At first glance, student loan forgiveness looks appealing. But it may not be as easily attainable as one might think. For example, 98% of applicants who applied to the Public Service Loan Forgiveness (PSLF) Program were denied due to issues such as not meeting the program requirements or mistakes made on their forms.
That being said, there are state-specific and federal Public Service Loan Forgiveness programs that certain student loan borrowers may be eligible for.
Before you review your options, it’s important to know that the terms forgiveness, cancellation and discharge essentially mean the same thing when it comes to federal student loans, but are applied in different scenarios. For example, if you are no longer required to make loan payments due to your job, that could fall under forgiveness or cancellation.
Or, if the school you received your loans at closed before you graduated, this situation would generally be called a discharge.
Even if you don’t complete your education, can’t find a job, or are unhappy with the quality of your education, you must repay your loans. But there are circumstances that may lead to federal student loans being forgiven, canceled, or discharged. Here are some of those options:
Public Service Loan Forgiveness (PSLF)
The PSLF Program may forgive the remaining balance on eligible Direct Loans after making 120 qualify monthly payments under a repayment plan (and working with a qualifying employer).
Teacher Loan Forgiveness
Those who teach full-time for five complete and consecutive academic years in a low-income school or educational service agency (amongst other qualifications) may be eligible for forgiveness of up to $17,500 on select federal loans.
Perkins Loan Cancellation
Cancellation for this specific loan is based on eligible employment or eligible volunteer service and the length of time applicants were in such a position, among other factors.
Total and Permanent Disability Discharge
Qualification may relieve eligible borrowers from repaying a qualifying Direct Loan, a Federal Family Education Loan (FFEL) Program loan, a Federal Perkins Loan or to complete a TEACH Grant service obligation.
Due to the death of the borrower or of the student on whose behalf a PLUS loan was taken out, federal student loans may be discharged.
Certain eligible borrowers may have federal student loans discharged if they file a separate action during bankruptcy, known as an “adversary proceeding.”
Closed School Discharge
Borrowers who were unable to complete an academic program because their school closed might be eligible for a discharge of Direct Loans, Federal Family Education Loan (FFEL) Program loans, or Federal Perkins Loans.
False Certification of Student Eligibility or Unauthorized Signature/Unauthorized Payment Discharge
Due to a variety of circumstances, borrowers may be eligible to discharge Direct Loans or FFEL Program loans due to issues such as identity theft or mistakes made by a school.
Unpaid Refund Discharge
Certain borrowers may be eligible for partial discharge of Direct Loans or FFEL Program loans if they withdrew from school, but the portion of a loan that the school was required to return to the borrower wasn’t returned.