What You Need to Know About Student Loan Forgiveness

The average student loan debt in the United States currently stands at $32,731.

When you consider that the median household income is $67,521 and, in many cases, includes two earners, then it becomes clear how big of a challenge student loan debt truly is.

It’s difficult to make a dent in student loan debt when you’re paying historically high rent, facing inflation, paying off credit card debt, and trying to level-up in your career. 

Fortunately, student loan forgiveness is real – very real.

And no, I’m not just talking about the proposals that our politicians are currently talking about. Forget what you’ve read in the headlines. Forget about what may or may not happen in Washington DC. Let’s put politics aside and focus on the right here and right now: you can get your student loans forgiven… today.

Well, you won’t literally be able to get your student loans forgiven today, but you can initiate the process to lighten your financial burden.

How Does Student Loan Forgiveness Work?

Student loan forgiveness programs are designed to help borrowers who have taken out federal student loans eliminate their debt faster. If you meet certain requirements, you might qualify for these programs.

It's important to note that these programs apply only to those with federal loans, not private loans.

The goal is to encourage students to complete their degrees and get jobs after graduation. In many cases, the government is incentivizing workers to serve underserved areas in regards to education, law enforcement, healthcare, and similar public service jobs.

Student loan forgiveness programs are meant to help borrowers who have already paid back some of their loans. They allow them to reduce their interest rates and/or forgive a portion (or all) of the remaining balance.

Now, there are three terms that seem similar, but have different meanings:

1. Forgiveness
2. Cancellation
3. Discharge

According to the the U.S. Government:

“The terms forgiveness, cancellation, and discharge mean nearly the same thing, but they’re used in different ways. If you’re no longer required to make payments on your loans due to your job, this is generally called forgiveness or cancellation. If you’re no longer required to make payments on your loans due to other circumstances, such as a total and permanent disability or the closure of the school where you received your loans, this is generally called discharge.”

It's important to understand these terms, because they are integral to understanding the 11 types of student loan forgiveness, cancellation, and discharge. 

Below, we'll explore the 11 ways you can qualify for federal student loan relief.

#1. Public Service Loan Forgiveness 

The Public Service Loan Forgiveness (PSLF) Program is only available to you if you've made at least 120 qualifying payments (10 years) on your student loans. 

To qualify as “public service,” you must work for one of the following:

• ​​Government organizations at any level (U.S. federal, state, local, or tribal) – this includes the U.S. military
• Not-for-profit organizations that are tax-exempt under Section 501(c)(3) of the Internal Revenue Code

To be eligible for PSLF, you must also have completed 10 years of working in one of these areas and be working at a qualifying employer at the time you make the request for forgiveness.

This is the PSLF Form.

It is recommended that you submit this form annually to certify your employment. It will make it easier to process your application when it's time to ask for forgiveness, as there will be yearly records of your qualifying employment.

If the form is confusing to you, the PSLF Help Tool will help you begin the application online, then allow you to print out the rest for your employer and yourself to sign.

You may mail the completed form to this address:

U.S. Department of Education
FedLoan Servicing
P.O. Box 69184
Harrisburg, PA 17106-9184

You may also fax your PSLF form to 717-720-1628.

The only exception is if your federal loans are serviced by FedLoan Servicing, which allows you to upload your PSLF form on its website.

It’s important to note that because of COVID-19, all federal student loans were put through temporary forbearance. This means that no payments are due through August 31, 2022. Because of this, even if you haven’t been making payments the last few months, you will still be eligible as long as you made payments before the forbearance period. In other words, paused payments as a result of the COVID-19 pandemic should not impact the 120 payments required to qualify for this loan. 

Furthermore, it’s important to understand the temporary limited waiver. 

In normal circumstances, you would have to make 120 qualifying payments to benefit from PSLF. However, thanks to the limited waiver, more payments qualify, so just because your payments were “unqualified” in the past, that doesn’t mean that’s the case today.

Specifically, payments on Federal Family Education Loans (FFEL) or Perkins Loans after 2007 were previously not counted. 

Now, they count and are retroactively being included.

Another example is if you served in the military. Whether or not you made payments during your military service, the months you were in the military will count towards your 120 qualifying payments. 

The deadline for limited waiver programs is October 31, 2022.

Since the limited waiver program is for those with direct loans, if you have FFEL or Perkins loans, you will need to consulate those into a direct consolidation loan by the deadline of October 31, 2022. 

#2. Teacher Loan Forgiveness

Teacher Loan Forgiveness is an incentive provided to teachers who agree to teach in certain schools with high poverty levels. You must teach full time for five consecutive years in one of these low income schools. 

If you meet those requirements, you can have up to $17,500 forgiven on your Direct Loan or FFEL Program Loans.

It's important to stay on top of your payments, because if you are in default on one of the loans, then you will not be eligible for forgiveness. If this happens, you will re-earn your eligibility by making a satisfactory repayment arrangement with your loan servicer. 

Once you've met five consecutive years of qualifying teaching, you can fill out the Teacher Loan Forgiveness Application. This form must be signed by the chief administrative officer of the school or educational service agency where you completed your qualifying years of teaching. 

Furthermore, if you have loans with different federal providers, you will have to submit a separate completed form to each of them. 

To qualify for the $17,500 in teacher loan forgiveness, you must have taught at a qualifying school listed in the Teacher Cancellation Low Income (TCLI) Directory. This directory is updated by the Department of Education every year, so just because you're currently teaching in a qualifying place, it doesn't mean that'll be the case next year.

You must have also been:

• a full-time mathematics or science teacher
• a special educator with a focus on children with disabilities

If you don’t teach in these areas, then you might not be eligible for the full $17,500 in forgiveness. However, you can still receive $5,000 in loan forgiveness as long as you meet the other eligibility criteria (i.e. teaching in a low income school). 

Furthermore, you must also hold at least a bachelor’s degree, have full state certification as a teacher, and not have any of your licenses or certifications revoked or suspended. 

A complete breakdown of the eligibility requirements can be seen on Federal Student Aid.

In some cases, you may be eligible for both Teacher Loan Forgiveness and Public Service Loan Forgiveness, as teachers count as “public service workers.” To qualify for PSLF, your place of employment (full-time) must be at a government entity or not-for-profit organization. 

While you can qualify for both programs, you need separate periods of teaching. For example, your 5 years of teaching for the Teacher Loan Forgiveness will not count towards the 120 qualifying payments for PSLF. You’d have to teach for 5 years, get your Teacher Loan Forgiveness, and once that’s completed, then you can begin your 120 qualifying payments for PSLF. In short, you can qualify for both, but no “overlap” is allowed. 

#3. Closed School Discharge

Schools are just like businesses. Sometimes, they can go out of business. If you took out a federal loan to attend a place of higher education, but the school shut down, then you can have your student loans discharged.

To qualify, the school must have shut down while you were a student or very shortly after you graduated.

If this is the case, then you can have 100% forgiven for any of the following:

• William D. Ford Federal Direct Loan (Direct Loan) Program Loans
• Federal Family Education Loan (FFEL) Program Loans
• Federal Perkins Loans

You should automatically receive an application from the Secretary if you meet the eligibility requirements for Closed School Discharge.

If you don't, you can also contact your loan servicer directly to initiate the process of getting your loan discharged.

Until your loan is discharged, it is important to continue making payments, even after you have submitted the application. It can take months for the application to be processed, so you'll want to keep your payments current, as that's one of the factors considered in having your loan discharge approved.

If you have more questions, here's an FAQ on Closed School Discharge.

#4. Total and Permanent Disability Discharge

If you suffer from a disability that prevents you from working, then you may be able to get your student loans discharged. This is available for Direct Loans, FFEL Program Loans, and Perkins Loans.

In addition to the discharge, you may also qualify for the Teacher Education Assistance for College and Higher Education (TEACH) Grant service obligation.

To prove that you qualify for a TPD discharge, you need official documentation proving your disability from one of the following three sources:

1. A physician
2. Social Security Administration (SSA)
3. U.S. Department of Veteran Affairs (VA)

If you were injured while serving in the military and your disability results from that service, then you'll be able to get documentation from the VA. If you receive social security benefits due to your disability, then you can use your records from the SSA to prove that you qualify. If you did not serve in the military or do not receive social security payments, then you will need to have your physician certify your disability on the TPD discharge application.

Your physical or mental impairment must meat one of the following qualifications:

• Has lasted for a continuous period of at least 60 months
• Is expected to last for a continuous period of at least 60 months
• Can be expected to result in death

You can find the application for TPD discharge on the TPD Discharge website.

Nelnet is the official TPD discharge servicer that helps the federal government process applications, communicate between borrowers and lenders, and administers the process from start to end.

If you intend on submitting an application, it is recommended to let Nelnet know by phone or email. Once you contact Nelnet, they should stop your federal student loan payments for 120 days. This is done to give you time to submit your application and acquire any supporting documentation that you need. 

You can call Nelnet at 1-888-303-7818 or email them at disabilityinformation@nelnet.net.

#5. Discharge Due to Death

Death is tragic in every circumstance.

But to make matters worse, your debt doesn’t automatically disappear once you die. 

Discharge due to death is applicable for parent PLUS loans under the following circumstances:

1. The student on whose behalf a parent takes out the loan has died.
2. The parent who actually took out the parent’s PLUS loan has died.

If you provide the loan servicer with an original death certificate, certified copy of the death certificate, or an accurate, unedited photocopy of either of those documents, then you can have your loans discharged by your servicer. 

#6. Discharge in Bankruptcy

If you declare bankruptcy, this usually impacts consumer debt such as credit cards. Under current bankruptcy laws, it is not possible to have student debt eliminated the same way that credit card debt is discharged.

However, if you have already declared bankruptcy and can show that continuing to make student loan payments would cause you undue hardship, then you may be able to qualify for discharge of some of your federal student loan debt.

This applies only for Direct Loans, FFEL Program loans, and Perkins Loans.

So what qualifies as undue hardship? You must be able to prove that:

• You made a good faith effort to pay off the loan prior to filing for bankruptcy
• If you must repay the loan, then you won’t be able to maintain a minimal standard of living.
• The hardship would last through a considerable period of the lifetime of the loan.

If you are able to prove one of these three circumstances, then the bankruptcy court can choose to discharge your loan in full (you would not have to repay any more), partially discharge your loan (you’d still be liable for the rest), or deny to discharge the loan (usually, even if your request is denied, they may approve different terms such as lowering the interest rate on your loan).

In the event that your student loans are not discharged and you are unable to afford to make payments, it is recommended that you contact your federal loan servicer directly. Request to discuss repayment plan options or how your current plan can be modified.

#7. Borrower Defense to Repayment

Did your school mislead you?

Was your school violating state laws in regards to your loan?

Did the school mislead or violate laws in regards to the educational services provided?

If so, you may qualify for “borrower defense to loan repayment” – or “borrow defense.” This type of discharge exists to prevent borrowers from educational fraud and school misconduct. 

One of the biggest signs you might qualify for borrow defense is if your college has been sued or is facing legal challenges in regards to how they operate. 

You can submit a borrower defense to repayment claim online at borrowerdischarge.ed.gov. 

Here are examples of how the school may have misled you:

• Actual licensure passage rates are different than advertised
• Actual employment rates are different than advertised
• Dishonest representation of the school’s certifications
• Dishonest representation of resources at the school
• Dishonest representation of the ability to transfer credits to/from school
• Dishonest representation of financial assistance opportunities
• Dishonest representation of graduate placement rates

The online application process takes approximately 30 minutes to complete. You must have documentation to support your case that you qualify for borrower defense.

#8. False Certification Discharge

You may be able to have your Direct Loans and FFEL Program loans discharged if your school falsely certified your eligibility for these loans.

If you qualify, not only will the rest of your loan be discharged, but you will also be refunded any payments that you have made.

There are three types of false certifications. According to the US Government these include:

1. Ability to benefit: The school falsely certified your eligibility to receive the loan based on your ability to benefit from its training, and you didn’t meet the ability-to-benefit student eligibility requirements that were in effect at the time the school determined your eligibility.
2. Disqualifying status: The school certified your eligibility to receive the loan, but at the time of the certification, you had a status (physical or mental condition, age, criminal record, or other circumstance) that disqualified you from meeting the legal requirements for employment in your state of residence in the occupation for which the program of study was preparing you.
3. Unauthorized signature or unauthorized payment: The school signed your name on the loan application or promissory note without your authorization or the school endorsed your loan check or signed your authorization for electronic funds transfer without your knowledge, and the loan money wasn’t given to you or applied to charges you owed to the school.

Since there are three types of false certifications, there are also three different applications for False Certification Discharge.

1. Ability to Benefit – False Certification: Loan Discharge Application
2. Disqualifying Status – False Certification: Loan Discharge Application
3. Unauthorized signature/payment – False Certification: Loan Discharge Application

If your application is denied but you still believe that you were wronged and qualify, then you can ask the U.S. Department of Education directly to review the denial.

False Certification Discharge is available for both students as well as parents who took out parent PLUS loans on behalf of their student. 

#9. Unpaid Refund Discharge

Let’s say you left school early. Maybe you needed to leave school because of a medical condition, family emergency, job opportunity, mental health, or any similar cause.

Regardless of the reason, if you left school early, then your school should have refunded you the difference between the education you actually received and the rest of the services not-rendered after you left school. 

If you took out a federal student loan, then the school should have refunded the difference directly to the federal loan servicer.

Unfortunately, this doesn’t always happen. If you were supposed to get a refund but it never arrived, then you may be entitled to what is known as an unpaid refund cancellation. 

It’s important to note that this will not discharge the entirety of your remaining loans. Rather, it will only discharge the portion that was supposed to be refunded to your loan servicer. 

Here is the Loan Discharge Application: Unpaid Refund.

Before submitting the application, it is recommended to contact your school. In many instances, this was just a procedural oversight and the school will be able to rectify the situation. If your contact with the school doesn’t solve the issue, then you can submit the application if you received a William D. Ford Federal Direct Loan (Direct Loan) or Federal Family Education Loan (FFEL).

#10. Forgery Discharge

Are you a victim of identity fraud?

When we think of identity theft, we usually think of stolen credit cards, access to bank accounts, and mortgages made in our name.

However, fraud can happen in the education system as well. 

Forgery qualifies as any creation of a false document or alteration of a genuine document. If you are the victim of identity theft or fraud, then you may qualify for forgery discharge.

If you are the victim of such forgery, then the remaining balance of the student loans will be discharged and any payments made will be refunded.

There are generally two types of forgery in this circumstance:

• Identity theft or fraud. This is the most common type of forgery. If you are a victim of this, then you will want to use the Forgery Discharge Application. 

• False certification. Do you think that someone in the school office forged your signature without your authorization to complete your enrollment? This happens more than you might think. If so, then you’ll want to use the False Certification (Unauthorized Signature) application. 

This is applicable to loans held by the U.S. Department of Education as well as Federal Direct Loans. 

#11. Perkins Loan Cancellation and Discharge

This cancellation and discharge program is a little different from others in that the Perkins Loan is no longer applicable for new loans.

The Perkins Loan Program itself ended on September 30, 2017, though disbursements of the loan were made as late as June 30, 2018. 

If you have one of these older loans, you may qualify for cancellation and discharge through your work in public service. In fact, you can have up to 100% of your federal student loan debt forgiven if you work in one of the following public service areas:

• Law enforcement
• Firefighter
• Nurse or medical technician
• Teacher
• Corrections officer
• Military service member in a hostile fire or imminent danger pay area
• Librarian with a master’s degree working in a Title 1-eligible elementary school, secondary school, or public library
• Full time faculty member at a tribal college or university
• And more

A full list of eligible public service jobs can be found on the Federal Student Aid website. 

Though 100% of your loan can be canceled, it is not canceled in a lump sum. A total of 30% will be canceled in your first two years of service (15% each year), 40% canceled for years 3 and 4 (20% each year), and the remaining 30% will be canceled your 5th year.

There is no online application available for Perkins Loan Cancellation and Discharge.

The request must be made directly to the school that made the loan or directly to your loan servicer. If you request discharge, they are required to provide the forms and instructions necessary for cancellation or discharge. 

Student Loan Forgiveness for Parents

Many of the same benefits that apply to you also apply to parents who have taken out parent PLUS loans on behalf of their children.

Parent borrowers for discharge are eligible if:

• Either the parent or student dies
• If the parent (not the student whom the loan is for) becomes totally and permanently disabled
• The loan is discharged in bankruptcy
• The school closed before your child could complete his/her program
• The school falsely certified your eligibility for the loan
• The loan was acquired through identity theft
• The student withdrew from the school, but the school didn’t refund the money it owed

In all of these cases, there is no specific form for parents to fill out. You must contact your loan servicer directly to apply for discharge