Are you wondering what types of loan forgiveness opportunities are available to you? Look no further. We review the major existing federal and private student loan forgiveness opportunities. You’ll recognize some of the most popular ones and will probably encounter some you didn’t know existed. We hope you find a nugget or two which will help you manage your student loan burden.
Programs reviewed:
- Public Service Loan Forgiveness (PSLF)
- Long Term Income Driven Repayment Forgiveness (Taxable IDR Forgiveness)
- Federal Perkins Loan Cancellation
- Loan Repayment Assistance Programs
- U.S. Military Student Loan Forgiveness Options
- Teacher Loan Forgiveness
- Veteran Affairs Education Debt Reduction Program (EDRP)
- National Health Service Corps Loan Repayment Program (NHSC LRP)
- National Institutes of Health (NIH) Loan Repayment Program
- Indian Health Services (IHS) Loan Repayment Programs
- Medical School Loan Repayment Assistance Programs (LRAPs) by State
- Nurse Corps Loan Repayment
- Student Loan Discharge
Public Service Loan Forgiveness (PSLF)
Public service loan forgiveness is the most popular federal loan forgiveness program and can be extremely beneficial for those who are eligible. If your student loan debt is equal to or more than your annual income, you should look into this program. As of November 2022, more than 360,000 public servants have had their loans forgiven via PSLF.
Who is eligible?
Generally speaking, any borrower is eligible who works for a non-profit organization or for the government. To check if you employer qualifies, use the PSLF help tool. You’ll need your employer’s employment identification number (EIN).
What types of loans are eligible?
- Direct stafford loans (unsubsidized and subsidized)
- Direct PLUS graduate loans
- Direct consolidation loans
There are a number of old federal programs which require direct federal consolidation before becoming eligible for public service loan forgiveness (PSLF).
What are the requirements?
- Make 120 on-time qualifying monthly payments. These are cumulative payments, not consecutive.
- Enroll in a qualifying repayment plan – IBR, PAYE, REPAYE, ICR or 10 year standard repayment. Stay clear of standard repayment since there won’t be any amount left to forgive after 120 payments.
- Work full-time at a qualifying employer or the equivalent of full-time across multiple agencies or organizations. Qualified employers tend to be the government and non-profits. Be careful as employers will sometimes be for-profit but affiliated with a government or non-profit entity.
- Have direct federal student loans, as mentioned above.
- Submit an employment certification form to verify your employment at a qualified employer and keep track of payments. It is advisable to submit this form at least annually to help servicers keep track of payments.
How much may be forgiven?
Any outstanding loan amount (principal and interest) will be forgiven tax-free after you have completed 120 qualifying payments and your loan servicer agrees.
How long does this program take?
PSLF takes about 10 years to complete. Give yourself time in case your loan servicer miscounts a few payments.
MOHELA is the federal loan servicer who works with borrowers pursuing PSLF. Their website has a nifty payment tracker that shows your progress as you pursue the program.
For more on PSLF, see this post by The White Coat Investor.
Please note – on July 1, 2023 there will be some rule changes impacting PSLF. The employment requirement will be simplified to 30 hours per week. Certain periods of forbearance or deferment (usually military) will count as PSLF credits. And, they will allow borrowers to make payments in installments or in a lump sum rather than just monthly.
Long Term Income-Driven Repayment Forgiveness (Taxable IDR Forgiveness)
Income driven repayment (IDR) taxable forgiveness is another method borrowers with federal loans pursue to receive federal loan forgiveness. Borrowers should only consider this method if their student loan debt is 2.5x, 3x, or more than 4x their income.
Who is eligible?
Borrowers enrolled in income driven repayment programs are eligible.
What types of loans are eligible?
- Direct stafford loans (unsubsidized and subsidized)
- Direct PLUS graduate loans
- Direct consolidation loans
- Parent Plus loans if consolidated (ICR only)
What are the requirements?
- Be enrolled in an income-driven repayment program
- Make monthly payments
- Complete annual income-driven repayment (IDR) certification
How much may be forgiven?
The outstanding loan amount will be forgiven after you have completed the payment term. The forgiven amount will be taxed for borrowers receiving this forgiveness after 2025. The taxed forgiven amount is often referred to as the “tax bomb.” To prepare for the tax bomb, borrowers will usually set aside money in a savings or investment account commonly termed a side fund to prepare for the future tax bill.
How long does this program take?
- REPAYE – 20 years for undergrad, 25 years for graduate
- PAYE – 20 years
- IBR – 25 years (20 years for borrowers who took out loans after July 1, 2014)
- ICR – 25 years
If you’re interested in pursuing IDR forgiveness, we recommend you meet with one of our student loan experts to help you run the numbers.
Federal Perkins Loan Cancellation
Who is eligible?
Teachers who work at low income schools, in special education or work in areas of need (shortage areas) are eligible.
What types of loans are eligible?
Federal Perkins Loans
What are the requirements?
- Teach at a qualifying school as listed above. Although, there are also other types of employment that may count for full or partial loan cancellation.
- Teach for at least a full academic year.
How much may be forgiven?
It is possible to qualify to have up to 100% of federal Perkins Loans forgiven.
How long does this program take?
- 15% canceled for the first and second years
- 20% canceled for the third and fourth years
- 30% canceled for the fifth year
Loan Repayment Assistance Programs
Who is eligible?
This varies by occupation but doctors and most healthcare professionals can apply.
What types of loans are eligible?
Federal and private student loans
What are the requirements?
Work for a non-profit or state based loan repayment assistance program for the designated period.
How much may be forgiven?
Forgiveness amount is dependent on occupation and employer.
How long does this program take?
Length varies by occupation and employer.
U.S. Military Student Loan Forgiveness Options
US military student loan forgiveness and repayment options are available while in school, training or even post-graduate. Each branch in the military has their own loan repayment assistance program.
Here are the major categories
- Army
- Navy
- Air Force
- National Guard
Army
Who is eligible?
All active duty and reserve dental and medical providers.
What types of loans are eligible?
Federal student loans
What are the requirements?
- Be an Active or Reserve duty medical or dental provider
- 3 years of service
How much may be forgiven?
- Active duty – $120,000 made in three annual payments of $40,000
- Reserve – $50,000 made in three annual payments of 20,000 first two years with 10,000 in third year
How long does this program take?
Up to 3 years.
Navy
Who is eligible?
Active duty naval health professionals are eligible.
What types of loans are eligible?
Federal student loans
What are the requirements?
- Be an active duty qualified health professional
- 3 years of service
How much may be forgiven?
Up to $65,000 in 3 annual payments
How long does this program take?
Up to 3 years
Air Force
Who is eligible?
Active duty Air Force health professionals
What types of loans are eligible?
Federal student loans
What are the requirements?
- Be an Active duty Air Force health professional
- 2 years of service
How much may be forgiven?
$40,000 maximum
How long does this program take?
Minimum 2 years of service
National Guard
Who is eligible?
National Guard soldiers
What types of loans are eligible?
Federal student loans
What are the requirements?
- Be an active National Guard soldier
- 6 years of service
How much is forgiven?
$50,000 maximum
How long does this program take?
6 years of service
Teacher Loan Forgiveness
Who is eligible?
Teachers
What types of loans are eligible?
- No balance on direct loans or FFEL loans on or before Oct 1, 1998
- Direct stafford loans (subsidized, unsubsidized)
- Direct PLUS graduate
- FFEL loans
What are the requirements?
- Have 5 years of continuous service at a qualifying school (low income or educational service agency)
- Be a highly qualified teacher
- Submit the teacher loan forgiveness application
How much may be forgiven?
Up to $17,500
How long does this program take?
5 years
Veteran Affairs Education Debt Reductions Program (EDRP)
Who is eligible?
This varies by occupation but doctors and most healthcare professionals can apply.
What types of loans are eligible?
Federal or private student loans
What are the requirements?
- Earned a degree from an accredited school or program.
- Employed full-time or part-time at Department of Veteran Affairs (VA) health care facilities and maintain an acceptable level of performance.
How much may be forgiven?
- Nothing is forgiven, but this program provides reimbursement (at the end of the year) for payments you made during the year up to $40,000.
- Up to $200,000 over a five year period. Note, if you work part-time your repayment benefit will be pro-rated.
How long does the program take?
- 12 months to five years
National Health Service Corps Loan Repayment Program (NHSC LRP)
Who is eligible?
Medical professionals with disciplines in primary care, dental care and behavioral/mental health.
What types of loans are eligible?
Federal and private student loans
What are the requirements?
Employed two years full-time or part-time clinical practice at an NHSC-approved site.
How much may be forgiven?
- Full-time employment $50,000 per year with up to $100,000 forgiven over two years.
- Part-time employment $25,000 per year with up to $50,000 forgiven over two years.
How long does this program take?
Two years.
National Institutes of Health (NIH) Loan Repayment Program
Eight NIH Loan Repayment Programs
- Clinical Research LRP
- Pediatric Research LRP
- Contraception & Infertility Research LRP
- Health Disparities Research LRP
- Clinical Research LRP
- Three exclusively for researchers employed by NIH
Who is eligible?
Health care providers
What types of loans are eligible?
Federal and private student loans
What are the requirements?
- U.S. citizens, U.S nationals, or permanent residents
- Possess an M.D., Ph.D., Pharm.D., D.O., D.D.S., etc. (i.e. a doctoral degree)
- Have “qualified educational debt” equal to or in excess of 20 percent of your base salary (this 20% requirement does not apply to renewal applications)
- Engage in “qualified research” for an average of at least 20 hours per week (or 50% time)
- Research must be supported by a domestic, nonprofit foundation, university, professional association, or other nonprofit institution, or a U.S. government agency
How much may be forgiven?
Up to $70,000 of loan repayment. $35,000 paid annually.
How long does this program take?
One to two years
Indian Health Services (IHS) Loan Repayment Programs
Who is eligible?
Health care providers
What types of loans are eligible?
Federal and private student loans
What are the requirements?
- Be employed in health facility serving American Indian and Alaska Native communities
- Two year commitment
How much may be forgiven?
Up to $40,000
How long does this program take?
2 years
Medical school loan repayment assistance programs(LRAPs) by state
There are many LRAPs across the country. Look up your state here to see what potential savings you can find!
For example, the California State Loan Repayment Program offers up to $50,000 for a two-year service contract.
Nurse Corps Loan Repayment
Who is eligible?
Borrowers employed as a nurse in an underserved community or at an eligible nursing school or nurse facility are eligible.
What types of loans are eligible?
Federal and private student loans
What are the requirements?
- Be employed full time at a qualifying employer
- Minimum of 2 years of service
How much may be forgiven?
Up to 85% of nursing education debt can be forgiven. 60% will be granted after two years of service. Then, you may be eligible for a third year and an additional 25% of your loans.
How long does this program take?
2-3 years
Student Loan Discharge
Student loan discharge is treated differently from forgiveness. Federal and private student loans have the possibility to be discharged. Here are several ways loans are discharged:
- Death
- Total and permanent disability
- Bankruptcy
- Closed-school
- False-certification
- Unpaid refunds
Be advised, federal and private loans will be treated differently. Some of these situations can be handled by booking a consult with us and there are others which may require review by a law firm that deals with loan discharge.
While there are many different loan forgiveness programs, it is necessary to make sure you are on the right path for your personal student loan situation. For some borrowers, the best path involves “living like a resident”, refinancing your loans to lower your interest accrual and simply paying them off as soon as possible. To help determine the best personalized plan for your student loan situation, book a consult with StudentLoanAdvice today.
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