How to Apply for Student Loan Forgiveness

by John Stapel

Student loans are a pressing issue for so many people who have put themselves through college and other higher education. It can also be a complex mess to understand and work your way through once you have to pay up the tally. Luckily, there are options for student loan forgiveness—which can wipe away some or all of what you owe.

Student loan forgiveness is by no means a magic bullet, and student loan forgiveness programs don’t work for everyone. They often apply only to public student loans, with funds for forgiveness provided by the government. Private loans can qualify for some amount of help in select cases, though it doesn’t work in the same sense. Here’s what to know when you’re digging into attempting to get your student loan forgiven.

What is student loan forgiveness?

In short, student loan forgiveness is a way to get your lender (in most cases, the federal government) to eliminate the whole balance you owe for your student loan, or at least part of that balance. It means you are no longer obligated to repay part of or the total of your loan debt.

Student debt has grown enormously, more than doubling over the past two decades. At the end of 2020, 43 million American borrowers owed a total of about $1.6 trillion in federal student loans, with private student loans bringing the sum to $1.7 trillion. While higher education can provide a significant socioeconomic boost to students who complete their degrees, the pile of debt is a serious problem for many student borrowers and potentially the United States economy itself.

Thankfully, the picture has shifted in a slightly more positive direction for those looking for help with their student loans—and the situation may ease borrowers’ debt in the future based on political possibilities. The American Rescue Plan that President Biden recently signed into law makes all student loan forgiveness tax-free, meaning you pay no tax on that erased balance no matter what, a new development. Biden also touted the idea of canceling $10,000 of student loans for each borrower during his campaign. That still hasn’t materialized, though his administration is reportedly still looking at paths to enact it.

Major types of student loan forgiveness and what they mean

The big federal loans

At the moment, the federal government offers assistance for student loan debt through two main programs: the federal student loan repayment program and the Public Service Loan Forgiveness program (PSLF). More on those below.

Income-based loan forgiveness

Other options exist that don’t fall under the traditional full forgiveness setup, but they do alleviate financial burden. The government offers income-driven repayment plans. These plans set monthly payments so that they’re affordable based on your income. They make sense for those with low income relative to what they owe. They include the Revised Pay As You Earn Repayment Plan (REPAYE Plan), Pay As You Earn Repayment Plan (PAYE Plan), Income-Based Repayment Plan (IBR Plan) and Income-Contingent Repayment Plan (ICR Plan). You can find details about qualifications, repayment terms and applying on the U.S. Department of Education’s Student Aid website .

Perkins Loan cancellation

There’s a Perkins Loan cancellation for those who took out that specific kind of federal student loan, even though it no longer exists. The loans were low-interest and aimed at undergraduate and graduate students with significant financial needs.

But you may still qualify for up to 100% cancellation of your Federal Perkins Loan. This is a popular route for people in the teaching system who are still paying off a Perkins Loan. To qualify you have to have worked full-time in a public or nonprofit elementary or secondary school organization as a teacher to students from low-income families; worked as a special education teacher; or taught math, science, foreign languages, bilingual education or another subject area a state education agency has determined is lacking in qualified teachers.

But Perkins Loan borrowers in other occupations may also qualify for the cancellation program. Among them are firefighters, law enforcement officers, and those with military service background. More details are available here.

Help for teachers and medical professionals

There’s further assistance for teachers in the Teacher Loan Forgiveness Program, which targets teachers educating kids from low-income backgrounds and may be able to get you up to $17,500 to use toward loan repayment. And teachers can seek out loan repayment assistance for teachers offered by many states. You often need to have a state license and teach for at least two years.

Additionally, there’s student loan assistance for nurses from federal and state programs, like the Nurse Corps Loan Repayment Program, which foots the bill for up to 85% of unpaid nursing education debt. And the National Health Service Corps (NHSC) Loan Repayment Program gives out money to licensed health care providers. Also under NHSC, students in their last year of medical schooling may get loan repayment help through the Students to Services Loan Repayment Program. The Indian Health Service’s Loan Repayment Program encourages clinicians to work in American Indian and Alaska Native communities by providing repayment assistance on student loans, up to $40,000.

The National Institutes of Health has its own program with aid to medical workers specifically involved in research. Known as NIH LRP, the program can repay up to $50,000 annually of a researcher’s educational debt.

Various other federal and state programs exist to assist workers in certain fields. If you’re in the fields of education, the military, health care, or even law, it’s worth talking to others in your profession about the possibilities of getting forgiveness or some kind of assistance with student loan debt, especially if you’re struggling to make payments.

Differences between student loan forgiveness, discharge and cancellation

“Student loan forgiveness” is a somewhat loaded term that is often used to refer to similar but distinct options for financial aid with your student loan debt.

In your conventional student loan forgiveness, you’re looking to get your balance owed wiped completely or at least partly, as in the federal student loan repayment program and Public Service Loan Forgiveness (PSLF) program. But these are generally tied to your occupation. The programs are directed toward people who enter jobs that help the public, and they either forgive the entire balance of a loan or offer an award to be used toward a balance due.

Cancellation of a student loan means more or less the same thing as forgiveness. It’s often tied to the field and position you’re working in, and as a result of your employment you can avoid certain payments on your loan.

Discharge works differently. If you qualify to erase payments owed due to other circumstances outside of your employment—for example, due to permanent disability or the close of the school you went to—you’re getting a loan discharge.

Are private student loans eligible for forgiveness?

Public loans account for the vast amount of student loan debt, with private loans taking up a 100 billion slice of the $1.7 trillion pool. Still, obviously, an enormous amount of debt for people out there struggling to pay for their higher education.

Private lenders don’t offer the same avenues for forgiving student loan debt, but there are possibilities for easing difficulties with payments. You can put a loan in deferment or forbearance, which essentially means putting a pause on payments if you’re unable to make them at that time. And depending on your situation, you may be able to refinance your loan with your lender to get more favorable terms. In any case, you should always talk to your private lender when you have trouble making the necessary payments.

Federal student loan repayment program

The federal student loan repayment program is able to forgive debt through participating agencies. They may give out $10,000 a year to a borrower, toward a possible total of $60,000, which can be used to pay off a student loan. But there’s a catch: You have to work for said agency for at least three years.

The federal government’s cabinet departments are part of this program, and there are 20 other independent agencies involved in helping to cancel out student loan debt. Each agency has its own rules for qualifying, based on the degree you get and the job you’re filling. Agencies can give out $10,000 a year, with a total cap of $60,000. In exchange, you must work for the agency for at least three years. This structure is set up as a recruitment incentive for certain agency jobs or as a means to retain desirable employees.

Student loans that may apply if you’re trying to nab a federal student repayment loan include Federal Family Education Loans, which include both subsidized and unsubsidized federal loans, as well as Direct Loans (an example is the Direct PLUS loan).

Public Service Loan Forgiveness

The PSLF program is a different beast from federal student loan repayment. The government excuses whatever balance you owe on your loan if it’s eligible and if you’ve worked in a certain public service position for at least 10 years. It’s a welcome benefit to Americans who decide to enter the public service realm as a career.

Obviously, this kind of student loan forgiveness is only workable for a slice of the population—particularly those who devote their time to either government or public-aiding work. But they can be sources of huge financial help to those who are struggling with student debt and are eager to pursue those paths anyway.

Qualifying and applying for public worker loan forgiveness

There are caveats for getting a Public Service Loan and The federal government provides a route for loan forgiveness specifically for teachers. There are other qualifications you can find on the Student Aid website. If you’re eligible, you could receive up to a total of $17,500 toward your federal student loans. Here are some of the criteria that you need to know about before you apply.

Public Service Loan Forgiveness

  • You must have made 120 monthly payments on your loan already.
  • You have to be in a full-time public service job.

List of organizations that qualify: 

  1. AmeriCorps
  2. Peace Corps
  3. Federal or state or local government sectors.
  4. A public agency that serves children and families,
  5. A nonprofit, or even a private firm that’s involved with public service like health, safety, public-oriented law, or law enforcement.

Teacher Loan Forgiveness

  • To qualify, you have to teach full-time for five full, consecutive years.
  • The work must be within particular elementary or secondary schools or educational service agencies that seek to help those with low incomes.

Student Loans that are eligible for forgiveness and their applicable programs

Federal Perkins Loans: Federal Perkins Loan cancellation

Direct PLUS Loan (or other federal student loan debt consolidated into a Direct Loan): Public Service Loan Forgiveness (PSLF), federal student loan repayment program

Federal Family Education Loans (FFEL) (Such as subsidized and unsubsidized Federal Stafford Loans): federal student loan repayment program

Private student loans: limited to negotiating with your private lender, using deferment, forbearance, or refinancing

What happens if your application is denied

Many options for both traditional loan forgiveness as well as assistance based on income or occupation or other factors exist. They all come with specific qualifications for applying. If a particular program denies you, it’s critical to explore all other options both federal and by state that make sense for your circumstances.

Other options for managing student loan debt

As with any loan, making payments to avoid piling interest is the way to financial health. Setting up a plan, such as a budget that sets aside a certain amount of money every month and directs it into a separate savings account not linked to your main banking accounts, can help build up the funds necessary to finally pay off the student debt you owe.