With the average student loan balance hitting $29,800 for the Class of 2018, you’re probably looking for any help you can get paying off your debt. And if you meet certain requirements, it’s possible to have a portion of your balance forgiven.
Not everyone qualifies for forgiveness: If you have private loans, for example, you’re on the hook to repay the full amount, and every forgiveness program has strict requirements. You shouldn’t count on forgiveness to get your debt under control, and you should never pay anyone who promises to get your debt forgiven—it’s likely a scam.
Public Service Loan Forgiveness
The Public Service Loan Forgiveness program is what most people think of when they think of loan forgiveness options. Full time employees of a government agency (federal, state or local) or of a 501(c)(3) qualify (note: those working for a religious nonprofit do not qualify).
The company you work for is the most important qualifying aspect for PSLF—not necessarily your job title. You can be an accountant or a groundskeeper, as long as you work for a nonprofit or government entity.
There are other fairly stringent requirements for qualifying, including making 120 (or 10 years’ worth) on-time payments to your loans.
You must have Direct loans, which include:
- Direct subsidized and unsubsidized loans
- Direct PLUS loans
- Direct consolidation loans
And you must be repaying your loans in an income-driven repayment plan:
- Pay As You Earn Repayment Plan (PAYE Plan)
- Revised Pay As You Earn Repayment Plan (REPAYE Plan)
- Income-Based Repayment Plan (IBR Plan)
- Income-Contingent Repayment Plan (ICR Plan)
Or a standard 10-year repayment plan. You must make 120 payments. You can read more about that here. You need to submit the Employment Certification for Public Service Loan Forgiveness form each year (and when you change jobs) to ensure you qualify. After your 120 payments, 100 percent of your loan balance is forgiven (but be aware that you’ll pay taxes on that like income).
Income-Based Repayment (IBR) Forgiveness
An income-based repayment plan is one of the four types of income-driven repayment (IDR) plans which can lower your monthly student loan payments. It requires you to pay 10 to 15 percent of your discretionary income for 20 to 25 years, depending on a handful of qualifying factors. If you’re enrolled in an IBR plan, you might have some of your loans forgiven after that time.
“Any remaining loan balance is forgiven if your federal student loans aren’t fully repaid at the end of the repayment period,” notes FinancialAid.gov.
As I wrote previously, “given the length of the plans, you may not have any debt left to be forgiven. How your income scales throughout your career will play a big role in that.”
You can qualify for IBR if your payments would be lower than the standard 10-year repayment plan (otherwise, you wouldn’t benefit from enrolling), and you have one of these types of loans, according to StudentAid:
- Direct subsidized and unsubsidized loans
- Direct PLUS Loans made to graduate or professional students (not parents)
- Direct Consolidation Loans that did not repay any PLUS loans made to parents
- Subsidized and unsubsidized Federal Stafford Loans (from the FFEL Program)
- FFEL PLUS Loans made to graduate or professional students (not parents)
- FFEL Consolidation Loans that did not repay any PLUS loans made to parents
- Federal Perkins Loans (if consolidated)
This type of repayment plan is best for those who have a lot of debt but don’t expect to have a high income throughout their careers.
Pay As You Earn (PAYE) Forgiveness
This is another type of income-driven repayment plan, similar to IBR. With PAYE, your payments are capped at 10 percent of your discretionary income, and you qualify if your payments would be less than your standard 10-year payments.
You need to make consistent payments for 20 years, and you need to be a new borrower as of Oct. 1, 2007. The same types of loans qualify as for IBR forgiveness.
There are income eligibility requirements for IBR and PAYE. PAYE is preferable to Revised Pay As You Earn (REPAYE), which we’ll get into below.
Revised Pay As You Earn (REPAYE)
REPAYE is similar to PAYE except that there are no income requirements. That means you could pay a lot more under this plan than via a standard 10-year repayment plan. But, if you make on time, consistent payments 20 years (25 for graduate loans), you can get the rest of your balance forgiven. You’ll want to do the math to make sure it’s worth it, though.
Income-Contingent Repayment (ICR) Forgiveness
This is the last of the four IDR plans. This plan requires you to pay the lesser of 20 percent of your discretionary income, or what you’d pay on a fixed 12-year plan. This is the only IDR repayment program available to parent PLUS loan borrowers. You must make on-time payments for 25 years, after that your balance is forgiven.
You can apply for any of the IDR plans on StudentLoans.gov.
Loan Forgiveness for Doctors
Physicians, pharmacists and other healthcare professionals have multiple options for loan forgiveness programs, depending on where they work.
The National Health Service Corps Loan (NHSC) Repayment Program
The NHSC “provides full-time and part-time commitment options for primary care providers to serve within a Health Profession Shortage Area at a NHSC approved site,” reports Credible. You “can receive up to $50,000 in loan repayment in exchange for at least a two-year service commitment.” You can stay on for a third year as well.
You can apply here.
The National Institute of Health Loan Repayment Programs (LRPs)
LRPs repay “up to $35,000 annually of a researcher’s qualified educational debt in return for a commitment to engage in NIH mission-relevant research,” per NIH’s website. See if you qualify here, and see more loan forgiveness options for medical professionals (including those in the military) here.
Loan Forgiveness for Nurses
There are multiple loan forgiveness programs available to nurses.
The Nurse Corps Loan Repayment Program
This program is offered to nurses who work in underserved communities for a minimum of two years. You must work in a “critical shortage facility,” which is defined here, but could be a clinic, hospital or some other facility that is in desperate need of nurses.
If you’re accepted into the program, it will pay “60 percent of your unpaid nursing education debt over two years—with an option to extend to a third year for an additional 25 percent of the original balance.” See the application here.
State and Federal Repayment Programs
Many states offer loan forgiveness programs to nurses and nurse practitioners. You can search through them here.
You might also qualify for PSLF, depending on where you work.
Loan Forgiveness for Teachers
Teachers have a few specific programs aimed at helping you manage your debt.
Teacher Loan Forgiveness Program
This federal program forgives up to $17,500 on your Direct Subsidized and Unsubsidized Loans and your Subsidized and Unsubsidized Federal Stafford Loans if you “teach full-time for five complete and consecutive academic years in a low-income school or educational service agency.” More here.
State Forgiveness Programs
Search for your state and teacher loan forgiveness programs.
Loan Forgiveness for Lawyers
The first thing lawyers should do is check with your state bar association and your law school to see if their forgiveness options. Then, google your state with forgiveness options for lawyers, and talk to your employer—they might be able to point you in the right direction. Attorneys who work for three years at the Department of Justice might qualify for $60,000 in assistance.
Remember, you might qualify for PSLF, depending on where you work, and if you enroll in an IDR plan, you’ll qualify after 20 to 25 years of on-time payments.
There are a few other cases where your loans might be forgiven, but for most people—including everyone with private loans—you will likely need to repay the full amount you borrowed, plus interest accrued. It might pay off to take the time to research all of your forgiveness options, but don’t count on a student loan silver bullet.