Are you wondering what types of loan forgiveness opportunities are available to you? Look no further. In this article 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 (Long Term IDR)
- Federal Perkins Loan Cancellation
- Loan Repayment Assistance Programs
- U.S. Military Student Loan Forgiveness Options
- Teacher Loan Forgiveness
- 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)
Who is eligible?
Generally speaking, any borrower is eligible who works for a non-profit organization or for the government.
What types of loans are eligible?
- Direct federal loans (unsubsidized and subsidized)
- 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 qualifying monthly payments.
- Enroll in a qualifying repayment plan – IBR, PAYE, REPAYE, ICR or 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.
- 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 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.
For more on PSLF, see this post by The White Coat Investor.
Long Term Income-Driven Repayment Forgiveness (Long Term IDR)
Who is eligible?
Borrowers enrolled in income driven repayment programs are eligible.
What types of loans are eligible?
- Direct federal loans (unsubsidized and subsidized)
- 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.”
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
Don’t forget to save money monthly for the future tax bomb.
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 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
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 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 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 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 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 federal loans
- 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
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 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 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 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.
