Student Loan Forgiveness and Cancellation Programs

In recent student loan debt statistics, 45 million student borrowers owe a collective $1.6 trillion of debt. This number represents a problem that has become a part of what is known as the student loan crisis. Given this large amount of debt, many student loan forgiveness and loan cancellation programs exist to help alleviate the burden […]

BY The Team

Student Loan Forgiveness and Cancellation Programs

In recent student loan debt statistics, 45 million student borrowers owe a collective $1.6 trillion of debt. This number represents a problem that has become a part of what is known as the student loan crisis. Given this large amount of debt, many student loan forgiveness and loan cancellation programs exist to help alleviate the burden of repayment.

Many of the student loan forgiveness programs apply to government loans, including The Public Service Loan Forgiveness program. Loan cancellation, however, can relieve the burden of student debt by cancelling qualifying federal student loans under certain circumstances. For example, if you canceled a loan due to serious issues with the school, you can sometimes qualify for a school-related discharge. Working for a specified timeframe at a public service job, including military service, may qualify for loan cancellation as well. 

Each program has its own requirements so you’ll want to find ones that match your circumstances. Here are a few to consider:

Student loans forgiveness programs

Income-driven repayment plans
An income-driven repayment plan adjusts the monthly payment amount to an amount that is more affordable after taking into consideration the income of the borrower and the size of their family. Common repayment plans include Revised Pay As You Earn repayment plan (REPAYE Plan), the Pay As You Earn Repayment Plan (PAYE Plan), the Income-Based Repayment Plan (IBR Plan), and the Income-Contingent Repayment Plan (ICR Plan).

Obama student loan forgiveness is a colloquial term for the Pay As You Earn program that adjusts the amount you’ll have to pay based on your income if you qualify

Public service loan forgiveness
Public service loan forgiveness is available for eligible non-profit and government employees who have outstanding student loan debt. This federal program forgives student loan balances if the borrower is employed for more than 30 hours a week and works a federal, state, or local job in public service or at a non-profit. Another qualification is that they make 120 on-time payments during the course of 10 years. Once the borrower’s eligibility is confirmed, the remaining balance on the federal loans is forgiven.

The teacher loan forgiveness program is a provision for teachers who took out loans after 1998 and are employed full-time in a low-income public school. After five years of employment, they can have up to $17,500 in Stafford or federal loans forgiven.

Student loan forgiveness programs for Nurses
Student loan forgiveness programs for nurses include the public service loan forgiveness program mentioned above, or the military student loan forgiveness for nurses program. The latter is open not only to those who have served in the military, but also to those who have had a qualifying public service job for the last 10 years. There Is also the 

Student loan forgiveness for doctors
Doctors fall under the public service loan forgiveness program. The loan forgiveness program benefits doctors employed in underserved or high-demand locations. Over the course of 10 years, 120 on-time payments and eligible employment qualify the borrower for forgiveness of their remaining debt. The National Institutes of Health also offers $35,000 in debt assistance to qualifying applicants in healthcare.

Student loan forgiveness for lawyers
There are a few options in loan forgiveness for lawyers. There is the Department of Justice Attorney Student Loan Repayment Program (ASLRP) that provides loan assistance of up to $6,000 a year on balances over $10,000 with a maximum of $60,000 in assistance provided. Department of Justice employees are eligible to apply. The John R. Justice grant program assists public defenders and state prosecutors with a commitment of three years as a public defender. Once eligible, $10,000 to $60,000 are available for assistance.  The American Bar Association also offers programs for qualified lawyers.

Niche student loan forgiveness programs

Student loan forgiveness for members of the military
Military student loan forgiveness can be granted to members of the military who have existing student loan debt. These federal student loan forgiveness programs apply to Federal Direct Loans only, and the individual must be employed on a full-time basis at a government or non-profit public service organization that qualifies for the program. The individual can also be engaged in military service to qualify. To determine eligibility, you must submit an Employment Certification Form. The applicant also has to have made 120 on-time payments aft

State-sponsored student loan forgiveness plans
State-sponsored student loan forgiveness plans may be offered to people who are employed by a state, local, tribal, federal, or non-profit organization. To be eligible, you have to have made 120 qualifying monthly payments during the time you were working at least 30 hours per week for a qualifying employer. These payments have to have been made under an income-driven repayment plan. If you’re a hired contractor, it’s your employer’s status, not yours, that can count towards your eligibility. The loan forgiven must have been received under the William D. Ford Federal Direct Loan program, and the 120 consecutive payments have to have begun after October 1, 2007.

Student loan cancellation programs

Perkins loan cancellation allows borrowers to apply to cancel up to 100% of their loans if they work in a public service job for five years or have circumstances such as bankruptcy, disability, school closure, etc.

Perkins loan teacher cancellation is available to those in a non-profit public or secondary school system as a teacher serving low-income students, special education teachers, or teachers in mathematics, science, or any other approved field of education. The educator must be employed for the full academic year and if qualifications are met, 100% of the loan may be canceled.

Student loan discharge programs

School closing discharges
school closing discharge allows for cancellation of your federal student loan because the school closed either while you were enrolled or soon after you withdrew. You may also qualify if you were on an approved leave of absence when the school closed or the school closed in 120 days or less after you withdrew. If you meet the requirements and you haven’t enrolled in another school that accepts federal financial aid, you can automatically have your loan discharged. You still have the option to apply for the discharge as soon as the school closes, but it will be granted automatically once three years have passed. With the school closing discharge, all of the loan you have not yet paid is discharged unless you have already received your diploma.

Borrower defense discharges
A borrower to defense discharge gives students who have been the victims of some kind of institutional misconduct the chance to have their loans forgiven. If the school you attended misled you or broke certain state laws, you may be entitled to forgiveness of your loans. The misconduct has to have been directly connected to your loan or the educational services provided by the school. If the school is found responsible, the amount that is forgiven will be determined by a discharge percentage calculated by the U.S. Department of Education. There is no time frame because the situation may come to light at a later date.

Disability discharges
disability discharge occurs when you’re permanently or totally disabled. To qualify, you have to submit a Total and Permanent Disability (TPD) discharge application and documentation that proves you qualify for it. Veterans can use VA documentation, those with Social Security Disability can use SSA documentation, and others can use a physician’s certification. The impairment has to result in you being unable to engage in gainful activity because of a physical or mental impairment. The impairment must be expected to result in death, been ongoing for at least 60 months, or be expected to last for a continuous period of 60 months. There is no timeframe because a situation like this may arise at any time. All of the remaining loan amount will be forgiven.

Disability discharges for veterans
A disability discharge for veterans can be granted if you have been disabled due to a service-connected disability that renders you 100% disabled or you are totally disabled according to an individual unemployment rating. It is similar to a normal disability discharge in that you must be unable to engage in gainful employment due to the disability. Similar to a normal disability discharge, there is no time limit because this kind of situation can occur at any time. All of the remaining loan amount will be forgiven once documentation is presented and the application is approved.

Student loan discharges upon death
A death discharge is granted if your loan servicer gets acceptable, documented proof of your death. All of the remaining loan balance is forgiven, and there is no time frame as to when someone would be eligible for this forgiveness program. Only people who owed money on a loan but died are eligible.

Final thoughts on student loan forgiveness programs

Being in debt because of student loans should not leave the borrower feeling like there are no options. There are many forgiveness and cancellation programs that can help ease the pressure that comes with the burden of debt. If you have student debt and are in need of loan forgiveness or cancellation, consideration of eligibility guidelines can help determine which program is best for your situation.