Student loan repayment can be daunting, especially if the student enters a public service field that may not be as lucrative as the private sector. As an incentive for the bright young minds of America to give back, there are a number of student loan forgiveness options for borrowers. Student loan forgiveness should not be confused with student loan discharge, which occurs if there is no way that the borrower can pay the loan (like in the case of disability or death) or if the education is no longer applicable (for example, if the school closes before the program completion).
Student loan forgiveness is decided by the lender, who determines if the borrower has earned the forgiveness through public service or teaching. There are some repayment programs that also act as a form of forgiveness. These forgiveness programs are designed to encourage students to teach in high-need fields, which vary per state and location. These fields can include science and math, as well as foreign languages. For a full list, visit http://www2.ed.gov/about/offices/list/ope/pol/tsa.doc.
Federal Student Loan Forgiveness
For federal loans, the Public Service Loan Forgiveness Program (PSLF) qualifies borrowers for forgiveness on the remaining balance of Direct Loans after 10 years of unmissed payments on those loans, employed full time by certain public service employers. 120 full payments must be made, and they must have been made after October 1, 2007. Note that FFEL and Perkins loans do not qualify for this program, but they can be consolidated into a Direct Loan to qualify (any payments made before consolidations do not count towards the required 120 payments, however). For more information, visit the Student Aid PSLF website.
Some other fields that offer student loan forgiveness plans include:
- Community service – For example, graduates who receive the AmeriCorps Education Award are eligible for a loan forgiveness of up to the maximum Pell grant for up to four years. Qualified loans include Stafford loans, consolidation loans, parent loans, Grad PLUS loans, Perkins loans, and state-funded loans.
- Military service – there are a number of repayment programs available to men and women who are in the service.
- Health services – there are a number of forgiveness plans and repayment programs available to those who enter the health services field.
State Student Loan Forgiveness
As laws vary by state, so do student loan forgiveness options. Some loan forgiveness programs are through the state, but others are through organizations specific to certain fields, like healthcare services. Research your specific state and see if you qualify for any of the local forgiveness plans.
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