Understanding Loan Forgiveness options
Did you know that certain careers or circumstances might make you eligible for loan forgiveness? Loan forgiveness programs can help reduce or even eliminate your student debt based on your profession, employer, or repayment plan. Learn more about these opportunities to see if you qualify.
Public Service Loan Forgiveness | Federal Student Aid
The Public Service Loan Forgiveness (PSLF) program offers loan forgiveness for those working full-time in qualifying public service jobs. If you make 120 qualifying monthly payments on your Direct Loans while employed full-time by certain public service employers, you may be eligible to have your remaining loan balance forgiven.
Key Points to Know:
• Eligible Loans: Only Direct Loans qualify for PSLF. If you have Federal Family Education Loan (FFEL) or Federal Perkins Loans, these can be consolidated into a Direct Consolidation Loan to become eligible for PSLF.
• Qualifying Payments: Only payments made on your new Direct Consolidation Loan will count toward the 120 payments needed for PSLF. Payments made before consolidation won’t count, so it’s essential to consolidate first if you have FFEL or Perkins Loans.
• Important Note: Payments made while you’re still in school or during deferment periods don’t count toward PSLF.
Teacher Loan Forgiveness | Federal Student Aid
The Teacher Loan Forgiveness Program is intended to encourage individuals to enter and continue in the teaching profession. Borrowers dependent upon their eligibility may receive loan forgiveness based off of their teaching occupation. Loans that are eligible for forgiveness under the Teacher Loan Forgiveness program include Direct Subsidized and Unsubsidized loans and Subsidized and Unsubsidized Federal Stafford Loans. Direct Parent PLUS Loans are not eligible for this type of forgiveness. If the qualifications for eligibility are met one may be eligible for up to a combined total of $17,500 in forgiveness.
The Teacher Loan Cancellation Program is only applicable to Federal Perkins Loans. Up to 100 percent of the loan may be cancelled dependent upon if one meets the eligibility requirements. One can apply for cancellation by requesting the appropriate forms and information from the office that administered the Federal Perkins Loan and from there it is the school’s responsibility to determine whether or not one qualifies for cancellation.
Eligibility
- Must not have had an outstanding balance on Direct Loans or Federal Family Education Loan (FFEL) Program loans as of October 1, 1998, or on the date that one obtained a Direct Loan or FFEL Program loan after October 1, 1998
- If one is in default on a subsidized loan, borrowers are not eligible for forgiveness of that loan unless one has made satisfactory repayment arrangements with the holder of the defaulted loan
- The loan(s) for which one is seeking forgiveness must have been made before the end of one’s five academic years of qualifying teaching service
- Any time a borrower spends teaching to receive benefits through AmeriCorps cannot be counted toward one’s required five years of teaching for the Teacher Loan Forgiveness Program
- A borrower must have been employed as a full time teacher for five complete and consecutive academic years, and at least one of those years must have been after the 1997-1998 academic year
- One must be employed in an elementary school or secondary school that:
- is in a school district that qualifies for funds under Title I of the Elementary and Secondary Education Act of 1965, as amended
- has been selected by the U.S. Department of Education based on a determination that more than 30 percent of the school’s total enrollment is made up of children who qualify for services provided under Title I
- is listed in the Annual Directory of Designated Low-Income Schools for Teacher Cancellation Benefits
- if this directory is not available before May 1st of any year, the previous year’s directory may be used
- If one’s school meets the above requirements for at least one year of a borrower’s teaching service, but does not meet these requirements during subsequent years, one’s subsequent years of teaching at the school may be counted toward the required five complete and consecutive academic years of teaching