Individuals can eliminate some or all of their student loans through a student loan forgiveness program in certain situations. It can save them from years of loan repayment, and it frees up more income to invest in their futures.
You may qualify for one of five options for student loan forgiveness, depending on your college degree and your current occupation.
The Public Service Loan Forgiveness program (PSLF) offers loan forgiveness if you work full-time for a qualifying employer and you make 120 qualifying monthly payments during that time. You must be employed by the federal government or by a state, local, or tribal government to qualify for PSLF. You can also qualify if you work for a not-for-profit organization.
Volunteering for AmeriCorps or the Peace Corps counts as full-time employment under this program. You must typically use your end-of-service award to make your loan payments for the previous year in order for your experience to count.
The U.S. Department of Education (DOE) made some significant changes to PSLF on Oct. 6, 2021. You can now count all payments made on Federal Family Education Loans (FFEL) or Perkins Loans, but you must submit an application to the DOE no later than Oct. 31, 2022. You can find further information at the Federal Student Aid website. A help tool will be available here.
Become a Full-Time Teacher
Full-time teachers are eligible for the PSLF program, but they can choose another loan forgiveness program instead.
You may be eligible for PSLF forgiveness of up to $17,500 on your Direct Subsidized and Unsubsidized Loans and your Subsidized and Unsubsidized Federal Stafford Loans under the Teacher Loan Forgiveness Program. You must teach full-time for five complete and consecutive academic years in a low-income school or educational service agency and meet other qualifications.
You must be a secondary math or science teacher or a special education teacher to receive $17,500. Teachers in other subjects receive a maximum of $5,000.
State and local school districts may also offer loan forgiveness programs.
Join the Military
One of the benefits of joining the military is student loan repayment. The Army, Army National Guard, Air Force, Air Force National Guard, and Navy offer student loan repayment programs up to $65,000, depending on the branch in which you serve, the work you do, and how long you serve.
Unfortunately, the Marine Corps, Coast Guard, and Air Force Reserves don't offer student loan forgiveness.
Military service members and federal employees are exempt from submitting an application to take advantage of the PSLF changes that were announced in October 2021. The government will automatically provide credit for these individuals using federal data matches.
Become a Doctor or Lawyer
Medical and legal professionals can end up with six figures in student loan debt. Fortunately, several student loan forgiveness programs exist to help them reduce their loan burdens:
- The National Institutes of Health repays up to $50,000 in student loan debt for medical students who complete certain types of medical research on topics such as medical disparities and contraception.
- Certain health professionals can receive up to $100,000 of student loan forgiveness through the National Health Service Corps Loan Repayment Program in exchange for two to three years of volunteer service at a clinic with a shortage of health professionals.
- Law school graduates may have some of their student loans forgiven by performing non-profit, public sector, or government work. The Department of Justice, the Legal Services Corporation, and several law schools offer student loan repayment programs. Lawyers may also qualify for the PSLF program, depending on where they work.
Wait 20 or 25 Years
You can have the balance of your student loan forgiven after 20 or 25 years, depending on when you took out your loan, if you have a federal loan and you're on an income-based repayment (IBR) plan. All federal student loans are eligible except those that are in default, Parent PLUS loans, and Parent PLUS consolidation loans. You can apply for IBR by contacting the lender servicing your loan.
Student loan forgiveness is tax-free through the end of 2025 due to a provision in the American Rescue Plan.
Who Pays for Student Loan Forgiveness?
Many people oppose student loan forgiveness because it's funded by taxpayers, and this is essentially true. Taxpayers have paid for your college education if the federal government forgives your student loans.
It's the same as using government grants to fund your education. Private student loan forgiveness is pretty much nonexistent, but the banks' other customers would end up funding them through fees and interest if private lenders were to offer these types of programs.