Perkins Loan Teacher Cancellation

To apply for Perkins Loan Teacher Cancellation, you must apply directly with the school that made the loan or with the school’s Perkins Loan servicer. The school or loan servicer is responsible for providing all necessary application documents and information.

Perkins Loan Cancellation for Other Professions

It is possible to qualify for a Perkins Loan Cancellation in other professions. The government may cancel up to 100 percent of your loan if, for five years, you worked in one of the following professions:

  • Early childhood education provider
  • Employee at a child or family services agency
  • Faculty member at a tribal college or university
  • Firefighter
  • Law enforcement officer
  • Librarian with master’s degree at Title I school
  • Military service
  • Nurse or medical technician
  • Professional provider of early intervention (disability) services
  • Public defender
  • Speech pathologist with master’s degree at Title I school
  • Volunteer service (AmeriCorps VISTA or Peace Corp

The percentage of debt cancellation depends on your number of qualifying years of qualifying services. Perkins Loan Cancellation can be for up to 100 percent of your Federal Perkins Loan, including accrued interest. 

Here are the cancellation increments:

  • 15 percent for the first year
  • 15 percent for the second year
  • 20 percent for the third year
  • 20 percent for the fourth year
  • 30 percent for t

How to Apply for a Perkins Loan Cancellation for Other Professions

The application process for general Perkins Loan Cancellation is the same as it is for Perkins Loan Teacher Cancellation. You must apply directly with the school that made the loan or with the school’s Perkins Loan servicer. The school or loan servicer is responsible for providing all necessary application documents and information.

Closed School Loan Discharge

The federal government might discharge your federal student loans if the school where you are currently enrolled or recently withdrew closes. 

Requirements for Closed School Loan Discharge

You could qualify for 100 percent discharge of your federal student loans under the Direct Loan, FFEL, and Federal Perkins programs if you were unable to graduate because the school closed. The circumstances regarding the school closure must meet one of the following criteria:

  • The school closed while you were enrolled in the program.
  • The school closed while you were on an approved leave of absence.
  • The school closed within 120 days after you withdrew if you first received your loans before July 1, 2020.
  • The school closed within 180 days after you withdrew if you first received your loans on or after July 1, 2020.

You cannot have your loans discharged if you completed the coursework but did not receive a certificate or diploma. Even if you do meet one of the above criteria, you may lose eligibility if you transferred the academic credits to another school you are enrolled in or have completed. 

You must keep to your repayment plan while your application is under review. The federal government will contact your loan servicer if the agency approves your request. You can receive reimbursement of volunteered payments, and all records relating to the loans – including negative marks – will be reversed on your credit report. 

If you meet the criteria for discharge, you will automatically receive an application from the Secretary of Education that you can provide to your loan servicer. Alternatively, you can contact your loan servicer directly to learn more about the application process.

Total and Permanent Disability (TPD) Discharge

Total and Permanent Disability (TPD) discharge erases your federal student loans from the Direct Loan, FFEL, and Federal Perkins Loan Programs if you meet the qualifications. It also relieves you from completing the terms of a Teacher Education Assistance for College and Higher Education (TEACH) grant. 

Requirements for TPD Discharge

The U.S. Department of Education determines whether you meet the requirements for being totally and permanently disabled. The government’s definition of disabled refers to an inability to work due to a physical or mental condition. For TPD standards, a physician must confirm one of the following to be true:

  • The impairment can cause death
  • The impairment has lasted for at least the last 60 continuous months
  • Professionals expect the impairment to last for at least the next 60 continuous months

You can establish your qualifications with disability documentation from the following sources:

  • The U.S. Department of Veterans Affairs (VA)

If you are a veteran, you can provide your VA disability determination letter as proof of meeting the TPD discharge requirements. Veterans who are determined to have a service-connected disability that is 100% disabling or are totally disabled based on an individual unemployability rating may qualify. 

  • The Social Security Administration (SSA)

If you receive or are eligible for Social Security Income (SSI) or Disability Insurance (SSDI) payments, you can submit a copy of the SSA award notification as proof of meeting the TPD discharge requirements. 

To qualify, your next disability review must be scheduled within five to seven years from the date of your most recent SSA disability determination. The SSA periodically reviews the disability status of all beneficiaries to confirm they continue to meet the eligibility criteria for receiving disability benefits. If you do not have a disability review scheduled within this time frame, the Department of Education may not approve your application because it has no way of verifying your disability.

  • A physician

Your U.S.-licensed doctor of medicine (M.D.) or doctor of osteopathy/osteopathic medicine (D.O.) can verify your condition on the TPD discharge application. 

How to Apply for TPD

To receive a federal student loan discharge through the TPD program, you must submit an application within 90 days of your physician’s certification date. 

There are four ways to submit an application:

  1. Online.

Access the online TPD Discharge Portal here to begin the online application process: https://secure.disabilitydischarge.com/registration 

  1. By mail.

Download the Discharge Application: Total and Permanent Disability here: https://secure.disabilitydischarge.com/Static/ApplicationOnlinePreview.html 

Then, send the application and any supporting documents to:

U.S. Department of Education – TPD Servicing

P.O. Box 87130

Lincoln, NE 68501-7130

  1. By fax.

Download the Discharge Application: Total and Permanent Disability here: https://secure.disabilitydischarge.com/Static/ApplicationOnlinePreview.html 

Then, fax the completed application and any supporting documents to (303) 696-5250.

  1. By email.

Download the Discharge Application: Total and Permanent Disability here: https://secure.disabilitydischarge.com/Static/ApplicationOnlinePreview.html 

Then, email the completed application and any supporting documents to disabilityinformation@nelnet.com

On the TPD application, you’ll need to fill out personal details like your name, address, Social Security number (SSN) and contact information. You must also indicate which documents you are attaching with the application, such as an SSA award letter or VA disability determination. 

If you are applying with a physician’s certification, your doctor must complete section 4 of the application. He or she will certify your disability or impairment and its severity, limitations, and duration. The doctor must also list all of his or her credentials,  professional license number, and the state where he or she practices legally. 

Once you apply, you can expect to receive an acknowledgement receipt from the U.S. Department of Education. It explains the application and review process and that you no longer need to make payments during the review. 

If your application is accepted, the government will send a notification of discharge for your loans and TEACH Grant service obligations. The agency also informs all your loan servicers of the approved loan discharge. You may also be subject to discharge monitoring for three years if you qualify with a physician’s certification. 

If your application is denied, the government typically provides a denial reason, an explanation of continuing loan repayments, and your TEACH Grant service obligation, as applicable. You can request a reconsideration by submitting a new application and additional documentation supporting your claim and disproving the reason for denial. 

You can designate another person or entity to represent you and complete the application on your behalf. They will need to complete the Applicant Representative Designation form even if they have power of attorney.

You can access this form by visiting the Federal Student Aid website here and clicking the link to download a PDF: https://disabilitydischarge.com/forms 

Maintaining Eligibility for a TPD Discharge

If you are subject to post-discharge monitoring, you must submit your employment earnings to Nelnet annually. Your student loan debt and work responsibilities will automatically reapply if you do not submit the form on an annual basis.  

The government can reinstate your federal student loan debt and TEACH Grant work commitment if you no longer qualify within the three years after the discharge. Below are the events that could cause you to lose the TPD loan discharge:

  • Your employment earnings exceed your state’s poverty limit for a family of two, regardless of your family size
  • You obtain a new federal student loan or TEACH Grant
  • The SSA determines you are no longer disabled
  • Your disability review is no longer scheduled within five to seven years of the last determination
    • Refer to the “Requirements for TPD Discharge” section to learn more about SSA disability reviews.

You are responsible for repaying your student loans and fulfilling any work obligations through the TEACH Grant if you lose a TPD discharge. Your federal student loan accounts will also return to their status at the time of your application. So, past-due accounts will be past-due for their original length and defaulted accounts will revert to default. 

Discharge Due to Death

The U.S. Department of Education discharges the federal student loan debt for borrowers who die. Similarly, the government discharges a Direct PLUS loan upon the death of one of the following: 

  • The borrowing parent. The loan does not discharge if the deceased individual was not the borrower responsible for the loan. For example, the loan will not discharge if a father is the borrower and the mother dies. 
  • The student for whom the loan was intended. 

All federal student loans – including Direct Loans, FFEL Program loans, and Perkins Loans – qualify for death discharge. The deceased’s representatives or family members must apply for a death discharge and submit proof of death. The following documents are acceptable for proof of death:

  • Original death certificate
  • Certified copy of the death certificate
  • A full photocopy of the original or certified copy of the death certificate 

Family members and/or representatives should send one or more of these documents to the loan servicer. After verifying that a death has occurred, the servicer will cancel the remaining loan balances. 

Discharge Due to Bankruptcy

Note: This guide is for general information purposes only. We are not providing legal or financial advice. Please consult with an attorney or accountant if you need such advice.

Both federal and private student loans are generally non-dischargeable debts and typically not part of standard bankruptcy filings, even if you include them on your bankruptcy forms. You will need a separate trial – or adversary proceeding – to apply for student loan discharge due to bankruptcy.

Once you file bankruptcy forms, your creditors – including student loan servicers – cannot try to collect debt payments. However, interest will continue to accrue. 

For Chapter 7 bankruptcy proceedings, you need to prove to the bankruptcy judge that you do not have the ability to repay your student loans. Undue Hardship Exception tests are used by courts to determine how likely it is that you can pay back your student loan debt, but the tests used vary by court. The Brunner Test, for instance, factors in the following:

  • Your current income and expenses compared to a minimal standard of living.
  • If your current financial situation is likely to continue through the loan repayment terms.
  • If you have made a good faith effort to pay your debt.  

With Chapter 13 bankruptcy, your student loans can become part of a repayment plan and be discharged after the periods end. However, there is no guarantee that your student loan debt will be discharged.

Direct Loans, FFEL Program loans, and Perkins Loans may be available for a bankruptcy discharge. 

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