Loan Forgiveness

What is Loan Forgiveness?

Loan forgiveness is defined as the cancellation of all or some of your student loan debt under various loan forgiveness programs.

If your loan is forgiven, you are no longer responsible for repaying the remaining portion. Learn more about federal student loan forgiveness programs.

What is the Public Service Loan Forgiveness Program?

The Public Service Loan Forgiveness Program is offered to public service employees. If you work full-time for a government or not-for-profit organization, you may qualify for forgiveness of the entire remaining balance of your Direct Loans after you’ve made 120 qualifying payments—that is, 10 years of payments. Loan forgiveness is the cancellation of a loan debt under various loan forgiveness programs.

The PLSF Program

The PSLF Program was established to encourage individuals to enter and continue in full-time public service employment by forgiving the remaining balance of their William D. Ford Federal Direct Loan Program loans (Direct Loans). The Public Service Loan Forgiveness program discharges any remaining debt after 10 years of full-time employment in public service. In order to obtain this benefit, the borrower must have made 120 payments as part of the Direct Loan program.

How to Qualify and Eligibility Requirements

There are specific requirements you must meet in order to qualify for the program.

Job Performed

The specific job you perform does not matter as long as you are employed by an eligible public service organization. For example, if you are a full-time employee of a public school system, your employment would meet the requirements for PSLF, regardless of your position (teacher, administrator, support staff, etc.).

Length of employment

You must be employed full-time by a public service organization when you make each of the required 120 qualifying payments on your Direct Loans when you apply for loan forgiveness after making the last of those 120 payments, and when you receive loan forgiveness.

Employment

Qualifying employment is any employment with a federal, state, or local government agency, entity, or organization or a not-for-profit organization that has been designated as tax-exempt by the Internal Revenue Service (IRS) under Section 501(c)(3) of the Internal Revenue Code (IRC). The type or nature of employment with the organization does not matter for PSLF purposes. Additionally, the type of services that these public service organizations provide does not matter for PSLF purposes.

Employment in private not-for-profit

A private, not-for-profit employer not tax-exempt under Section 501(c)(3) of the IRC may be a qualifying public service organization if it provides certain specified public services. These services include emergency management, military service, public safety, or law enforcement services; public health services; public education or public library services; school library and other school-based services; public interest law services; early childhood education; and public service for individuals with disabilities and the elderly. The organization must not be a labor union or a partisan political organization.

Income Level Eligibility

Your income is a factor in determining your required monthly payment amount under the Income-Based Repayment (IBR) Plan, Pay As You Earn Repayment Plan, and the Income Contingent Repayment (ICR) Plan. These three PSLF-eligible repayment plans will most likely leave you with a remaining loan balance to be forgiven after you have made 120 qualifying payments.

Only Direct Loans Can Be Forgiven

Only loans you received under the William D. Ford Federal Direct Loan (Direct Loan) Program are eligible for PSLF. Loans you received under the Federal Family Education Loan (FFEL) Program, the Federal Perkins Loan (Perkins Loan) Program, or any other student loan program are not eligible for PSLF.

Teacher Loan Forgiveness Program: Quick Overview

Under the Teacher Loan Forgiveness Program, if you teach full-time for five consecutive academic years in a low-income school or educational service agency and meet other qualifications, you may be eligible for forgiveness of up to $17,500 on your Direct Subsidized and Unsubsidized Loans and your Subsidized and Unsubsidized Federal Stafford Loans.

If you have a Direct Consolidation Loan or a Federal Consolidation Loan, you may be eligible for forgiveness of 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.

Teacher Loan Forgiveness Eligibility Requirements

  • You must not have had an outstanding balance on Direct Loans or Federal Family Education Loan (FFEL) Program loans as of Oct. 1, 1998, or on the date you obtained a Direct Loan or FFEL Program loan after Oct. 1, 1998.

  • You must have been employed as a full-time, highly qualified teacher for five complete and consecutive academic years, and at least one of those years must have been after the 1997–98 academic year.

  • You must have been employed at an elementary school, secondary school, or educational service agency that serves low-income students (a “low-income school or educational service agency”).

  • The loan(s) for which you are seeking forgiveness must have been made before the end of your five academic years of qualifying teaching service.

The Federal Student Aid Center offers the following loan forgiveness programs:

  1. Teacher Loan Forgiveness for Direct Subsidized Loans, Direct Unsubsidized Loans, Subsidized Federal Stafford Loans, and Unsubsidized Federal Stafford Loans
  2. Teacher Cancellation for Federal Perkins Loans

The programs do not cite teacher salaries as a determinant for approval if you meet the other requirements.

Both programs are aimed at teachers who work in low-income designated school districts, target particular subjects, and teach special education. Check to see if your school is designated as a low-income school for Teacher Cancellation Benefits.

Check to see if your school has this low-income designation and if you meet the other qualifications to have your student loan debt forgiven.