Updated May 7, 2018

How to Get Student Loans Forgiven


Student loan forgiveness is real. There are several income-based repayment plans and jobs that offer loan forgiveness. Read on to learn how.

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Did you graduate college with tens of thousands in student loan debt? The total can be frightening.

Then there are the impending payments.

If you want to lower or even eliminate your monthly payments, you have options. There are several ways to get your student loans forgiven. In this article, we'll tell you how.

Federal vs Private Student Loans

You might have federal, private, or even both types of loans. Let's talk about the difference.

Why does it matter?

  • Federal loans tend to be cheaper than private loans because they are subsidized and issued by the government. They also tend to be more flexible with offering student loan forgiveness and income-based repayment plans. We're going to discuss this in more detail later.

  • Private loans are taken out with banks and private lenders. They're not eligible for government forgiveness programs. But certain organizations may offer loan repayment help.

Tip: If you don't know whether you have federal or private loans, you can:

Standard Repayment Plan

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First, let's talk about the default option. If you don't apply for any of the repayment assistance options, you are put on the Standard Repayment Plan. This plan evenly divides monthly payments over 10 years. Here's what that looks like using the average college debt of $37,172:

  • Loan amount: $37,172
  • Interest rate: 5%
  • Monthly payment: $394.27
  • Interest paid over the life of the loan: $10,140.01

Because of the interest, that $37,000 you borrowed turned into $47,000 - and that's if you make your payments on time.

What If You Can't Afford the Standard Repayment Plan? Don't worry, there are other options. Let's go into the different loan forgiveness options.

Tip: If you are still in college, know this: It is not necessary to take out the full amount of loans offered to you. A great rule of thumb: Don't borrow more than your anticipated starting salary.

Income-Driven Plans with Forgiveness

These plans are offered under the William D. Ford Federal Direct Loan Program (FDLP). They help you out by reducing your monthly payments.

How Income-Driven Plans Work

  1. Enroll in one of the income-driven plans: Income-Based, Pay As You Earn, Revised Pay As You Earn, or Income Contingent.

  2. Depending on which plan you choose, your loan term will be extended to 20 - 25 years.

  3. If you have any balance left at the end of your term, it will be forgiven.

Here are important things to know about the income-driven forgiveness program:

  • Only Federal loans are eligible. Direct and Direct PLUS Loans are eligible. If you have other loans (such as Federal Stafford Loans or Perkins Loans), you may need to consolidate them into a Direct Consolidated Loan. Private loans and Parent PLUS loans are not eligible.

  • Your payment is based on your discretionary income. You monthly payment can be as little as 10% of your discretionary income. If you earn very little, your monthly payments could even be $0.

    Your discretionary income = Your adjusted gross income - 150% of the federal poverty level for your family size

    For example, for a family of 1, 150% of the poverty level is $18,090. If your income is $40,000 a year (after taxes), your discretionary income = $40,000 - $18,090 = $21,910.

  • Depending on the plan you choose, after 20 - 25 years of payments, the rest of the balance will be forgiven.

Here are the repayment plans available.

Income-Based Repayment (IBR)

You must have Federal Direct Loans or Federal Family Education Loans (Stafford, Federal PLUS Loans, and Federal Consolidation Loans) to qualify.

  • Loans taken out before July 1, 2014: Students pay 15% of their discretionary income. After 25 years of payments, any amount left over is forgiven.

  • Loans taken out after July 1, 2014: Students pay 10% of their discretionary income. After 20 years of payments, any leftover amount is forgiven.

As your income increases, so does your payment. The maximum payment is the amount of the Standard Repayment Plan's payment.

As a bonus, the government will pay your interest on subsidized loans for the first 3 years. After that, the unpaid interest may get added to your principal balance. Luckily, this doesn't happen until your IBR payment equals the Standard Repayment payment.

Example: You have $50,000 in student loans with an interest rate of 5%.

Under a Standard Repayment Plan, this means you will owe a total of $63,640 including interest. Your annual adjusted income is $30,000. You enter the Income-Based Repayment plan with a monthly payment of $148/month.

After 25 years of payments on this plan, you will have paid a total of $44,662. The rest is forgiven at that point.

The example above is great because it saved the student money by having some balance forgiven. BUT this isn't always the case. You will pay more interest over the life of the loan - because it is 20-25 years rather than the Standard Repayment Plan's 10 years. And as your monthly income increases, so does your monthly repayment amount, up to that of the Standard Repayment Plan.

Pay as You Earn Repayment (PAYE)

Fewer graduates will be eligible for this program because of date restrictions.

  • You must be a new borrower after October 1, 2007. In other words, you must not have any student loans dating before this date. You must also have taken out an eligible loan after October 1, 2011.

  • Payments are 10% of your discretionary income. If you don't have an income right now, you don't have a payment.

  • Your outstanding balance is forgiven after 20 years of payments.

This loan's max payment also equals the Standard Repayment plan payment. Interest payback begins when you reach that amount.

Tip: You must reapply for these programs once every 12 months. Otherwise, the loans will resume at the Standard Repayment Amount.

Revised Pay as You Earn Repayment (REPAYE)

The REPAYE program is for those who don't fall into one of the above categories. Most importantly, there are no date restrictions. Only Parent PLUS loans and most private loans are excluded.

  • Payments are 10% of your discretionary income.

  • There is no cap on the payments, unlike the other plans we discussed thus far. As your income increases, so do your payments. This could make for some hefty payments if you become successful.

  • Your outstanding balance is forgiven after 20 years of payment. Because there is no payment cap, you won't have any interest added to your principal balance.

Income-Contingent Repayment (ICR)

This is the only repayment plan available for borrowers with Parent PLUS loans. To be eligible, the Parent PLUS loans must first be consolidated into a Direct Consolidation Loan.

  • For the ICR plan, discretionary income = your adjusted gross income - 100% of the poverty level (instead of 150%).

  • Your payment is 20% of your discretionary income OR payments based on a 12-year repayment plan, whichever is less. This payment may also exceed the Standard Repayment Plan monthly payment.

  • The government does not subsidize any unpaid interest. 100% of the unpaid interest gets added to your loan balance annually. However, no more than 10% of the loan balance will be added.

Public Service Loan Forgiveness (PSLF)

If you work for a government agency or non-profit, you may be eligible for Public Service Loan Forgiveness.

  • You MUST be enrolled in one of the 4 Direct Loan Program repayment plans to qualify.
  • You must work full-time and make 120 qualifying payments. Payments made before enrollment don't count as qualifying payments towards PSLF.
  • After 10 years of payments in any of the above plans, your loan balance may be forgiven.

If you have Federal Perkins Loans and/or Federal Family Education Loans (FFEL), you must consolidate them into a Direct Consolidated Loan in order to qualify for PSLF. And then you must make 120 payments towards the new consolidated loan.

Tip: Fill out this form to learn if you are on track for loan forgiveness.

Federal Perkins Loan Cancellation and Discharge

Perkins Loans are no longer offered.

But if you took them out before the expiration, you can still be eligible for Federal Perkins Loan Cancellation. Look into this before you consolidate your Perkins Loans. Once you consolidate, you may no longer be eligible.

This forgiveness program can offer you 100% forgiveness in just 5 years. You get a fixed percentage of loans (plus interest) forgiven for each year of service. They are as follows:

  • 15% for the 1st year
  • 15% for the 2nd year (total 30%)
  • 20% for the 3rd year (total 50%)
  • 20% for the 4th year (total 70%)
  • 30% for the 5th year (total 100%)

A number of professions are eligible for this program, including teachers, nurses, firefighters, and law enforcement officers.

You must have taken out the Perkins Loan before 9/30/2017. And the loan can't be cancelled the same year it was disbursed. It's up to your school to decide if you qualify for forgiveness.

Watch Out: Unfortunately, Uncle Sam will come knocking on your door with ANY forgiveness plan. The IRS requires you to include any forgiven loan amounts as income. This means you'll be taxed on the forgiven amount. This may still be the better option. Your tax liability is often much lower than the amount forgiven.

Loan Forgiveness for Teachers

Teachers working at a low-income school for five consecutive years may qualify for loan forgiveness for teachers.

You must have state certification and have a license to teach in your state. Your loan cannot be in default, either.

Elementary school and middle school teachers may receive up to $5,000 in forgiveness. Teachers who specialize in math, science or special education may receive up to $17,500 in forgiveness.

Loan Forgiveness for Nurses

Nurses have a lot of forgiveness programs available to them.

  • Nurse Corps Loan Repayment Program: Eligible for nurses, RNs, APRNs, and nurse educators who work in an eligible Critical Shortage Facility or teach in an eligible public or private nonprofit school of nursing. After 2 years of service, you can get 60% of loan repayment. After another year, you can get 25% more.

  • National Health Service Corps Loan Repayment Program: Provides loan repayment for health professionals working in medically underserved areas. This includes nurse practitioners and certified nurse-midwives. You can get up to $50,000 of repayment for a 2-year service.

Loan Forgiveness for Doctors

National Health Service Corps: Provides up to $50,000 towards your medical school debt for those serving in Health Professional Shortage Areas. Eligible fields include: primary care medical, dental, and behavioral health professional.

After your 2-year commitment, you can apply to continue your service in exchange for further loan forgiveness.

Loan Forgiveness for Military

  • Army: Student Loan Repayment Program. Active members can get 33.33% of your loan balance paid for each year of service, up to $65,000 for 3 years.

    You must request the Loan Payment Program before enlisting. Also, you must score at least a 50 on the Armed Services Vocational Aptitude Battery. Those in the Reserves can get 15% each year, up to $20,000.

  • Navy: Student Loan Repayment Program. Navy service members can receive up to $65,000 over the course of 3 years.

    To qualify, you must have had the loan prior to enlisting in the Navy. Also, you must include your application for the Repayment Program prior to enlisting.

  • Air Force: Student Loan Repayment Program. Eligible for members of the Air Force Judge Advocate General Corps. You can get up to $65,000 over a 3-year period. This is paid directly to your student loan provider.

Other Ways to Get Rid of Student Loans

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A final option is getting federal student loans discharged due to a catastrophic event. These may include the student's death, false certification from the school, a school closing down, and a change in the health of a student (such as a disability).

  • School closing down. Maybe you went to a school, either in the United States or overseas, that closed down. You may be eligible for a federal loan discharge in that case.

    For example, ITT, a large career college, closed its doors last year and ended up leaving tens of thousands of students in the dark about their education and federal loans. We now know that they are in fact eligible for a discharge. Students should contact the Department of Education, which can be reached at 1-800-433-3243.

  • Passing of a student. Another type of discharge available is when a student has passed away. The federal loan servicer handling the student's loans will require a certified death certificate to authenticate it and then discharge the loans.

  • Disability. Along the same lines, if a student becomes disabled and is no longer able to perform the duties from when they received the federal student aid, for they may be eligible for a discharge.

    For example, students who went to a career college for Commercial Drivers License training may be eligible for a discharge if they became an insulin-dependent diabetic. Read here to read more about how to get your loans discharged due to total and permanent disability or you can call Nelnet Loan Services at 1-888-303-7818.

Although these may seem like extreme options to get rid of your student loans, always look at all the facts and find out if a discharge is something that you may be eligible for.

Bottom Line

You are not alone in your concern over your student loans. Consider applying for an income-based repayment plan or forgiveness. But remember, extending your term means paying more interest over the life of the loan, so keep that in mind.

Try to pay off higher-interest debt first if you can, because you'll be able to better afford the Standard Repayment Plan. But if you need to take an income-based repayment plan, do it. Just don't forget the tax consequences.

More from CreditDonkey:


How to Pay for College


Pay Off Student Loans Fast

Infographics: Life after College

Life After College

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