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How To Get Student Loans Forgiven: 8 Proven Scenarios

Student loan forgiveness sounds like a dream come true for loan holders. But when can you actually get it? And how?

Read on to see if you qualify for loan forgiveness or discharge (both partial and full). If so, I’ll show you how to get student loans forgiven.

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Most of this information applies to federal loans. Private loan discharges are more at the discretion of the individual lender. But if you can get federal loan forgiveness, it’s worth finding out if your private loans can be forgiven, too.

1. You work in public service

Since public service encompasses many types of jobs, this route to forgiveness is one a lot of graduates can take.

Who can get it?

Qualification depends on your employer, rather than your job title. Qualifying organizations include:

  • Government organizations-federal, state, local, or tribal
  • Non-profit organizations that are tax-exempt under Section 501(c)(3) of the Internal Revenue Code.

Your employer can be a non-profit that provides any of the following services:

  • Military service
  • Law enforcement
  • Early childhood education
  • Public interest law
  • Public health
  • Public library services
  • Public services to individuals with disabilities or the elderly
  • Emergency management
  • Americorps or Peace Corps (if you serve full-time)

Note: partisan political organizations and labor unions don’t count, nor does any for-profit company (even if it provides the services above).

You should be working at one of the above organizations full-time, or at least 30 hours per week. Two or more part-time jobs at qualifying organizations, as long as your weekly hours add up to 30, should count.

How do you get it?

Not right away. You need to make 120 payments on your direct loans to be eligible. Payments should be made after October 1, 2007. And you can’t be in default.

The 120 payments should be made while you’re employed by a qualifying employer, and they can’t be more than 15 days late. Payments don’t have to be consecutive to count, but they should be under a federal repayment plan. After all the payments are made, the remaining balance on your loans is forgiven.

If you’re making payments monthly, this process takes at least 10 years. It’s a commitment! Don’t rush the process-you get credit for regular payments, but not for paying more than you’re required to at any given time.

Members of the military qualify for other benefits as well, including interest rates capped at 6 percent during active duty and 0 percent while you’re in a hostile military zone. In some individually determined cases, the Department of Defense (DOD) may pay a portion of your loans. You’re also eligible for deferment after active duty.

To apply, fill out an Employment Certification Form. Submit this form early, while you’re working towards the requirements. It’s a good idea to resubmit annually or whenever you change jobs.

Which loans can be forgiven?

Any loans you take out under the William D. Ford Federal Direct Loan Program – including Direct Subsidized and Unsubsidized Loans, Direct PLUS Loans, and Direct Consolidation Loans – count. When in doubt, look for the word “Direct” in the name of your loan.

Perkins loans and Family Education Loans don’t count, unless you consolidate them into a Direct Consolidation Loan. If you consolidate, however, you start over with the 120 payments on the new loan.

Many public service workers will also qualify for a Perkins loan discharge through a different program – more on that below.

2. You teach in a low-income school

Educators in low-income schools can qualify for $5,000-in some cases up to $17,500-in loan forgiveness.

Who can get it?

You’re eligible for Teacher Loan Forgiveness once you’ve been teaching for five complete and consecutive years, full-time, at a low-income elementary or secondary school.

Schools considered low-income are

  • in school districts that qualify for funds under Title I of the Elementary and Secondary Education Act of 1965
  • listed in the Annual Directory of Designated Low-Income Schools for Teacher Cancellation Benefits.
  • ones whose student body has more than 30 percent of children who qualify for Title I services, as determined by the U.S. Department of Education.

Both public and private schools count, if they meet the requirements above.

Even if you took time off during the five years, you may still qualify if

  • you taught for at least half the year
  • you used the time for post-secondary education related to teaching, or
  • you took family or medical leave or were called to active military duty

How do you get it?

Loan forgiveness is given to highly qualified teachers. For public elementary and secondary school teachers to be “highly qualified,” they should have full state certification or passed the state teacher licensing exam (or met state requirements to teach in a charter school).

For new or non-certified teachers, you may also be considered “highly qualified” if you have at least a bachelor’s degree and can prove competency in your field’s subject matter through testing. The testing requirements are more specialized for secondary school teachers, who usually focus on the field they teach.

After you’ve completed the five years of teaching service, submit the Teacher Loan Forgiveness Application. The chief administrative officer of your school (such as the principal) should sign off on the application as well. In the meantime, continue making loan payments.

Which loans can be forgiven?

Any teachers who meet the requirements above can get up to $5,000 in loan forgiveness.

Secondary school mathematics or science teachers, and special education teachers who are trained specifically in special education, are eligible for more-up to $17,500 in loan forgiveness. These fields face periodic teacher shortages, so the loan discharge is an added incentive.

Subsidized and unsubsidized direct loans can be forgiven with this program. PLUS loans cannot. Also, your loans should have been taken out after 1998.

3. You have Perkins loans and work one of these public service jobs

Federal Perkins Loans have a separate set of requirements for forgiveness.

Who can get it?

Public service professions are often eligible for Perkins Loan forgiveness. The amount of forgiveness will increase each year you work in a qualifying job.

You can get up to 100 percent Perkins Loan forgiveness if you are:

  • A teacher in an early childhood education program
  • A special education teacher
  • A teacher of students from low-income families
  • An educator in a “teacher shortage area” such as math, science, or foreign languages
  • A speech pathologist or an early-intervention provider for the disabled
  • A nurse or medical technician
  • A law enforcement officer or firefighter
  • An employee of a public or nonprofit child or family services agency
  • A teacher at a tribal college or university
  • A military veteran who served in a hostile zone after Aug. 14, 2008

You can get up to 70 percent forgiveness if you are:

  • A VISTA or Peace Corps volunteer

You can get up to 50 percent forgiveness if you are:

  • A military veteran who served in a hostile zone before Aug. 14, 2008

How do you get it?

Since there’s no standard application form for a Perkins Loan cancellation, contact the school you attended to find out how to proceed.

4. You have become totally and permanently disabled

Disability often affects earning potential. If you have a permanent disability and can document its effects, you can get multiple loans forgiven.

Who can get it?

  • Military veterans with disabilities connected to service. Submit documentation from the U.S. Department of Veterans Affairs.
  • People with disabilities who receive Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI) benefits. Submit a notice of award from the Social Security Administration.
  • People with disabilities whose physicians can verify that they are totally and permanently unable to work. The physician should also certify that the disability has either lasted or will last for at least 60 months (about five years).

How do you get it?

In addition to sending the above info to the U.S. Department of Education, you should contact Nelnet, the Total and Permanent Disability (TPD) Servicer that communicates with lenders and borrowers.

Start a TPD discharge application online at Nelnet here (click on “Apply now”). You can call Nelnet at 1-888-303-7818 or send an e-mail to disabilityinformation@nelnet.net for more application information.

After you’ve begun the process, Nelnet will contact your loan servicers and suspend your payments for 120 days while they determine your eligibility.

Which loans can be forgiven?

Most federal loans can be forgiven with this program, including any federal direct loans, Perkins loans, or Federal Family Education Loans-as well as any TEACH Grant service obligations.

5. The school you’re attending closed before you could finish your degree

If your school closes while you’re attending, your federal loans should be forgiven.

Who can get it?

Any student enrolled at a school which closes during their enrollment, or within 120 days after they withdraw. You’re considered enrolled if you are on an approved leave of absence, as well.

The closure should keep you from completing your degree program. You’re ineligible if you’ve completed your coursework, or if you’re enrolled in a comparable program and able to transfer credits.

How do you get it?

Contact your loan servicer (public or private) for specifics.

Which loans can be forgiven?

Federal loans are eligible for 100 percent forgiveness in a closed school discharge. These include direct loans, Perkins loans, and Federal Family Education loans.

6. The school falsely certified your eligibility for a loan

If the school made an error and falsely certified your eligibility for a loan, you may be able to get the loan forgiven.

Who can get it?

  • Anyone whose school has either falsely certified their eligibility or signed their name on an application or promissory note without their authorization.
  • Anyone whose name was put on a loan due to identity theft.
  • Anyone disqualified from employment (because of a physical or mental condition, criminal record, or other factors) in the occupation they’re training for, despite taking out a loan from the school.

Which loans can be forgiven?

Federal direct loans and Federal Family Education Loans.

7. The school didn’t refund your loan after your withdrawal

If you took out a loan and then withdrew from school, the school may be required to issue a refund to the U.S. Department of Education or private lender. If the school doesn’t issue the refund, you can apply for forgiveness.

Only the amount of the unpaid refund will be forgiven. Check with your lender for specifics.

8. You are bankrupt (extremely rare)

This is the rarest kind of loan forgiveness. To qualify, you have to prove that further payments will cause undue hardship.

Who can get it?

A loan holder who’s filed Chapter seven or Chapter 13 bankruptcy may be eligible.

How do you get it?

You’ll have to go to bankruptcy court to make the request. The court will decide based on three factors:

  • Income: Evidence that you won’t be able to support yourself if you have to make payments
  • Duration: Evidence that your financial difficulty will continue for a significant portion of the repayment period
  • Good Faith: A previous sincere effort to repay the loan (usually about five years of payments)

Which loans can be forgiven?

All federal loans, including Perkins loans.

Summary

Getting your loans forgiven isn’t easy, but it’s worth a shot if you think you qualify.

If you don’t meet any of the above criteria, and you’re struggling to make payments, you still have options. An income-based repayment plan is a good place to start.