If you have student loan debt like many Americans, you may wonder if there is anything you can do to get rid of it sooner rather than later. In many cases, there is. Student loan forgiveness debt relief relieves borrowers from paying for at least some of their federal student loan debt. Student loan forgiveness is available for some loans, but your eligibility may be limited based on employment in specific public service, military, and educational fields.
How Does Student Loan Forgiveness Debt Relief Work?
Student loan debt forgiveness means that some or part of your student loan debt is forgiven, meaning you no longer have to pay it.
While any type of student loan can be forgiven, student loan forgiveness in the US typically refers to student loans that are backed or issued by the US government.
So, most student loan forgiveness programs don’t apply to student loans that were privately issued, such as those issued by Sallie Mae or a local bank.
For students who have loans that are eligible for forgiveness, it is possible that they could be forgiven in certain situations.
If you think you qualify for a loan to be forgiven, you will need to apply and continue to make payments until the loan is forgiven. If you do not make your loan payments on time, the loans could go into default and you will lose the ability to have the debt forgiven.
Which Student Loans Are Eligible For Forgiveness?
Most borrowers would like to get rid of their student debt, not everyone is able to do so because of the requirements for the program. The majority of student loan forgiveness is only for people who work in certain public service fields. Those who may be eligible include teachers, medical workers, government employees, and military members.
Also, not every federal student loan is eligible for forgiveness. Students loans that can be forgiven are mostly direct loans, also known as Stafford loans. Other loans that may be forgiven are Perkins loans and Federal Family Education Loans.
Student Loan Forgiveness Types
The only loans that are eligible for forgiveness are direct loans from the federal government. These are known as the William D. Ford Federal Direct Loan Program. Private loans that were issued by private lenders are not direct federal loans and do not qualify for forgiveness.
If you don’t have direct loans from the federal government and borrowed via the FEEL Program or the Perkins Loan Program, you can consolidate these loans into a direct consolidation loan. This loan would then be eligible for student loan forgiveness.
Also, if you are employed by a federal agency, your company could pay part of your loans, up to $10,000 per year via the federal student loan repayment program.
What Is Public Service Loan Forgiveness (PSLF)?
PSLF is made for people who are employed in public service jobs in the government or nonprofit sector. You could get some or all of your student loans forgiven if you work in public service, including medicine, government, and nonprofits.
For debt to be forgiven under the PSLF program, you have to make 120 payments, which means making the minimum payment due on time. These payments need to be made when you work for an employer who qualifies under PSLF. Usually, such employers are state, federal, or local government, or nonprofit organizations. So, if you work for the qualifying organization for 10 years, you are generally eligible to have some or all of your student loan debt forgiven.
How To Apply For PSLF
To apply for public service student loan debt forgiveness, you and your employer must fill out the Public Service Loan Forgiveness form. If necessary, you should first consolidate any FFEL Program and Perkins loans into a direct consolidation loan. After this consolidation has taken place, you should submit your PSLF form to the loan servicer handling your loan.
Loan Forgiveness Payment Plans
If you do not work in public service, it still could be possible to have some of your debt forgiven from student loans. But this process will take longer. Federal income driven repayment options are designed to help college graduates who would have difficulty making payments in the regular 10-year period, also allow for some student loan debt forgiveness after a certain time has passed. Some of these plans include:
• Income-based repayment: Your maximum payments each month are 10% or 15% of your discretionary income. You may be eligible for forgiveness after 20 or 25 years of payments.
• Income-contingent repayment: Your payment is recalculated every year according to your gross income, size of household, and how much money you owe. Generally, you must pay 20% of your discretionary income. You may qualify for student loan debt forgiveness after 25 years.
• Pay as you earn: Your maximum monthly payments are 10% of your discretionary income. Forgiveness eligibility requirement is 20 years of making payments. The government could pay part of your loan’s interest, as well.
What Is Borrower Defense?
If a university misled you or engaged in conduct that violates state law, you could have your loans discharged. This is known as the borrower defense to loan repayment forgiveness program. If you qualify all of your direct loans from the US government can be cancelled if you can show you were defrauded or deceived by the university you attended. This program is generally for private, for-profit schools that have engaged in questionable tuition practices.
Summary on Student Loan Forgiveness and Debt Relief in 2024
It’s possible for certain workers to have their student loan debt forgiven, but there are many requirements and limitations. Generally, you need to work in public service, such as for the government, a nonprofit, or healthcare organization run by the city or state. These programs have a minimum work requirement, such as 10 years for many of them.
If you are interested in student loan forgiveness, you should speak to your employer about your options. They should be able to tell you if their institution qualifies for certain types of student loan forgiveness.