Personal finance

The borrower’s guide to student loan forgiveness

With graduation day behind you, now’s the time to celebrate everything you’ve accomplished over the past several years. Earning a degree is no small feat, and these post-college days should be about looking ahead and navigating a new career.

For many recent grads, however, understanding student loans and how to pay for them can look intimidating at first glance. Luckily, income-driven repayment (IDR)  plans, student loan forgiveness programs, and consolidation options help you map a clear path forward to paying off your loans in a way that works best for you.

If you feel initially daunted, you’re not alone—as of June 2018, there were more than 44 million student loan borrowers throughout the U.S.

For these millions of borrowers, understanding the loans themselves can seem complicated enough, never mind various federal student loan forgiveness programs and their individual requirements.

To start from the beginning, today’s student loan forgiveness programs are designed to cover the majority of borrowers with federal loans. Each available plan was created to help early professionals find daily financial balance as they work toward paying off these large sums.

In the past year, a great deal of attention has surrounded the large percentage of rejected Public Service Loan Forgiveness applications. According to Forbes, the majority of these denied applications stem from a misunderstanding of the repayment process, errors with paperwork, and picking the wrong forgiveness program for a specific federal loan.

The takeaway here? The most important step toward receiving student loan forgiveness is fully understanding the plan that’s right for you, as well as how to keep yourself on track with it.

Our guide provides a starting point for understanding student loan forgiveness, cancellation, and discharge as you enter this new phase of your career. By learning about the process before you begin, you can overcome the uncertainty that often comes with paying back your student loans and instead focus on financial stability.

What is Student Loan Forgiveness?

Student Loan Forgiveness programs aim to help borrowers responsibly pay down their student loans in a set amount of time. Income-driven programs, for example, set a monthly payment schedule that aligns with each person’s individual salary. Other forgiveness programs, such as those in public service-based careers, reward a set number of steady payments by waiving a loan’s balance.

The majority of student loan forgiveness programs can begin in the early part of your career. This sets recent grads on a clear track to paying off their loans while maintaining financial balance in these initial years. Some plans focus on income-based monthly payments, while others offer cancellation after a certain amount of time working in a specific industry.

Some of the most well-known loan forgiveness programs assist professionals in the public service, non-profit, and educational sectors, as well as those who work in healthcare, public law, and government agencies. Plans like the Public Service Loan Forgiveness program (PSLF) encourage students to enter service careers with the promise of loan forgiveness after 10 years.

Loan cancellation programs also step in to help students in a range of situations, such as those who attended a school that closed early or those who are collecting Social Security disability benefits.

It is important to note that private loans are not eligible for federal loan forgiveness. Borrowers with private loans still have options for paying down their balances with stability, however, especially when properly utilizing refinancing programs.

This is especially helpful when you have multiple loans from school (undergraduate and/or graduate) with various due dates and minimums. Refinancing your student loans offers one interest rate and monthly payment, as well as a long-term payoff plan.

Though these program details seem initially complex, they are more straightforward than they appear. Progress in the past decade has opened up payment plans to nearly every borrower with federal loans, so it’s worth taking a look to see how student loan forgiveness applies to you. Begin by narrowing down the programs right for your career, salary, and payment preferences, and then dive into the details on how to get started today.

Who is Eligible for Student Loan Forgiveness?

While some student loan forgiveness programs rely on your chosen career path, others offer IDR plans throughout all industries. No matter the plan you choose, there are several details before to consider when clarifying your eligibility.

As you research the best student loan forgiveness program for you, begin by compiling these details in a central location:

Loan Type

Clarify your type of federal loan (or loans), whether it is a Direct, Perkins, or Federal Family Education loan (FFEL).

Employer Eligibility

Ask about your current or prospective employer’s eligibility for forgiveness programs—programs like PSLF depend on your employer, not necessarily your job title within the organization.

Income Qualifications

Determine whether IDR plans are best for you based on your discretionary income. This number is determined by finding the federal poverty line for your family size, multiplying it by 1.5 and subtracting this from your annual income. Ten, twenty or twenty-five percent of this amount—depending on the specific plan—would be your capped payment for the year.

Loan Start Dates

Compile the start dates for each of your loans to determine eligibility in each program. For example, the Pay as You Earn (PAYE) program only applies to those who took out their first federal loan after October 1, 2007. Check out our income-driven explanation below for specifics.


Having expert help throughout the process can eliminate any confusion along the way. Gather contact information for your federal loan provider and your school’s financial aid office for assistance.


Organize all necessary forms for verifying employment through industry-specific loan forgiveness. These may include the Public Service Loan Forgiveness Application, Income-Driven Repayment Plan Request, or the PSLF Employment Certification Form.

Then, you can look into different eligibility options:

Career-Based Student Loan Forgiveness

Choosing a career path in public education, government, or another community-focused industry opens the door to a range of student loan forgiveness programs. For example, Public Service Loan Forgiveness was established in the fall of 2007 to assist those with full-time careers in a range of service-centric areas.

Begin by checking out the requirements below and when in doubt, check in with both your employer and by contacting employees at My Fed Loan for questions completing the Employment Certification Form.

You may be surprised how many positions and organizations qualify for PSLF. Though these categories are quite broad and include a large number of businesses and organizations, it’s important to verify with your employer that you meet the given criteria.

Check out the Department of Education website to read the full specifics on whether your organization qualifies. This website answers borrowers frequently asked questions in unique situations like working for-profit advocacy groups or religious organizations, and explaining what constitutes as full-time employment. On the whole, you can qualify if you work for one of the following types of employers:

  • Nonprofit with 501(c)3 status
  • Nonprofits that don’t have this specific status, but meet other qualifying public service requirements (listed below)
  • Local, state, and federal government positions
  • Americorps and Peace Corps

Check if your employer qualifies as a tax-exempt organization in the IRS’s database. No matter your role within one of these organizations, your eligibility depends on the employer itself.

PSLF also often applies to those in the community that provide public service without tax-exempt status. These include:

  • Military, law enforcement, and public safety workers
  • Emergency workers
  • Public educators, librarians, and school health service providers
  • State-funded early education teachers
  • Public health workers
  • Public library workers
  • Public interest legal services
  • Public assistance for elderly and disabled people

Federal Student Loan Repayment Plan

Certain federal agencies offer their own specific loan repayment program to attract and retain top employees. Known as the Federal Student Loan Repayment Plan, employers will pay up to $60,000 of a Direct, PLUS or FFEL Loan, even in the case of a Parent PLUS loan taken out for a child.

New employees are required to sign a three-year contract minimum and will receive up to $10,000 toward their loans each year, with an overall cap of $60,000 per person. Employees must stay in good standing during these three years, or they will be asked to repay the gifted amount.

Over 30 government agencies participate in the program, and many will specify which degrees and positions qualify within their agency. The details of each agency’s programs are usually discussed during the latter part of the interview process.

Income-Driven Student Loan Forgiveness

No matter your industry, IDR plans assist those who pay more than 10 or 15 percent of their annual discretionary income toward student loans. Depending on when your loan began, you may qualify for one of the four programs that both cap your monthly payments and forgive the remaining balances after 20-25 years.

Though these IDR plans are required to apply for PSLF, they can be used by workers in all industries. These programs are only ideal, however, when your monthly payment can cause financial hardship. See our guide later in this piece for information on specific IDR plans.

Consolidating Your Federal Loans

Consolidating your federal loans is necessary to receive student loan forgiveness within certain programs.

Public Student Loan Forgiveness, for example, is only open to those with Direct Loans. If you have a collection of loan types, such as a mix of Perkins and FFEL Loans, federal consolidation groups these together into one Direct Consolidated loan, thus opening up eligibility.

The consolidation process also simplifies IDR plans such as PAYE and Income-Contingent Repayment. See the specific requirements of each program below to see if consolidation is right for you.

Consolidation also groups together a collection of different loans with differing stipulations into one easy-to-understand loan. This streamlines your interest rate and payments and may help you qualify for specific student loan forgiveness programs, depending on their criteria.

Other eligibility options:

You may also be eligible for student loan forgiveness or cancellation if:

  • You have a Perkins Loan and work in an eligible field for gradual cancellation such as education (see specifics below), firefighting, law enforcement, the military, and more.
  • You teach qualifying subjects at a school recognized in the Teacher Cancellation Low Income (TCLI) directory.
  • Your school closes before graduation
  • You need to file for bankruptcy and file a specific court order
  • You receive false certification of loan eligibility
  • You are owed a refund by the school after withdrawal from the program

There are also allowances made in the unfortunate event of the borrower’s death or permanent disability.

Types of Student Loan Forgiveness Programs

Once you’ve decided that pursuing student loan forgiveness is the best financial decision for you, it pays to explore the specific programs offered for federal loans. While some cater to specific careers, all offer options to manage payment for the next decade or two. The purpose of these programs is to provide financial stability to early-career borrowers planning for their future.

Income-Driven Repayment Plans

The four income-driven federal programs available determine your monthly payment based on your discretionary income and family size. Discretionary income is determined by your state’s federal poverty line.

After a set number of years making qualifying payments on an IDR plan, the balance of your federal loan is forgiven. Borrowers with federal loans can choose which program works best for their career choices, lifestyles, and long-term payoff plans.

Though these programs are available regardless of career, they are required for those applying for the PSLF. Therefore, this a great starting point no matter which option you choose to pursue.

IDR plans include:

Pay as You Earn (PAYE): Established for those who borrowed a federal loan after October 1, 2007 and those who borrowed a Direct Loan or Direct Consolidation Loan after October 1, 2011—PAYE caps monthly loan contributions at 10 percent of your discretionary income. After 20 years of eligible payments, the remaining balance is forgiven.

Revised Pay as You Earn (RePAYE): This revised program launched in 2015 to assist a broader group of borrowers with loans of all ages, including those before October of 2007. Similar to PAYE, qualifying borrowers with a financial hardship can apply for monthly payments based on their annual household income. Final loan balances are forgiven after 20 years for undergraduate study and after 25 years for graduate study.

Income-Based Repayment (IBR): IBR works similarly to the programs above, but varies based on whether your federal loans were borrowed before or after July 1, 2014. Newer borrowers will pay no more than 10 percent of their discretionary income and must make 20 years of eligible payments for forgiveness. If loans were taken before July 1, 2014, borrowers will pay no more than 15 percent, and receive forgiveness after 25 years. Either way, the new monthly payment cannot exceed that of the standard 10-year repayment plan.

Income-Contingent Repayment (ICR): Though you may not get the lowest monthly payment on ICR, this option is open to all Direct Loan and Direct Consolidation Loan borrowers, including parents that consolidated their PLUS Loans. You are also not required to meet a specific low-income level to qualify. Payments are made over 20 years and chosen based on whichever amount is lower: either 20 percent of your discretionary income or fixed-monthly payments from a 12-year loan.

Public Service Loan Forgiveness

One of the most popular and widely used programs, Public Service Loan Forgiveness assists student loan borrowers with careers in the non-profit, government, and service-focused sectors.  After 120 qualifying payments working in an eligible career, the remaining balance of your loan is forgiven. Basic requirements for PSLF are:

  • Loans must be through the Federal Direct Student Loan Program
  • Borrowers must have made 120 eligible payments within a qualifying payment plan
  • Borrowers must work for local, state, or federal government; a non-profit organization as a full-time employee; be a member of AmeriCorps or Peace Corps; or teach at a school listed on the TCLI directory (this differs from Teacher Loan Forgiveness Program listed later).
  • The full list of qualifications is outlined on the Department of Education’s website

Borrowers who believe they are eligible for the program are urged to fill out the PSLF Employment Certification Form as soon as they begin to make qualifying payments. It’s important not to wait until the end of the ten-year period to submit this certification as many borrowers are now learning that years of their payments were not qualified. It is safest to begin the process early and adjust as needed as you go.

Note: If you have Perkins or Federal Family Education loans, you will need to consolidate them into a Direct Consolidation Loan and make 120 qualifying payments on that loan to become eligible for PSLF forgiveness.

Perkins Loan Cancellation

Qualifying teachers can have up to 100 percent of their Perkins Loans canceled when working full-time in a specific type of school setting. These situations include teaching in schools serving low-income families, teaching special-education programs, or teaching subjects in need of qualifying teachers (as determined by the state). This program also includes positions such as guidance counselors and librarians whose work constitutes teaching, but whose roles fall under different job titles.

With each qualifying teaching year, educators can have a percentage of their Perkins Loan canceled. Low-income or special-education status is determined by the Department of Education.

A range of professional and volunteer service members also qualify for Perkins Loan Cancellation. The majority of the programs below offer up to 100 percent loan forgiveness after five years of qualifying service. Details vary depending on:

  • The date the loan was borrowed
  • The type of loan
  • The number of years the borrower serves an employee

See the Department of Education’s detailed cancellation chart for a breakdown of forgiveness programs for the following careers:

  • Full-time nurse and medical tech
  • Full-time firefighter
  • Early childhood educator
  • Police or law enforcement officer
  • Public defender
  • Speech pathologist with Title I Master’s Degree
  • Military servicemen and women
  • Librarian with Title I master’s degree
  • Faculty member at tribal university or college
  • Professional early intervention disability provider
  • AmeriCorps VISTA or Peace Corps Member

Teacher Loan Forgiveness Program

For teachers in education agencies or schools serving low-income families, Perkins Loans borrowers are not the only ones who benefit from forgiveness programs. The Teacher Loan Forgiveness Program also forgives up to $17,500 from your:

  • Direct Subsidized Loans
  • Unsubsidized Loans
  • Subsidized and Unsubsidized Federal Stafford Loans
  • Direct and Federal Consolidation Loans (According to the Department of Education, this applies to the, “Outstanding portion of the consolidation loan that repaid an eligible Direct Subsidized Loan, Direct Unsubsidized Loan, Subsidized Federal Stafford Loan, or Unsubsidized Federal Stafford Loan.”)

The Teacher Loan Forgiveness Program has specific requirements based on your teacher training, as well. Qualifying teachers must have a bachelor’s degree and state certification. Public charter school certifications are determined by the school’s specific charter requirements.

Additional requirements for new teachers, such as a state test in specific subject matter, may be required for consideration in the program.

What is Student Loan Discharge?

Although the cancellation, forgiveness, or discharge of student loans are all similar in some ways, the term “discharge” is often used in extenuating circumstances that either negate the validity of the original loan agreement or state the borrower is no longer physically able to pay back the balance. Reasons for student loan discharge and cancellation include:

  • Total and permanent disability
  • Death
  • Bankruptcy (requires a specific filing with the courts)
  • School closure while you were attending, on leave, or within 120 days of withdrawal from school
  • False certification of student loan eligibility or unauthorized signature/payment on a loan payment
  • Unpaid refund—if you withdrew from school and did not receive a refund for your unused time

Tips for Applying for Student Loan Forgiveness

Now that the majority of the student loan programs have matured past their 10-year (or in some cases, 20-year) point, we’re learning more and more about the common mistakes made on the journey to student loan forgiveness.

For each long-term forgiveness program, you want to make sure you’re checking in with a financial professional and completing all necessary forms while making the qualifying payments themselves. Waiting until the end of your payment period to check on eligibility could leave you waiting longer, paying more, or even learning that you never qualified for the program.

As you get started, consider these tips for making sure you’re on the right track.

Understand Your Loan Type

As explained above, federal loans come in different forms. Direct loans are treated differently than Perkins or FFEL loans, for example. And though each has their own options for cancellation or forgiveness, be sure to take this into consideration before starting on a plan toward your qualifying payments.

Reminder: If your federal loans do not qualify for the preferred program, you can often consolidate through the Direct Federal Consolidation program. Federal consolidation is also helpful if you borrowed before the qualifying program date.

Join an Income-Driven Repayment Plan

Payment plans differ in order to cover as many borrowers as possible. It’s important to find the one that makes the most sense for your situation.

For example, if you qualify for PSLF, you want to steer clear of the standard 10-year repayment plan since you’ll have nothing left to be forgiven at the end of your cycle. You also need to be sure to recertify for your program each year, as it is assumed salaries change year by year.

Check Your Employment Certification Form (ECF) for Errors

The Department of Education blog outlines the common mistakes that cause them to reject ECFs for forgiveness programs requiring proof of career eligibility. These often include:

  • Missing Fields: Everything on the form must be filled out for consideration, including your Employee Identification Number (EIN). The DOE explains that this is the most commonly excluded bit of info. Find this number on your annual tax form.
  • Altered Information: If you or your employer need to make changes to your form, be sure to include the appropriate person’s initials next to the change before sending it to the DOE. Without these initials, any crossed-out or changed info could void the form’s validity.
  • Inconsistent Dates: For PSLF, you’ll need to send in certification forms throughout your period of employment. When dates on each form do not line up, this can stall your process or discredit your information. Be sure to keep a copy of each one around so you can stay clear and consistent.

Never Miss a Payment

Minimum payments that arrive after 15 days of the due date are not counted toward the 120 qualifying payments. Whenever possible, arrange automatic withdraw to ensure you don’t miss a date.

Stick to a Calendar

Keeping yourself on track may feel daunting, but making a student loan calendar or using an online task program could help. Include your monthly payment dates and when you should begin your annual employment certification process, and note dates that any mail or forms arrived so you can keep your files in order.

Starting the Student Loan Forgiveness Process

If you’re graduating with federal student loans, it is likely that you qualify for one of the many student loan forgiveness, cancellation, or discharge programs. These plans are designed to help you pay off your loans responsibly while living comfortably.

Though private student loans do not fall into these categories, refinancing can help you lower your monthly payments, save on interest, and solidify a final payoff date down the line.

No matter your decision, these programs allow you to focus on the great accomplishment of graduating from school and the exciting years ahead as you grow your career. Begin your student loan journey off right by considering which loan forgiveness program works best for you.

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