Everyone wants to get rid of their student loan debt! However there are no ways to just magically delete all of your outstanding debt, though that would be nice. There are however,  some not very well known forgiveness programs* that exist to help those that need some relief to get rid of some of it and make student debt payoff more realistic and affordable. Programs exist for all types of occupations from nurses to teachers to public service and others.
One of the main programs, which is the most widely available yet still under utilized, is the Public Service Loan Forgiveness or PSLF, which we will get into more detail in this article. Lots of states have programs to help those with crippling student debt, here are some of the main programs from across the country:
 
  • Public Service Loan Forgiveness (PSLF)
  • Forgiveness with Income-Based Repayment (IBR)
  • Forgiveness with Pay As You Earn (PAYE)
  • Forgiveness with Revised Pay As You Earn (REPAYE)
  • LRAP programs (Student loan repayment assistance for other careers)
  • Forgiveness with Income-Contingent Repayment (ICR)
  • Federal Perkins Loan cancellation
  • Student loan forgiveness for teachers
  • Student loan forgiveness for nurses
  • Student loan discharge for special circumstances

*The DOE's student loan consolidation programs, including its loan forgiveness programs, have specific qualifications that must be met in order to obtain a consolidation or forgiveness of student loans. These qualifications requirements include but are not limited to qualifications based on Client's income, other financial factors, types of outstanding loans and the area of Client's current employment. All decisions regarding loan consolidations and loan forgiveness, including the amounts of monthly payments, are subject to DOE approval and are determined solely by the DOE. Any forgiveness of a loan may be treated as taxable income for income tax purposes and any forgiveness of a loan greater than $600 may be reportable as taxable income to state and/or federal governments. You should discuss your personal tax situation, including any potential tax consequences of loan forgiveness, with a tax professional.

What are student loan debt forgiveness programs?

One of the most popular programs is the PSLF or Public Service Loan Forgiveness program. This deal allows you to qualify for 100% loan forgiveness after a certain number of payments. Essentially if you qualify for this program you must make 120 consecutive payments and if there is any amount left owed on your loan (no matter the dollar amount) the balance is completely forgiven. This plan is meant for a variety of fields and is based more on the company you work for rather than your actual occupation or job title. With this plan ALL Direct Loans are considered to be PSLF eligible, including:
 
  • Direct PLUS Loans
  • Direct Consolidation Loans
  • Direct Subsidized and Unsubsidized Loans

Income-Based Repayment Forgiveness

For more on IDR and IBR based programs you can check out our in depth article on Income-Based Student Loan Repayment Programs here. This is one of the bigger programs along with PSLF and isn’t a traditional “forgiveness” program like most of the other federal programs, but it does reduce monthly payments significantly**. Essentially this program will cap your monthly payments based on certain factors, mainly income level weighed against your family size, at 10-15%. This can really help those whose payments are a much higher percentage than their take home income and especially those with multiple members in the household. There is a forgiveness aspect of the program, as at the end of the term (usually 20-25 years) regardless of what you have paid off, any remaining balance on the loan is forgiven if you have made all of the qualifying payments*. Depending on income level and family size, payments can even be $0 a month with IBR programs!

*The DOE's student loan consolidation programs, including its loan forgiveness programs, have specific qualifications that must be met in order to obtain a consolidation or forgiveness of student loans. These qualifications requirements include but are not limited to qualifications based on Client's income, other financial factors, types of outstanding loans and the area of Client's current employment. All decisions regarding loan consolidations and loan forgiveness, including the amounts of monthly payments, are subject to DOE approval and are determined solely by the DOE. Any forgiveness of a loan may be treated as taxable income for income tax purposes and any forgiveness of a loan greater than $600 may be reportable as taxable income to state and/or federal governments. You should discuss your personal tax situation, including any potential tax consequences of loan forgiveness, with a tax professional.


**Lowering your monthly payment may require you to pay more interest over a longer period.

PAYE (Pay As You Earn) vs REPAYE (Revised Pay As You Earn)

These two programs are very similar to each other and also to IBR type payment programs. PAYE and REPAYE are programs that cap monthly payments based on your income levels. Payments are usually capped at 10% and like IBR, will forgive any remaining loan balance after 20 or 25 years depending on the type of loan you have if you have made all of the qualifying payments.
 
The main difference between the two is that REPAYE has no income eligibility requirement caps like PAYE does, basically anyone with eligible loans can apply. This can be good or bad depending on your individual situation and should be evaluated in comparison to your standard 10 year plan. You should consult with a Student Loan Specialist to see which plan is best for your current financial outlook.

LRAP Programs (Student Loan Repayment Assistance For Other Careers)

These are state specific programs meant to help individuals in other careers not covered in traditional public service loan forgiveness or other income-based programs. For example there are programs for pharmacists or veterinarians in various states that offer assistance in exchange for 2 years of service in a specific region of need. Each state has different LRAP programs for different professions so you should check with one of our Student Loan Specialist to see what you can qualify for in your home state.

Income-Contingent Repayment (ICR) Programs

Again, fairly similar to IBR or IDR plans but this program is available to those with Parent PLUS Loans which are ineligible for most other income-based repayment plans. There are some minor differences with income-contingent repayment programs. Monthly payments are restructured based on either 20% of your discretionary income or the standard payment on a 12 year plan, whichever payment would be less is what you will be slotted in for each month. Like other income-based plans, any remaining balance is completely forgiven after 25 years of on-time qualifying payments.

Federal Perkins Loan Cancellation

This program is a very popular specialty program that forgives a percentage of your debt for qualifying professions in exchange for a year of service. Usually they require you to work in an area of high need or an area with a shortage of your profession. Under some circumstances you can even have 100% forgiveness over time depending on how many years of service you are willing to put in. Professions eligible range from firefighter and law enforcement to speech pathologists to public defenders.

Student Loan Discharge For Special Circumstances

This is not really a traditional forgiveness program as it usually resolves your student debt obligation completely based on special circumstances. These situations are rare and range from permanent disability to closed school discharge to borrower defense discharge. If you think you could be eligible for a complete student loan discharge you can contact Student Loan Direct to find out if your situation applies.

**Lowering your monthly payment may require you to pay more interest over a longer period.

Eligibility

As you read above there are A LOT of programs for all types of situations. Eligibility for each program is different with various requirements or qualifications for each. Some programs are based on where you work or what you do for a living, others are based on your income level and family size, and some are just contingent on your willingness to exchange forgiveness for work in another area of the country. Just like doing your taxes and understanding all the IRS tax laws in both your state and federal level, it is always best to consult a professional that has your best interest in mind. That is what we at Student Loan Direct are here for! We have experts that are well versed in every single student loan program and can advise you on the best path, with the lowest payment, and easiest route to resolve your student loan debt. Call us anytime at 888-377-7197 to speak with one of our loan professionals or fill out the easy online form! We will show you the best path for your situation and help lower** your overall student debt burden! 

**Lowering your monthly payment may require you to pay more interest over a longer period.