Federal Student Loan Forgiveness

Student loan forgiveness means that you are released from your obligation to repay all or part of your student loan. A student loan forgiveness program may be an option if you meet the specific requirements.

Federal student loan forgiveness, cancellation or discharge all mean the same thing, but the terms are used in different ways and pertain to different situations. Review the sections below to learn more about student loan forgiveness programs and which ones you may qualify to receive.

Who qualifies for student loan forgiveness?

Every student loan forgiveness program has its own eligibility requirements, and not all federal student loans carry the same types of discharge or cancellation options. Certain circumstances can lead to the need to apply for student loan forgiveness, such as:

  • A closed school
  • Total and permanent disability
  • The borrower’s death
  • False loan certification, either by the school or through identity theft
  • S. armed forces service in hostile fire or imminent danger pay areas
  • Bankruptcy (only in rare cases)

In addition, student loan forgiveness is available to certain people as an incentive to work in various public service positions. Student loan forgiveness for teachers is available through the Teacher Loan Forgiveness Program. To be eligible for this student loan cancellation program, you must have taught full-time for five years in a low-income school or educational service agency and meet other program requirements.

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Federal student loan cancellation is also available to certain public service employees through the Public Service Loan Forgiveness Program. This student loan forgiveness public service option is for people employed full-time by federal, state, local or tribal government organizations at any level and certain not-for-profit organizations. FAFSA loan forgiveness for public service applicants must have an eligible Direct Loan and have made at least 120 qualifying payments before applying.

Differences between Student Loan Forgiveness, Cancellation and Discharge

There are not many differences between student loan forgiveness, cancellation and discharge. However, the terms “student loan forgiveness” and “student loan cancellation” are often used to describe what happens when you are no longer required to make payments due to your job. Student loan discharge usually refers to being released from a loan due to other circumstances, such as when the school where you received your loans closes. Federal student loan discharge is also the preferred term when a total and permanent disability prevents you from fulfilling your promise to repay a loan.

Types of Student Loan Forgiveness Programs

Student loan forgiveness programs differ according to the type of loan you have. Federal student loan discharge and cancellation options must be discussed with your loan servicer because each loan has its own specifications.

Federal Direct Loan and Federal Family Education Loan (FFEL) student loan forgiveness programs and the amount forgiven include:

  • Borrower’s total and permanent disability or death: 100 percent
  • Bankruptcy: 100 percent
  • Closed school: 100 percent
  • False loan certification by school: 100 percent
  • False loan certification by identity theft: 100 percent
  • School does not make required return of loan funds to lender: up to the amount due
  • Student loan forgiveness for teachers: up to $17,500
  • Student loan forgiveness public service: 100 percent of the remaining balance on an eligible Direct Loan

Student loan forgiveness programs for Federal Perkins Loans must be requested through the school that made the loan or the loan servicer. Perkins student loan forgiveness programs and amounts include:

  • Borrower’s total and permanent disability or death: 100 percent
  • Bankruptcy: 100 percent
  • Closed school: 100 percent
  • S. armed forces service in hostile fire or imminent danger pay areas: Up to 50 percent for borrowers whose active duty service ended before August 14, 2008 and up to 100 percent for borrowers whose active duty service includes or began after that date.
  • VISTA or Peace Corps volunteer: up to 70 percent

Perkins loan holders in certain full-time professions seeking student loan forgiveness may receive up to 100 percent loan cancellation if they meet specific requirements. These include full-time public defenders, firefighters, law enforcement officers, corrections officers, nurses and medical technicians. Student loan forgiveness for teachers with Perkins Loans can be requested by teachers and speech pathologists in Title-1 schools, special education teachers, certain librarians and many other specific education providers.

How to Apply for Student Loan Forgiveness

If you are wondering how to apply for student loan forgiveness, it will depend on the type of loan you have. If you are seeking student loan cancellation for a Federal Direct Loan or FFEL loan, you must start by contacting your loan servicer. If you are unsure of who your loan servicer is, you can look it up online. The federal student aid website keeps a current list of all Direct Loan and FFEL providers.

If you need federal student loan forgiveness on a Perkins Loan, contact the school that made the loan or the loan servicer designated by the school. The loan servicer will tell you the types of student loan cancellation options for your loan and how to qualify for student loan forgiveness with their company. Be sure to ask whether you must continue making payments while your application is being reviewed. In most student loan forgiveness programs, you will not be required to make payments during the application review process.

Student Loan Forgiveness Application Outcomes

A student loan forgiveness application can be approved or denied. If you qualified for full student loan cancellation, you are fully released from your loan and will no longer be required to make payments. If you qualified for student loan discharge of only a portion of your loan, you are still responsible for paying off the remaining balance. The loan servicer will provide you with instructions on how to fulfill any remaining obligation.

In some cases, the student loan cancellation may include a refund of some or all of the payments you made on the loan. This also usually includes the removal of any loan delinquency entries on your credit record. If this happens, and you have no other defaulted loans, you will regain eligibility to apply for federal financial aid in the future.

If your student loan forgiveness application is denied, you remain legally responsible to fulfill the terms on the promissory note you signed when you applied for the loan. Even if the loan servicer cannot give you a student loan discharge, they are often willing to negotiate better repayment options, especially if you can demonstrate financial need, especially if you can demonstrate financial need.

Related Article: Federal Student Loan Deferment

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