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Benefits of Student Loan Forgiveness Act

Student loan forgiveness act

Student loan debt has progressively ballooned to become a major concern for the majority of Americans. The majority of these debtors are still looking for sustainable means of paying off their loans in an attempt to lessen their debt obligations. If you’ve been around for a while, you might have heard or read a guide to the federal Student Loan Forgiveness Act. According to some sources online, this student loan forgiveness act offers a way for borrowers to become eligible for forgiveness of loans under several different circumstances.

In essence, the student loan forgiveness act bill was introduced by the U.S. Congress in 2012. The bill aims to assist borrowers with their student debts through down payments. Also, apart from capping federal student loan interest rates, the bill aims to present a repayment plan that forgives borrowers of their loans after 10 years. However, this will be applicable if borrowers can consistently make monthly payments equivalent to 10% of gross income. Furthermore, the bill creates an avenue for borrowers who are public servants to enjoy forgiveness of loans after five years unlike the 10 years proposed for other borrowers.  

6 Benefits of Student Loan Forgiveness Act

Student loan forgiveness actBasically, the first and foremost benefit of the student loan forgiveness act is the situation it creates for eligible borrowers to obtain full or partial debt relief. However, this may mean different things to different benefactors of the Act. Therefore the 5 different categories below outlines the different ways individuals under different circumstances benefit from the student loan forgiveness act.

Public Service Loan Forgiveness Benefits

If you are a government non-profit workers, you can stand a chance to enjoy loan forgiveness through the Public Service Loan Forgiveness Program (PSLF). Under the PSLF, direct public service workers qualify after making a total of 120 monthly payments of their Direct loans. Usually, these payments made during full-time employment for a qualified employer must also be under a repayment plan which qualifies.

It is important to note that another student loan servicer manages this particular program. Therefore, in the event of your registration for this program, your former program transfers to the service provider the PSLSF. In addition, you need to bear in mind that your benefit for PSLSF and teacher loan forgiveness isn’t the same.

Permanent and Total Disability Discharge Benefits

If you happen to be permanently or totally disabled, you may meet the eligibility criteria and receive a discharge of your federal loans. The total and permanent disability also called TPD exempts you from the need to repay a Direct loan, Federal Perkins Loan or the Federal Family Education Loan. To become a beneficiary of the TPD, you must submit a completed application form for the TPD program. Also, you must attach documentation showing that you’ve met the minimum requirements that make you totally or permanently disabled. As a standard procedure, you submit this form to Nelnet. Nelnet is the service that helps implement the student loan forgiveness act for the Department of Education.

Generally, Nelnet accepts documentation from three main sources. Namely:

  • A physician
  • The U.S Department of Veterans Affairs (VA)
  • The Social Security Administration (SSA)

Teacher Loan forgiveness Benefits

Student loan forgiveness actThis is for full-time time teachers that have taught for five consecutive academic years. According to the requirements, such teachers in low-income educational agencies, elementary schools or secondary schools may qualify for forgiveness of loans. Usually, this loan would have to be an FFEL program loan or a Direct loan. Teachers who fall under this forgiveness plan may obtain a significant financial break from their monthly loan repayment obligations.

However, it is important to remember that you may benefit from teacher loan forgiveness vary. And it is determined based on a number of parameters.

Closed School Discharge Benefits

For those whose schools close during their enrolment or shortly after their withdrawal, they may qualify for forgiveness of their federal student loan. A good example is the recent closure of ITT and Corinthian College and the students that qualified for a closed school discharge benefit from loan discharge.

In addition, should you discover that your school misled you or misconducted itself according to any of the different rules and regulations, your federal student loans acquired during enrollment at this institution may be forgiven. This is called the Borrower Defense to Repayment. This opportunity also has its associated rules of eligibility and falls under the student loan forgiveness act. It is also sometimes referred to as “borrower defense”.

Typically, the borrower applies for borrower defense to repayment by submitting their application through the Department of Education.

Temporary Expanded Public Service Loan Forgiveness (TEPSLF) Benefits

For those who couldn’t obtain any benefits under the previous names programs, due to one reason or the other, you may obtain loan forgiveness under the TEPSLF program. With this opportunity, you benefit from loan forgiveness through an expanded list of qualifying criteria. This way your eligibility is reconsidered since you stand a higher chance of qualifying.

However, you must remember that the TEPSLF opportunity isn’t permanent with limited funded and is available only to those who apply early. Those who apply earlier are considered and awarded before others, despite the additional requirements.


For many students, the talk of a student loan forgiveness act may sound too good to be true. However, the benefits above show that it is worth finding the truth for yourselves. Through government intervention, you may get a legitimate means of getting by your student loans if you still paying. Nevertheless, there are some other options apart from the student loan forgiveness act out there that help borrowers with federal student loans to get forgiveness for their loans.

Simply remember to verify their specific requirements to ensure that you are eligible. You may find some are quite challenging to qualify for. Despite this fact, there is a caveat, you need to be wary of scams and costs to take into consideration. Though you can find legitimate student loan forgiveness acts and other loan cancellation programs, you need to keep an eye out for scammers with programs that over loan cancellation services at a cost. Hence, the challenge lies in distinguishing the genuine programs from the fake ones. Hopefully, we’ll consider this in another post.