What Is Student Loan Forgiveness?

Nearly two-thirds of the college class of 2019 graduated with student loan debt, the average of which totaled $28,950, according to The Institute of College Access & Success. Those recent graduates joined the roughly 43 million Americans who now owe a collective $1.6 trillion in student loan debt, a staggering 100% increase from 10 years ago. This monetary total is larger than the gross domestic product of all but a dozen countries in the world.

The $1.6 trillion sum spread out across 43 million people – or one in every eight Americans – means the average student debt owner owes more than $57,000. This amount of debt can hamper an individual’s ability to spend money elsewhere — particularly on larger expenses such as rent, mortgages, and car payments – thus hurting the economy. Because of this, many have argued that forgiving student loan forgiveness would be beneficial to both the individual and the country at large.

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What Is Student Loan Forgiveness?

Simply put, student loan forgiveness means you are no longer required to pay back a portion or all of your outstanding debt. This debt has to come from money borrowed to pay for a postsecondary education.

Am I eligible for Student Loan Forgiveness?

There are several federal and programs that will forgive some of your student loan debt. However, most of these are only open to those in a certain career field. If you work in public service, for example, your chance of having your student loans forgiven is much higher than most other’s.

The Public Service Loan Forgiveness program is open to full-time employees at a federal, state or local government agency, or another organization with a 501(c)(3) designation. After making on-time monthly payments for 10 years, you could qualify for all of your remaining loans to be forgiven.

The Teacher Loan Forgiveness program is another example. To qualify, you must have a state certification or teaching license and work in a low-income school for at least five consecutive years. The amount of debt forgiven depends on what subject and grade level you teach. To see if you qualify, check for your school on the Teacher Cancellation Low Income Directory.

There are also several options specifically for nurses and doctors. For example, under the NURSE Corps Loan Repayment Program, registered nurses, nurse practitioners and nurse faculty members who work in underserved communities can get up to 85 percent of their loans paid after two to three years of employment.

Some states offer student loan forgiveness and repayment assistance programs as an incentive to attract more workers to certain areas. In Massachusetts, health professionals who work at public or nonprofit healthcare organizations in federally designated Health Professional Shortage Areas can apply to the Massachusetts Student Loan Repayment Program. Though not the same as loan forgiveness, under this program, those qualified can receive up to $50,000 over two years of full-time service.

In New York, licensed social workers and district attorneys may be eligible for the New York State Licensed Social Worker and District Attorney and Indigent Legal Services Attorney Loan Forgiveness programs, respectively. Both programs reward applicants with either a maximum dollar amount or the applicant’s actual eligible student loan indebtedness. Applicants receive whichever amount is less.

Click here to see a list of loan forgiveness or repayment assistance programs in your state.

Repaying Your Student Loan

Federal student loan borrowers must enroll in a student loan repayment plan upon graduation. If the borrower doesn’t choose a different plan, the loan servicer will automatically place the borrower on the standard repayment plan, which charges a monthly payment based on whatever amount it would take to pay off all loans in 10 years. The other options include the extended plan, graduated plan, income-sensitive plan and income-driven plans.

If the borrower chooses an income-driven plan, their loans may be forgiven under certain circumstances, which differ depending on the type of plan. Under the Income-Based Repayment plan, a borrower’s remaining balance is forgiven after making consistent payments for 20 or 25 years. Like other income-driven payment plans, borrowers choose IBR when they expect their income to be relatively low compared to their debt.

Parents helping their children pay for school using Parent PLUS loans may want to consider the income-contingent repayment plan. It also forgives loans after 25 years of consistent payments, but is different in that it’s the only income-driven plan available to borrowers with Parent PLUS loans.

If you’re currently enrolled in the Standard Repayment Plan and wish that you’d enrolled in an income-driven plan instead, don’t fret. You can switch repayment plans at any time at studentloans.gov. Use the Department of Education’s repayment estimator to see which income-driven plan would be best for you – it will also tell you your projected loan forgiveness, if any.

As with any federal matter, the student loan program, especially in terms of forgiveness, is subject to change. Keep up with the current status of the program at the U.S. Department of Education’s website.

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Are you still paying off student loans for yourself or your child? Do you think you’re eligible for loan forgiveness? Share your thoughts in the comments below.