Student Loan  |  September 12, 2022  |  Lisa Litant

Federal student loan forgiveness for special situations

What you'll learn
  • What student loan forgiveness is
  • The difference between loan forgiveness and forbearance
  • Federal student loan forgiveness specialty programs
  • How you can apply to these federal loan forgiveness programs

Along with the new proposal for canceling a portion of federal student loan debt, there are existing federal programs that forgive debt in specific situations. Here are descriptions of those federal programs, along with details on eligibility.
 

What is student loan forgiveness?

When your loan is forgiven, you don’t have to repay some or all of what you owe.1

Federal loan forgiveness programs refer to federal student loans only—those made by the government, like Direct Loans. They do not apply to private student loans made from banks, credit unions, and other financial companies. So…federal loans—yes; private loans—no. (Many private lenders do offer loan forgiveness in cases of disability or death, depending on their policies).

Forgiveness vs forbearance:
These aren’t the same. Forgiveness erases your debt; forbearance is when a lender lets you stop making payments—or lets you make smaller payments—for a short period of time, like 12 months. This is usually due to a temporary event, like an illness; you can’t make full payments right now, but you will in a few months. Forbearance is available for both federal and most private student loans. Interest continues to grow during this time even if you’re not making payments.

There’s also the COVID-related federal student loan payment relief program, which has suspended federal loan payments temporarily with 0% interest. This isn’t forgiveness, though. As it stands now, when the payment relief program ends, borrowers will have to continue to make loan payments.
 

Types of specialty federal student loan forgiveness programs

1.  Public Service Loan Forgiveness (PSLF)

The PSLF Program cancels out the balance on your Direct Loans after you’ve worked full-time for a qualifying employer and made 120 monthly payments.2

According to studentaid.gov, to qualify for PSLF you have to:

  • Work, or have worked for a U.S. federal, state, local, or tribal government agency, or non-profit organization
  • Work full-time for that agency or organization
  • Have federal Direct Loans
  • Repay your loans through an income-based repayment program

If you’re a public health provider, like a nurse or nurse practitioner, you may also qualify for Public Service Loan Forgiveness.

To make sure your job is one that’s eligible for PSLF, you should read the list of qualifications and submit a Public Service Loan Forgiveness Form every year.

Important news:
You have until October 31, 2022 to take advantage of a “limited PSLF waiver.” This may give you credit for periods that previously didn’t qualify for PSLF. Here’s info on how to take advantage of the PSLF waiver.
 

2.  Student Loan Forgiveness for Teachers

  • Teacher Loan Forgiveness (TLF) can forgive up to $17,500 of your Direct or Family Federal Education (FFEL) Subsidized or Unsubsidized Loans. Here are some of the requirements:
    • You’ve been employed as a full-time teacher at an eligible school for five complete and consecutive academic years. One of those years must have been after the 1997 – 98 academic year.
    • You may be able to qualify to have up to $17,500 of your loans forgiven if you’re a highly qualified special ed and secondary math or science teacher. Other eligible teachers can qualify for up to $45,000.
    • Teacher Loan Forgiveness Forbearance lets you defer payments until the Teacher Loan Forgiveness program begins. Interest will continue to grow during this period.
  • Perkins Loan Cancellation for Teachers is a program that may forgive your Perkins Loans if you teach full-time at a low-income school or if you teach certain specified subjects.

  • State-sponsored loan forgiveness programs may be available if you teach in a high-need area.

Learn more about Teacher Loan Forgiveness and see which program—Teacher Loan Forgiveness or Public Service Loan Forgiveness—is right for you. 

3.  Other federal student loan forgiveness programs

  • Borrower Defense to Repayment
    The U.S. Department of Education is taking action against schools that lied or misrepresented things like job placement, how much money their graduates earned, or if their credits would be accepted at other schools. (You can’t get this forgiveness if you weren’t happy with your school’s facilities or classes.) If you think you qualify, you need to apply with this form.

  • Total and Permanent Disability Program (TPD)
    If you meet the government’s definition of total and permanent disability, you can apply for this forgiveness program—you don’t have to repay Direct Loans, FFEL Loans, or Federal Perkins Loans.
  • Income-Based Repayment or Pay As You Earn Plans
    You can qualify for forgiveness of the remainder of your loan at the end of the repayment period after you’ve
    • Made the equivalent of 20 or 25 years of qualifying monthly payments (depending on the loan)
    • At least 20 or 25 years have passed (depending on the loan)

If you think you qualify for any of these federal programs, be sure to check with your school’s financial aid office or read up at studentaid.gov to see if your loans, your employment, or your situation are covered. If not, should you plan on all your student loans being forgiven in the future? Don’t stop making payments right now. But as the government continues to work out plans for easing the federal student loan debt problem, keep checking to see if there are new forgiveness programs. 

Sallie Mae does not provide financial, tax, or legal advice and the information contained in this article does not constitute tax, legal, or financial advice. Sallie Mae does not make any claims, promises, or guarantees about the accuracy, completeness, or adequacy of the information contained in this article. Readers should consult their own attorneys or other tax advisors regarding any financial strategies mentioned in this article. These materials are for informational purposes only and do not necessarily reflect the views or endorsement of Sallie Mae. Reproduction without explicit permission is prohibited.

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1. https://studentaid.gov/manage-loans/forgiveness-cancellation

2. https://studentaid.gov/manage-loans/forgiveness-cancellation/public-service