The Ultimate Guide to Student Loan Forgiveness
With tuition levels rising and wages seemingly failing to keep up, it’s no wonder why student debt levels are at an all-time high.
The government knows this can affect you and your family as well as your day to day life.
They and other institutions have several loan forgiveness programs available to graduates who qualify.
There are more out there than you think; it’s worth investigating these loan forgiveness programs in case you qualify. Let’s jump into everything you need to know before you go searching on how to get your student loans forgiven.
How Does Student Debt Affect Your Life and Finances?
College is an investment in a way. College degrees open up plenty of doors, through both study and networking.
But most people take on extraordinary amounts of debt to fund their years in academia. Even if you get the degree and land a job, student loans can cancel a lot of your “returns” out by eating up large chunks of your paycheck each month.
This leaves you with less money to invest and begin building your wealth. In fact, it might barely leave you enough money to save a mere $20 per month.
Drawbacks go beyond your finances, though. Student loans are a massive stressor already, but then consider that you probably have no savings as a fresh college grad.
You have to work hard at your job not just to get that promotion or raise, but simply because you can’t afford to lose your job.
Such stress can bleed into all parts of your life, tarnishing your outlook on life and even leading you to make rash, stress-influenced decisions.
Not to twist the knife, but to illustrate the looming terror that massive student loan debt happens to be.
With that in mind, you should seek out any possible means of easing your debt burden, including student loan forgiveness.
Refinance With Credible in the Meantime
In almost every case, your lenders won’t outright forgive your loans just because you asked. It usually involves several years of successful payments before you can be considered for a loan forgiveness program.
But you aren’t powerless here: you can make it easier on yourself by refinancing up to $40,000 of your student loans and securing a better interest rate with Credible.
Instead of shopping around for the best rates, Credible does all the work for you. Using some basic information about you (name, income, alma mater, etc.), Credible runs a soft credit check (sparing your fledgling credit score) to gain insight into your financial history.
They then present you with several offers you’re prequalified for. From there, you get to choose which loan you like best and go through the full application process with the offering lender.
Not only can refinancing land you a lower interest rate, but you’ll spend less time and headache balancing several loan due dates. Saves you on late fees and credit score dings from forgetfulness.
Student Loan Forgiveness Methods
Public Service Loan Forgiveness (PSLF)
Public Service Loan Forgiveness (PSLF) is a well-known forgiveness program for those working in the public sector.
To qualify for PSLF, you must
- Work full-time for a government agency/certain types of nonprofits – Public sector jobs
- Have direct loans/consolidate other federal student loans
- Make 120 qualifying payments (12 payments per year X 10 years)
- Be on an income-driven repayment plan – Under the standard payment plan, you’d have no balance left (as the standard plan has you pay off your loans in exactly 10 years). You can start on the Standard plan, though.
Common examples of roles that qualify are government employees, police officers, and firefighters. Studentaid.ed.gov has more comprehensive information on if your job qualifies you for PSLF.
If you work in a qualifying role, you must complete a Employment Certification for Public Service Loan Forgiveness form annually and whenever you change employers. Otherwise, you have to fill out one for each employer upon applying for PSLF.
You apply when you reach 120 payments, then if approved, you’re forgiven!
Volunteers don’t get paid, or it wouldn’t be volunteering. Thus, many volunteer organizations offer loan forgiveness in the form of student loan repayment help.
- AmeriCorps – Serve for 12 months to receive up to $7,400 in stipends and $4,725 in student loan repayment aid
- Peace Corps – Can apply for Stafford, Perkins, and Consolidation loan deferment. Also, can be eligible for 15% Perkins loan cancellation per year of service, up to 70% total.
- SponsorChange – Matches you with volunteer projects based on your skills. Each completed project earns you between $200 and $1,000 in repayment aid.
- Volunteers in Service to America (VISTA) – Accumulate 1,700 service hours, and you’ll earn $4,725 towards your debt
In addition, some volunteer organizations offer student loan repayment aid for certain fields (such as physicians volunteering for the National Health Service Corps). More on field-specific forgiveness later.
Now, your loans won’t be forgiven completely. But hey, you get to travel and help people around the world while getting financial assistance. Not a bad way to have an interesting, fulfilling life on a budget.
It’s worth noting that some volunteer roles (such as the Peace Corps) may also qualify you for the job requirement for PSLF, though.
State-Based Loan Forgiveness
Nearly every state offers their own repayment and loan forgiveness programs separate from the federal government. Many states have multiple!
Here’s a full list of state-based loan forgiveness programs by state. Check it out to see what your options are!
Teacher Loan Forgiveness
Education is extremely valuable to any society. Thus, it’d make sense to offer teachers an opportunity to have their loans forgiven.
Teachers can qualify for up to $17,500 in loan forgiveness through the TLFP, providing they meet a few requirements.
- Have been employed full-time for five complete and consecutive academic years, at least one being after the 1997-1998 academic year
- Be considered “highly-qualified” (bachelor’s degree, full state certification, certification not waived on an emergency, temporary, or provisional basis
- Work at a school/educational service agency that serves low-income students as defined by the government
- Have taken out loans prior to the end of your teaching service
TLFP is best for teachers with less debt for two reasons: less time to qualify, and lower amount of loan forgiveness.
Teachers usually qualify for PSLF, so look into that if your debt is too large for TLFP.
Military Loan Forgiveness
Active duty personnel and veterans alike are eligible for several military loan forgiveness programs as a thank you for their service.
Each branch of the US military has its own forgiveness program with varying amounts depending on your branch.
There’s an abundance of other options for active duty, reserve, and veterans as well. Student Loan Hero has a large list of these.
Law School Loan Forgiveness
Law school is one of the most difficult and expensive educational institutions in existence. Even with that high lawyer salary, you might need some student loan forgiveness help.
Public interest lawyers statistically make less than private lawyers, but they luckily qualify for PSLF.
Another good program is the Attorney Student Loan Repayment Program. Although it’s not a traditional “forgiveness” program, the US Department of Justice will help you out by matching student loan payments up to $6,000.
Lawyers who want to take advantage of the ASLRP must owe at least $10,000, fall below a certain income level, and commit to 3 years of service with the Justice Department.
All this being said, private lawyers don’t have as great of a chance of qualifying for loan forgiveness. However, they can always refinance using a service like Credible!
Medical School/Nurse Loan Forgiveness
Like law school, medical school is an expensive pursuit. With little time to pick up a side job during school, many newly-minted doctors are going to need help paying back loans they took on just to afford to live.
Doctors working at certain nonprofits or for the government can (not at all to your surprise) qualify for PSLF by meeting the typical requirements.
Aside from typical loan forgiveness, various volunteer organizations like the National Health Services Corps. help you pay back your loans by volunteering with them.
Nurses can also qualify for forgiveness through the Nurse Corps Loan Repayment program. More on that can be found at the HRSA Health Workforce website.
Tips for Student Loan Forgiveness
Having your student loans forgiven can feel like lifting 10 tons off your shoulders. Still, it’s important to keep a few things in mind:
- Taxes – The IRS considers “cancelled” debt to be taxable income in many cases. Most forgiveness programs are excluded (meaning your forgiveness will be tax-free), but always do your homework to make sure.
- Keep documentation – In the same spirit as the previous tip, keep all documentation related to loan forgiveness.
- Loan type – Most forgiveness programs require you to have federal loans. Private loans almost never qualify, so your only choice for private loans may be refinancing.
- There are tons of opportunities – We covered some of the more popular loan forgiveness programs. However, each career field is likely to have a list of forgiveness programs. At the very least, many employers offer repayment assistance to help draw talent to their firms. Consider these firms in your job search.