Repaying student loans can be a long process, but there are ways some borrowers can speed things up—and without paying more.
If you volunteer, teach, or work for a public service or a nonprofit employer, you might qualify to have part of your federal loan debt wiped out via loan forgiveness. This can also be an option for Perkins loan borrowers or those on income-driven repayment plans.
You shouldn't base the amount you borrow or choose your career just for the possibility of loan forgiveness. However, if you already have the debt or are already considering these eligible fields, loan forgiveness may help you a great deal.
We've put together an eBook of more than 100 different student loan forgiveness plans, but here are the more commonly used federal programs designed to help you erase your federal student loan debt.
Teacher Loan Forgiveness
If you enter into a teaching profession, you might qualify for loan forgiveness. You must have been teaching full time for 5 consecutive years in an eligible low-income school in an eligible subject.
The U.S. Department of Education keeps a directory of which schools are eligible. If you've just graduated, check schools before you apply for jobs. If you're already in this field, see if your school qualifies. Depending on what you teach, where you teach, and how long you've been teaching, you may be eligible to have anywhere from up to $5,000 or up to $17,500 forgiven.
Public Service Loan Forgiveness
Public Service Loan Forgiveness is very similar to Teacher Loan Forgiveness in that it's partly your work service that makes you eligible. You may be eligible for loan forgiveness if you work full time for an eligible public service or nonprofit employer (it doesn't matter what your actual job is) and you've made 120 eligible, on-time Direct loan payments after October 1, 2007, over at least 10 years.
The loans have to be Direct loans, so if you have other federal loans, you'll need to consolidate into the Direct Loan program to potentially qualify. Payments made to your loans before you consolidate into the Direct Loan program don't count toward your eligible payments.
Ten years may seem like a long time, but at that time, your remaining loan balance could still be significant (especially if you opt for an income-driven repayment plan). So, if you're entering into a career of public service or teaching, look into getting part of your loan forgiven. Be sure to make payments on time and follow all of the guidelines. Also, contact your loan holder to make sure that your repayment plan is eligible for one of the forgiveness programs so you don't miss out.
Special Forgiveness For Perkins Loans
In addition to the types of forgiveness for public service and teaching, Perkins loan borrowers may be able to have a portion of their entire loan balance forgiven if they work in one of these occupations:
- Speech pathologist or librarian at a Title I-eligible school
- Nurse or medical technician
- Child or family services
- Early intervention
- Head start
- Law enforcement or correction officer
- Military service (active duty)
- Pre-kindergarten or childcare
- Volunteer service
For these occupations, if you qualify, Perkins loans will be forgiven incrementally—a bit each year that you are eligible. It's best to apply as soon as you're eligible for forgiveness because you're only able to cancel the debt you still have yet to pay. If you were eligible the last few years but didn't apply for forgiveness, the portion that you paid after you were eligible can't be forgiven.
Contact your university or loan holder to find out more details of debt forgiveness for Perkins loans.
In some rare instances, you can apply to have your entire remaining loan dismissed or discharged in one fell swoop. However, these circumstances are very rare and most of them are things you wouldn't want to happen in the first place:
- The student benefiting from the loan or the borrower of the loan dies.
- You become totally and permanently disabled.
- Before you can complete your degree, your school closes.
- Your school fabricated or falsely signed your promissory note and you are unable to transfer your credits elsewhere.
- Your school falsely certified your qualifying status.
- Someone was convicted of fraudulently taking out a student loan in your name.
- Your school owes your loan holder a refund
- You attended a school that committed fraud by its actions or by not doing something, misrepresenting services, or violating a state law related to your loans or the educational services you paid for.
- You file for bankruptcy (this is rare, but not impossible).
Keep in mind that for many of these discharge scenarios, it's possible that the amount written off your loan will be taxable as income.