Student loans may be a terrific investment for your future or a major if not carefully considered or exploited. If you have a student loan or are considering receiving one, you should find out if you are qualified for student loan debt forgiveness. To be eligible, you must volunteer, serve in the military, work in the medical field in specified locations, or satisfy other requirements.
It might be difficult to know where to begin when there are so many different student loan debt forgiveness programs available. And, for many, it is highly dependent on your circumstances, financial and career objectives.
The purpose of this guide is to bring together as many different options to discover student loan debt forgiveness as possible in one place so that you can receive student loan debt forgiveness quickly.
Student loan debt forgiveness based on repayment plans
These student loan debt forgiveness schemes are linked to your repayment schedule for your student loans. You’ll be eligible for student loan debt forgiveness if you’re on one of these qualifying repayment plans at the conclusion of your payback period.
The majority of students are eligible for student loan debt forgiveness in one of these “backdoor” approaches. The formula is simple: pick a student loan repayment plan that you qualify for, and any remaining balance on your loan will be forgiven at the end of the repayment period.
It’s crucial to remember that in order to be eligible for these income-driven repayment plans, you must meet certain criteria. There is no student loan forgiveness if there is no remaining balance at the end of the loan term.
Loan Forgiveness under the Income-Driven Repayment Plan (IDR)
How long you make on-time payments while on an eligible repayment plan determines the second form of student loan debt forgiveness. To qualify for debt forgiveness based on your repayment history, you do not need to be employed in a certain sector.
You will make on-time payments for 20 or 25 years, depending on the repayment plan. The outstanding loan balance is forgiven after that time period. It’s important to remember that the amount forgiven is considered as taxable income.
After 20 years of on-time payments, you are eligible for the PAYE Repayment Plan. In most cases, this repayment plan will provide you with the lowest monthly amount. You must demonstrate financial hardship to be eligible for this repayment plan. You may, however, return to the program after the hardship has passed.
The Revised PAYE repayment plan is identical to the PAYE repayment plan, with the exception that you do not need to demonstrate financial hardship to qualify. You may be eligible for loan forgiveness under the Income-Contingent or IBR Plans after 25 years of on-time payments.
Only Federal Student Loans are eligible for forgiveness after 20 or 25 years of on-time payments. Private student loans are ineligible. After successful 120 payments, the Public Service Loan Forgiveness Program (PSLF) will forgive qualified student debts (10 years).
If you’re qualified, this is the best approach to seek student loan debt forgiveness in 2022.
The beauty of public service is that it has such a broad scope. Any job with
- a federal
- state
- or local government agency
- entity
- or organization
- or a not-for-profit organization
that has been certified as tax-exempt by the Internal Revenue Service, qualifies as qualifying employment (IRS). For PSLF purposes, the kind or nature of employment with the organization is irrelevant.
The following people will be eligible for PSLF Student Loan Debt Forgiveness in 2022.
It no longer matters what type of federal student loan a borrower has or what repayment plan he or she has because of the temporary waiver. If the borrower worked full-time for a qualifying firm, all payments will be eligible for the Public Service Loan Forgiveness program.
Previously, possessing a Direct Loan and having an IDR plan, which determines payments based on family size and income, were also requirements. Those who had Federal Family Education Loans, which were backed by the government but made by private lenders, were not eligible.
What can borrowers do now?
Many borrowers don’t have to do anything to have their eligible payments reviewed and updated by the Department of Education.
If they haven’t already done so, those with older Federal Family Education Loans will have to consolidate them into Direct Loans. Payments paid prior to consolidation will now be considered for relief. Those who already have Direct Loans but haven’t filled out employment certification paperwork for previous payback periods must do so immediately.
Nurses are eligible for loan forgiveness
Under the NURSE Corps Loan Repayment Program, registered nurses, nurse practitioners, and nursing professors who serve in high-need population regions or places where there is a critical shortage may be eligible to have up to 85 percent of their debts forgiven.
For working two years in an underprivileged region, qualified individuals might have 60% of their school loans canceled. There can be a 25% addition if they work for three years.
Some states also provide aid with debt repayment. Visit the Loan Forgiveness for Nurses website to check if your state is one of the 33 that offers it, as well as the qualifications for qualifying.
Loan Forgiveness for Doctors
Physicians, dentists, pharmacists, and mental health professionals, in particular, have a number of opportunities for loan forgiveness, both national and local.
Depending on whatever program you enroll in, the conditions and amount forgiven differ substantially. Check out the links to check the amount of loan forgiveness available and criteria for Army physicians; Indian Health Services, National Institute of Health, as well as state-by-state programs.
Eligibility for Parent Borrowers
A parent PLUS loan, like student loans, can be dismissed if you die, become completely and permanently incapacitated (not the student on whose behalf you received the loan), or if your debt is discharged in bankruptcy. If the kid for whom you borrowed dies, your Parent PLUS loan may be forgiven.
To forgive a parent PLUS Loan is possible in any of the following circumstances:
- Because the school closed, the student for whom you borrowed could not finish his or her program.
- The school made a mistake in certifying your eligibility for the loan.
- Your loan eligibility was falsely verified as a result of identity theft.
- The student dropped out of school, but the institution failed to issue a return of your loan funds as required by applicable laws.
Discharge of Student Loans
In rare instances, you may be able to get your student debts forgiven. Due to the nature of how the debt is removed and the possible taxability around it, we view student loan discharge to be a little different from forgiveness.
You may be eligible for a variety of discharge choices.
Closed School Discharge
Borrowers who were unable to finish their program of study because the institution closed while they were enrolled or within 120 days of their enrollment are eligible for this program. However, you must have been unable to transfer your credits to another qualifying institution to be eligible.
Discharge for False Certification (Identity Theft)
You may be entitled to have your student loans dismissed if you had loans taken out in the name that wasn’t yours owing to identity theft or other fraudulent certification. This implies someone faked your signature or information on a student loan.
If your identity has been stolen and student loans have been taken out, you must take a number of procedures. In addition, you should submit a police report.
Discharge for Total and Permanent Disability
You may be eligible to have your school loans forgiven if you become fully and permanently incapacitated.
A physician must certify that the borrower is unable to participate in substantial gainful work owing to a physical or mental handicap in order for the borrower to be eligible. This disability must be
- predicted to cause death
- to endure for at least 60 months
- or it must have previously lasted for at least 60 months.
From the moment your physician confirms your application, any remaining debt on your federal student loans will be forgiven.
The VA Secretary can also certify that the borrower is unable to work due to a service-connected disability. Any Federal student loan amounts outstanding after the date of the service-related injury will be forgiven. And any payments you made after your injury will be reimbursed to you, provided your case is approved by the VA.
Any outstanding debt on your Federal student loans would be forgiven if you were authorized based on the SSA determination.
Discharge From Bankruptcy
Many individuals assume that student debts cannot be erased in bankruptcy. This is not true. Borrowers may be able to have their student debts dismissed in bankruptcy, but this is an uncommon occurrence. You must show the judge that repaying your loans will put you in an unreasonable hardship.
This standard requires you to demonstrate that you will not be able to repay the loan in the future. Because the future is so far away, this fundamental element - future capacity - is difficult to grasp. Assume you are 35 years old. Is it true that you will never be able to repay your loans in the next 50 years? It’s a high bar to meet.
As a result, it might be difficult—but not impossible—to discharge Federal student debts in bankruptcy.
Furthermore, many attorneys (and even some judges) are unfamiliar with student loan and bankruptcy issues. If you’re considering going this way, make sure you choose an attorney who is well-versed in the regulations.
Repayment aid programs sponsored by the government
In some states, licensed teachers, nurses, physicians, and attorneys may be eligible to take advantage of debt relief programs. For example, the Mississippi Teacher Loan Repayment Program will pay up to $3,000 per year on undergraduate college loans to teachers with a certain teaching license for each year of full-time teaching in a defined geographical or topic region for a maximum of four years. To see if you qualify for a program, contact your state’s higher-education agency.
More than $1 billion in student debt forgiveness is on the way for Navient borrowers.
Navient will be compelled to erase $1.7 billion in private student loans for more than 60,000 borrowers who took out private loans for for-profit institutions under the terms of the settlement deal. Individual reparation payments of $260 will also be distributed by Navient to about 350,000 federal borrowers who were misled into hardship forbearance periods.
Borrowers are not required to take any more steps in order to obtain the payments or debt forgiveness at this time. The settlement administrator will send impacted federal borrowers a postcard in spring 2022. And private borrowers will get a letter from Navient detailing the debt cancellation by July 2022.
Interest on federal student loans has been eliminated for almost 47,000 service members.
The interest on some federal loans will be eliminated retroactively for more than 47,000 military personnel deployed to places that qualify them for imminent danger or unfriendly fire pay. This waiver is valid for both current and retired active-duty military personnel.
Service members will no longer have to apply for the interest waiver, thanks to the new computerized data matching, removing a barrier that has kept many from accessing benefits. Since 2019, 88 percent more service members are likely to obtain the interest waiver due to the use of computerized data matching.
Forgiveness, Cancellation, and Discharge: What’s the Difference?
Although the phrases forgiveness, cancellation, and discharge have similar meanings, they are employed in various ways. This is known as forgiveness or cancellation. And it occurs when you are no longer needed to make payments on your loans owing to your employment. Discharge occurs when you are no longer obligated to make payments on your loans owing to unforeseen circumstances, such as
- total and
- permanent incapacity
- or the closing of the school where you acquired your loans.
Finally, there are alternative options for student loan debt forgiveness.
Many of the 45 million debtors are unable to qualify for student loan forgiveness due to the stringent requirements. But there are other options available that may make repaying your debt a bit easier.
Signing up for one of the income-based programs is the most obvious option for federal loans. These student loan debt forgiveness programs alter your monthly payment based on your income, So you won’t have to pay much if you don’t make a lot. Borrowers might take advantage of historically low-interest rates in 2020 to see if refinancing their student loans made sense. Some borrowers were able to secure rates as low as 3% APR, bringing their monthly payments down to a more affordable level. However, if you refinance a federal student loan, you will lose access to the various government programs available. If your financial difficulties are just temporary, you might request that your debts be postponed or put on forbearance. This gives you time to restructure your finances so you can fulfill your monthly payment obligations.
