Loan Forgiveness

In the US, college students and graduates who are worried about paying off their student debts have a golden opportunity to avail student loan forgiveness programs. By taking advantage of these programs, all or some part of student debt can be waived off. These loan forgiveness programs can lower your loan from anywhere between a few dollars to above $100,000.

Loan forgiveness allows students to eliminate the burden of debt which they carry after the completion of their studies. It adds to their stress and worries even after securing a job. Ironically, most loan forgiveness programs get a minimal number of applications because the majority of graduates or college students are not aware of them. However, there are specific criterion and situations under which you can qualify for student loan forgiveness programs.

If you have taken a student loan and are stressed about repaying it, take a look at some of the federal loan forgiveness programs that can help you put an end to your worries.

Student Loan Forgiveness

The student debt in the US has reached an all-time high. According to an estimate by Experian's report, 40 million graduates owe a balance of $29,000 each on average. There are certain situations and circumstances under which it is possible to avail forgiveness for your federal student loan.

The sole possibility of eliminating your student loan seems like a relief. However, in reality, all student loan borrowers are not eligible to avail forgiveness or discharge. The requirements for student loan forgiveness vary with the type of loan received.

Ways of Earning Student Loan Forgiveness

There are two primary ways to earn student loan forgiveness:

  • If you work in public sector services, you qualify for student loan forgiveness.

  • If you have started a job, you qualify for income-contingent loan forgiveness programs, which give you a more extended period to pay off your student debt. 

Public Service Loan Forgiveness (PSLF)

If you are working in the public sector or with a non-profit institution, you may become eligible for the Public Service Loan Forgiveness program by the federal government.

In the Public Service Loan Forgiveness program, the borrower can avail forgiveness for the remaining debt balance on direct loans after making 120 qualifying monthly repayments. The borrower should have been working under the qualifying employer full-time during this repayment duration. However, a borrower will only be entitled to forgiveness if all eligibility conditions for Public Service Loan Forgiveness are met.

Requirements of Eligibility for PSLF

  • As a student loan borrower, you should be working for some federal department or for a non-profit organization.

  • You should be a full-time working employee of the organization or department.

  • You have taken either direct loans or consolidated your other federal student loans.

  • You have repaid a certain amount on your loan through the income-driven loan repayment program.

  • You have made 120 monthly repayments of your student loan without any break.

Teacher Loan Forgiveness

Another way to qualify for student loan forgiveness is a teacher loan forgiveness program. Under this program, if you have been teaching in any low-income elementary or secondary school or working in any educational service organization for five consecutive years, you may qualify to apply for Teacher loan forgiveness.

With the Teacher Loan Forgiveness program, you can avail up to $17,500 in forgiveness on your direct as well as FFEL loan programs.

Eligibility Requirements for Teacher Loan Forgiveness

  • There should not be any outstanding balance on your direct federal loans or FFEL loan program.

  • You should have been working as a full-time employee at the educational institute for full and consecutive five academic years.

  • You should have been working as a full-time teacher at an elementary or secondary school or at some educational institute which mainly serves students from low-income families.

  • The loan or loans for which you are applying for forgiveness should have been taken before the five academic years of your eligible teaching service.

Total and Permanent Disability Discharge

If some permanent or complete disability afflicts the student loan borrower, he/ she may qualify for the Total and Permanent Disability Discharge (TPD). This relieves the borrower from the burden of student loan debt repayment, including Direct Federal Loans, Perkins Loan Program or Federal Family Education Loan plan or completion of an obligation of TEACH Grant service.

To qualify for the TPD Discharge, the borrower needs to give evidence to the federal loan department that he/she is completely and permanently disabled. The information you provide is evaluated for authenticity by the federal loan department. Based on that evaluation, the borrower may or may not qualify for the TPD Discharge.

How to Show Your Qualification for the TPD Discharge?

As a student loan borrower, you are required to present the evidence of complete and permanent disability to qualify for the TPD Discharge. You can give the proof of your eligibility by showing the documents from any of these sources:

  • The evidence from the USA Department of Veteran Affairs (VA)

  • Testimony from a physician

  • Proof from Social Security Administration (SSA)

However, these supporting documents also have specific requirements which you should fulfill to demonstrate your qualification.

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