Your guide to student loan forgiveness types
Student loan debt amounts to nearly $2 trillion in the United States, with almost 43 million Americans holding federal student loan debt. After the Biden student loan forgiveness plan was ruled unconstitutional in June 2023, followed by a post-pandemic resumption of student loan payments, borrowers are back to looking for ways to pay the bills (and hopefully get a little relief).
There are several student loan forgiveness plans available, and the Biden administration has floated a new plan, dubbed Saving on a Valuable Education (SAVE). Let’s take a look at student loan debt relief programs and how you might qualify for them.
Key Points
- Public Service Loan Forgiveness (PSLF) is popular and available to those who work for 10 years with a nonprofit organization.
- Some states have their own student debt relief programs aimed at specific occupations.
- There are also programs for medical and legal professionals working in areas of defined shortages.
Federal student loan forgiveness types
The federal government offers a variety of student debt relief programs beyond the recently announced student loan forgiveness program.
Here are some of the federal student loan forgiveness programs that are currently available:
1. Income-driven repayment (IDR) plan forgiveness
Depending on the type of income-driven repayment plan you’re on, you might be able to receive forgiveness of any balance remaining after 20 or 25 years. In most cases, this student loan forgiveness type is taxable at the federal level. However, through 2025, no student loan cancellation will be considered taxable income by the IRS.
The 2023 Biden SAVE Plan
After the Supreme Court struck down a blanked loan cancellation plan of up to $20,000 for some borrowers, a new plan, the SAVE plan, was unveiled. By 2024, borrowers who earn less than 225% of the poverty line will be eligible for $0 monthly payments. Other provisions include a payment cap of 5% of discretionary income, and accelerated loan forgiveness after 10 years of payments. Learn more SAVE details here.
How to receive this student debt relief: If you qualify for income-driven repayment, consolidate your federal student loans into one dedicated to the repayment plan. Then make regular payments for a certain number of years, depending on the plan requirements. Once the payment period is over, your remaining balance will be forgiven.
2. Public service loan forgiveness (PSLF)
This program was introduced in 2007 as a way to encourage graduates to work in nonprofit fields. After you complete 120 qualifying payments (essentially working for 10 years) while working for a qualified employer, your remaining balance is forgiven. But note: loans from private lenders do not qualify for PSLF.
How to receive this student debt relief: Consolidate your federal loans and sign up for an income-driven repayment plan. Work for a qualifying employer for at least 10 years. These employers include state and federal governments, nonprofit organizations, and some others. Fill out an employer certification form each year and submit it to the U.S. Department of Education for more accurate processing. To qualify, you don’t have to make your payments consecutively or work for the same organization. But you do need to recertify each year.
3. Teacher loan forgiveness
The federal government will cancel up to $17,500 in federal student loans if you work in a low-income area or meet other requirements.
How to receive this student debt relief: After finishing school and getting your teacher certification, spend five consecutive years working as a teacher in a school listed in the Department of Education’s Teacher Cancellation Low Income (TCLI) Directory.
4. National Health Service Corps loan forgiveness
Depending on your specialty, years of service, and whether you work full-time or part-time, you can receive up to $100,000 in student loan forgiveness as a health care professional (physician, nurse, physician assistant, psychologist, social worker, or other qualified medical practitioner).
How to receive this student debt relief: You need to work in a health care specialty in an area of need for two or three years (depending on the program you choose). Working full-time will result in a greater amount of loan cancellation. There are three different programs, so review the criteria to see which program will work best for you.
5. Other federal student loan forgiveness types
You might be eligible for other federal programs, depending on your situation and life experience. Some examples of loan forgiveness/repayment plans include:
- Veterans and active duty military service. There are a number of programs available to offer payment deferment, IDRs, partial or total payment under a Department of Defense program, and total loan discharge if you’re a disabled veteran.
- Veterinarians. Under a program run by the National Institute of Food and Agriculture, you might be eligible for up to $25,000 per year—up to three years—for serving in a “veterinarian shortage situation” area.
- Lawyers. The John R. Justice student loan repayment program offers loan repayment to help fill a shortage of prosecutors, public defenders, and attorneys for nonprofit organizations that serve juvenile delinquency cases and indigent people.
State student loan forgiveness programs
In addition to federal programs, many states offer their own student loan forgiveness programs. In many cases, the amount canceled is less than what you’d get through a federal program, but you might not need to commit as much time to repay your loans.
Most state student loan forgiveness programs focus on specific professions, such as teaching or health care services. You usually need to work in a low-income or rural area or be certified in a specialty of particular need.
Check with your state to find out what student debt relief programs they offer. Some of these programs are compatible with federal student loan forgiveness efforts, so you might be able to combine different programs to get extra help.
Other student debt relief options
As long as you meet the requirements, grants and other forms of help repaying your student loan debt might be available:
- Service organizations. Some organizations, like Peace Corps and AmeriCorps, offer stipends and funds you can use to help reduce your student loan debt.
- Teach For America. This nonprofit offers some help repaying student loans.
- Employer student loan payment help. Some companies offer student loan benefits, including matching payments to eliminate your loan debt over time.
The bottom line
Don’t assume you’re stuck with your student loan debt indefinitely; do your research to explore the possibility of student loan forgiveness. But remember, in most cases, loan assistance comes with strings attached. You typically need to meet specific requirements and/or choose particular career paths.
And as a reminder, private student loans aren’t eligible for most of these student debt relief programs. Only your federal loans will qualify for cancellation. So it might make sense to consolidate your federal loans and get on an income-driven repayment plan if you qualify. That way, you can manage your monthly cash flow while making qualifying payments for various cancellation programs.
If you’re already drowning in student debt, it might be worth your while to jump through any available hoops to get your finances on the right track. If you (or your loved ones) are just starting the college journey, consider choosing a career path that comes with a get-out-of-debt program.