When someone mentions student loan forgiveness, they are normally referring to the Public Service Loan Forgiveness (PSLF) program, which forgives people with federal student loans. If you qualify for this program, the complete balance of your federal student loan will be forgiven. This means that your payments permanently end. There are a few other programs that will forgive your federal loans, but the PSLF program is the largest and most popular.
The other programs include the Teacher Loan Forgiveness program, which can potentially forgive up to $17,500 if you work in a low income area. The government also offers Perkins Loan Cancellation, Disability Discharge, Death Discharge, Bankruptcy Discharge (rare), Closed School Discharge, False Certification of Student Eligibility Discharge, and Unpaid Refund Discharge. Click on the links to learn more about each program.
Student Loan Forgiveness Qualifications and Application
To qualify for PSLF, you must have made 120 qualifying monthly payments on your student loans while under a qualifying repayment plan. A qualifying payment must be made after October 1st, 2007, have paid the full amount due, not be over 15 days late, and be paid while employed by a qualifying employer. Payments while in-school and the grace period, deferment, or forbearance do not count as qualifying monthly payments. A qualifying repayment plan includes all of the income-driven repayment plans. This means that you must make 120 on-time payments while on one of the income-driven repayment plans to qualify.
Moreover, a qualifying employer, means a government organization or a 501(c)(3) tax-exempt not-for-profit organization. A not-for-profit organization that is not tax-exempt can also qualify if their primary purpose is to provide certain types of qualifying public services. You must work full time for these employers to qualify. If you serve full-time as a AmeriCorps or Peace Corps volunteer, you also qualify for the PSLF Program.
Additionally, to qualify, you must have direct loans from the government. Federal Perkins Loans and Federal Family Education Loans are not eligible. However, you can consolidate them into a Direct Consolidation Loan that will qualify.
One final requirement is to complete and submit the Employment Certification for PSLF form while making eligible payments. You must submit this form every year you work at a qualifying employer or when you change jobs to qualify. If you have not been doing this, you can submit one for each employer you worked for while making qualifying payments. To submit the application, you can mail or fax it to the Department of Education. You can also submit it online if FedLoan Servicing is your servicer.
Only after having completed all of these steps and submitting the PSLF application form will you be considered to have officially applied for student loan forgiveness. The process may not provide a great experience but it can certainly relieve someone of their student loan obligation.
Alternatives to Student Loan Forgiveness
If you do not qualify for the PSLF option, there is still hope. You can always check out the other options that were listed above. You can also try to get the loan discharged in bankruptcy. While rare, it does still happen on occasion. To qualify, you must declare Chapter 7 or Chapter 13 bankruptcy. You must also prove that repayment of your student loans would cause undue hardship to you and your dependents. The court will examine multiple factors to determine undue hardship.
Another option for those looking to have their student loans forgiven is to refinance their loans to an Income Share Agreement. If you're not familiar with Income Share Agreements, you can find out more here. This financing option can help lower, or even eliminate, your monthly payments in times of hardship. To learn more, check out the Defynance website.
