Student Loan Forgiveness – What is the meaning and how can you qualify for it?
Student loan forgiveness has become a hot-button topic in the United States. President Joe Biden included forgiving the vast majority of student loans in his presidential campaign. As of January 2022, his administration has forgiven over $15 billion in student loans, with that number likely to rise in the coming years.
As a student, you’re no doubt interested in the possibility of getting your student loans forgiven. Here, we explain what student loan forgiveness is and the many ways you may be able to qualify for it. As the economy takes hit after hit, being able to find an effective means of debt relief is becoming extremely important.
What Is Student Loan Forgiveness?
When your federal student loan is forgiven, you no longer have the responsibility of repaying some, or even all, of the loan. Some private loans may also be eligible for student debt relief. The same applies to student loan cancellation and student loan discharge. While these terms are often used interchangeably, there are some differences between student loan forgiveness, cancellation, and discharge.
Typically, these differences relate to the circumstances that result in your loans being discharged. For example, if you no longer have to make loan repayments because of a change in your job or pay, this usually falls under the forgiveness or cancellation categories. However, those who no longer have to pay their loans due to a permanent disability will likely receive a discharge.
The outcome is usually the same in practice, regardless of the term used. For example, a situation or circumstance arises that leaves you unable to repay your student loans. By applying to the correct program, you can discharge yourself from having to make repayments.
This brings us to an important question:
What are the various student loan forgiveness programs, and what are the eligible loans?
There are several, each with its own purpose and requirements.
Types of Student Loan Forgiveness Programs
Program No. 1 – Public Service Loan Forgiveness (PSLF)
Available for direct loans, this program may apply if you’re employed by one of the following organizations:
- U.S. Federal
- U.S. State
- Tribal Government
- U.S. Local
PSLF will forgive the remaining balance on your direct loans assuming you met some standard repayment conditions. You must be working full-time for a qualified employer. You must also have made at least 120 qualifying monthly loan payments during your employment. A payment qualifies under the following conditions:
- It was made after Oct. 1, 2007.
- You pay the total amount on your bill.
- You pay no later than 15 days after the due date.
- You are employed by a qualifying employer.
- You’re making repayments under a qualifying plan.
What’s more, you need to make these repayments based on an income-driven payment plan. Though this program only applies to direct loans, it makes allowances for those who consolidate multiple student loans into a direct loan.
Beyond meeting the personal qualifying criteria, your employer must also qualify for you to receive this type of student loan forgiveness. As mentioned, federal, state, tribal, and local governmental organizations qualify, in addition to the United States Military. In addition, a not-for-profit qualifies as long as it receives tax exemption under Section 501(c)(3) of the Internal Revenue Code.
The following types of employers are not qualifying organizations:
- For-profit organizations
- For-profit government contractors
- Labor unions
- Partisan political organizations
If you are a contractor, you may still qualify for the PSLF. This assumes you’re working for a qualifying employer. You are not eligible if you’re working for a non-qualifying organization or completing work under contract with a qualifying organization.
To increase your chances of receiving this type of loan forgiveness, complete a PSLF form every year and whenever you change employers. This form allows the Federal Student Aid department to keep track of your repayments to ensure every payment you make qualifies.
Program No. 2 – False Certification Discharge
If your school falsely or incorrectly stated that you were eligible for a student loan, this program may help you receive a discharge. It applies to both direct loans and loans through the FFEL program. In addition, this program can discharge the entire loan balance if you qualify.
There are three instances in which you may qualify for this type of student loan forgiveness:
- The school falsely claimed you were eligible for the loan based on the benefit the school offers in its training. In other words, if the school fails to provide what it promised to you through your course, you may be able to get your loan forgiven. In this case, you won’t have to worry about student loan repayment.
- There is an unauthorized signature on the loan application, or an unauthorized payment has been made. These issues involve the school approving something without your knowledge or consent in both cases. This criterion may also apply if you didn’t receive the loan money or the school used it to pay charges you owe to it without your consent.
- You had a status that disqualified you from student loan eligibility when the school certified your eligibility. Examples of disqualifying statuses include having a criminal record, having a mental or physical condition that makes you ineligible, or not being the appropriate age for the loan.
To apply for a False Certification Discharge, you must fill out the relevant False Certification form. In addition, there are forms related to an unauthorized payment or signature, your ability to benefit, and disqualifying status.
Program No. 3 – The Total and Permanent Disability (TPD) Discharge
This program applies to direct loans, Perkins loans, and FFEL loans, this type of student loan forgiveness applies if you have a total or permanent disability. You may also be able to apply for this discharge for a Teacher Education Assistance for College and Higher Education grant.
To qualify for this type of student loan forgiveness, you must provide appropriate documentation from one of the following sources:
- A qualified doctor
- The U.S. Department of Veteran Affairs (VA)
- The Social Security Administration (SSA)
You can apply for student loan forgiveness using this program via the Disability Discharge website. But, first, let’s examine what documentation you need to receive based on the source used.
A Qualified Doctor
A relevant physician must certify your disability on a TPD discharge application form. In addition, they must state that you cannot conduct “substantial gainful activity” due to mental or physical impairment. What’s more, the physician must define if this impairment has lasted for at least 60 months, will last for at least another 60 months, and can be expected to lead to death. If this is the case, making loan payments will not longer be required.
You must provide documents from the VA to show that you’re receiving a VA disability determination due to one of the following issues:
- An unemployability rating shows you have a total disability.
- Your disability is connected to your military service.
You may be eligible for this program if you receive Supplemental Security Income or Social Security Disability Insurance. To demonstrate eligibility, provide either a Benefits Planning Query or an award notice from the SSA. In both cases, these documents must show that your next disability review is not planned for at least another five years from the date of your previous review.
Program No. 4 – Bankruptcy Discharge
The rarest form of student loan forgiveness, a bankruptcy discharge, can apply to direct, FFEL, and Perkins loans. This program may allow you to have your loans discharged if you declare bankruptcy. However, each case is handled individually, and it’s one of the least-awarded types of student loan forgiveness.
To have a chance of qualifying, you must have declared Chapter 7 or Chapter 13 bankruptcy. Furthermore, the bankruptcy courts must determine that repaying your student loan would cause you undue hardship.
You experience undue hardship if repaying the loan would mean you can’t maintain what the court determines to be a minimum living standard. Furthermore, the court must determine if this living standard will continue for a large portion of your repayment period. Finally, the court must show that you attempted to repay the loan in good faith before filing for bankruptcy.
Your loan may be fully or partially discharged if you meet these conditions. Alternatively, the court may create an alternative repayment plan. For example, it may apply a lower interest rate to your student loan or choose to have you make smaller monthly repayments over a more extended period.
Program No. 5 – Death Discharge
This applies to Perkins, direct, and FFEL loans. The program applies if the borrower passes away during the loan repayment period. The loan is discharged once proof of death is received.
Proof of death can come in the form of several types of documents. An original or certified copy of your death certificate is the most common. However, many loan services accept complete and accurate copies of this certificate without certifications. The documents must be delivered to your loan service by a family member or appropriate representative.
This program also applies to PLUS loans, which are loans taken out by your parents to support your studies. If either you or the parent paying the loan passes away, the loan is forgiven.
To arrange student loan forgiveness due to a death, contact your loan servicer to discuss how you can provide the required documentation.
Program No. 6 – Closed School Discharge
You may be able to receive student loan forgiveness if your school closes while you’re enrolled or soon after you withdraw from the school. Again, this program applies to direct, Perkins, and FFEL loans.
Federal Student Aid will discharge the entire loan if your school closed when you were enrolled or if you were on an approved leave of absence during the closure. It will also provide a 100% discharge if the school closed no more than 180 days after your withdrawal. However, this last criterion only applies if your student loan was disbursed either on or after Jul. 1, 2020.
Unfortunately, withdrawers whose first loan disbursement occurred before Jul. 1, 2020, are not eligible for this program. You’re also not eligible if you completed all of your educational program’s coursework, even if your school failed to provide a certificate or diploma. You also do not qualify for student loan forgiveness if you transferred to a comparable course following your school’s closure.
Contact your loan servicer to begin the forgiveness process. As you wait, continue making your student loan repayments until your application is approved.
As a final note, those who attended a school that closed between Nov. 1, 2013, and Jul. 1, 2020, may be eligible for an automatic loan discharge. The U.S. Department of Education will initiate the discharge for you if you did not enroll in a different school within three years of your original school’s closure date.
Program No. 7 – Perkins Loan Forgiveness
As the name implies, this form of student loan forgiveness only applies to federal Perkins loans. You may qualify for this program if you have served as a teacher in the nonprofit or public elementary and secondary school systems. However, not all teachers are eligible. You must be one of the following to receive this loan forgiveness:
- A teacher in a field in which your state education agency struggles to find qualified teachers. Typical fields include languages, science, and mathematics. However, the fields vary by state, depending on teacher availability.
- You teach for a school that primarily serves students from low-income families.
- You’re a special education teacher working with infants, toddlers, children, or any youngsters who have mental or physical disabilities.
Unfortunately, you are not eligible for this loan forgiveness if you teach in the post-secondary system.
The exact amount of loan forgiveness you receive is determined by how long you’ve taught for and your job description. Furthermore, those working in other educational fields may also be eligible for a full or partial loan discharge. As such, you may be able to apply if you work in one of the following fields:
- The military
- Early childhood education
- Law enforcement
- As faculty in a university or tribal college
- Public defending
- Relevant volunteering services
- As a medical technician
- Family or child services agencies
- Early disability intervention
You may also qualify if you’re either a librarian or speech pathologist with a master’s degree from a Title I educational institution.
Contact the school that provided the loan to apply for Perkins student loan forgiveness. Typically, your school will have a Perkins loan professional that you can work with. You can also find more details about cancellation eligibility and how much of your loan may be canceled on the Federal Student Aid website.
Program No. 8 – Teacher Student Loan Forgiveness
If you have a Direct or FFEL loan, you may be eligible for up to $17,500 of student loan forgiveness. This program applies to teachers who have taught full-time for at least five consecutive years. Furthermore, the teacher must work in an educational agency, elementary school, or secondary school in a low-income area.
Beyond this essential eligibility requirement, you must also meet the following criteria:
- At least one of your five teaching years occurred after the 1997-1998 academic year.
- You have no outstanding balance on your loan as of Oct. 1, 1998.
- If you took out your loan after Oct. 1, 1998, you must have no outstanding balance on the date you received the loan.
- Your loan was received before the conclusion of your five years of teaching service.
You must also meet eligibility requirements that demonstrate you are a “highly qualified teacher”:
- You have a minimum of a bachelor’s degree.
- The state has certified you as a teacher.
- Your license or teaching certification has not been waived on a provisional, emergency, or temporary basis.
You can learn about more specific criteria, in addition to finding this program’s application form, on the Federal Student Aid website.
Program No. 9 – Unpaid Refund Discharge
Available for FFEL and direct loans, this student loan forgiveness may apply if your school failed to return your loan after you withdrew. It specifically relates to the portion of your loan that the school didn’t return, meaning you must still repay any part of the loan that applied to the time you spent in school.
Contact your former school if you believe you’re eligible for this type of student loan forgiveness. You can resolve the issue without applying for an unpaid refund discharge in many cases. If your school is no longer open, consider applying for the closed school forgiveness program. However, if the school is open and refuses to refund your loan provider, you can apply for an unpaid discharge using the Loan Discharge Application: Unpaid Refund form.
Program No. 10 – Borrower Defense
This program might be for you if your school failed to do something required for your loan. For example, this is the program you should use if your school did not provide the educational services the loan was supposed to cover.
This program also covers students whose school misled them or engaged in inappropriate conduct during their studies.
The borrower defense program is a little more complicated than most because it leverages state law to prove misconduct or failure to provide services. Still, you can apply for it online as long as you believe you can demonstrate that your school violated state law. The application requires you to provide the following:
- The school’s name
- Your study program
- Your FSA ID
- The dates you were enrolled
- Any documentation that supports your claim for borrower defense
Get Your Loans Forgiven
Instead of waiting to see if the government will follow through on its various promises related to student loan forgiveness, take the matter into your own hands. The above programs may provide you with a discharge from the responsibility of repaying your loans.
Before applying for student loan forgiveness, read the criteria for your chosen program carefully. Finally, always continue to repay your loans until you receive a judgment in your favor. Failure to do so could lead to penalties.