Student loan forgiveness
Student loan forgiveness
Student loan forgiveness releases borrowers from their obligation to repay part or all of their federal student loan debt. These borrowers have taken out loans to pay for their post-secondary education. Forgiveness is available for different types of loans, but those
qualifying for forgiveness tend to fall into certain public service, educational, or military professions.
• Student loan forgiveness allows you to stop repayment on part or all of your federal student loans.
• Private loans don’t qualify, only federal direct loans qualify for loan forgiveness.
• You can earn student loan forgiveness by working in public service.
• Federal loans may also be discharged under circumstances beyond the borrower’s control.
• Students who feel their educational institution defrauded them can apply for loan forgiveness under the category of “borrower defense.”
To have debt forgiven under the public service program, you must first make 120 qualifying payments (which means paying the minimum amount due on time). These payments must be made while you are working for a qualified employer—generally, a federal, state, or local government or a nonprofit organization with tax-exempt status. In effect, you qualify after 10 years on the job and 10 years of monthly payments (120 payments overall).
Income-driven repayment (IDR) plans are designed to make your student loan debt more manageable by reducing your monthly payment amount. If you need to make lower monthly payments or if your outstanding federal student loan debt represents a significant portion of your annual income, one of the following income-driven plans may be right for you.
The Income-Based Repayment (IBR) plan is a repayment plan with monthly payments that are generally equal to 15% (10% if you are a new borrower) of your discretionary income, divided by 12. This repayment plan is for both FFEL Program and Direct Loans. Parent PLUS Loans and Consolidation loans which include at least one Parent PLUS Loan are not eligible for this plan.
The Pay As You Earn (PAYE) plan is a repayment plan with monthly payments that are generally equal to 10% of your discretionary income, divided by 12. Monthly payment amount is based on adjusted gross income, family size and total eligible federal student loan balance. This plan is applicable for Direct Loans only. To qualify for the PAYE Plan you must also be a new borrower as of Oct. 1, 2007, and must have received a disbursement of a Direct Loan on or after Oct. 1, 2011. You’re a new borrower if you had no outstanding balance on a Direct Loan or FFEL Program loan when you received a Direct Loan or FFEL Program loan on or after Oct. 1, 2007.
If you’re totally and permanently disabled, you may qualify for a discharge of your federal student loans and/or Teacher Education Assistance for College and Higher Education (TEACH) Grant service obligation. On March 29, 2021, due to the COVID-19 emergency, the Department of Education (ED) suspended the annual requirement for borrowers to certify their annual earnings during the three-year Total and Permanent Disability (TPD) post-discharge monitoring period. Additionally, ED will be returning borrowers’ loans and TEACH Grants back to discharge status if they were reinstated any time on or after March 13, 2020, due to a borrower’s failure to certify annual earnings.
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