Student loan forgiveness programs: Which one is best for you?

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Student loan forgiveness programs can cancel all or part of your federal student loans. (iStock)

If you’re a federal student loan borrower and you have a certain occupation or income, you may qualify for one of several federal student loan forgiveness programs. These programs forgive all or some of your federal student loan balance if you meet the requirements.

Keep reading to learn more about federal student loan forgiveness programs, student loan discharge and cancellation, and what you can do if you don’t qualify for student loan forgiveness.

While student loan forgiveness programs can provide financial relief for your federal student loans, private student loans unfortunately aren’t eligible for loan forgiveness.

But you may be able to lower your private student loan costs by refinancing. You can use Credible to compare student loan refinance rates from private lenders in minutes.

Federal student loan forgiveness

If you qualify for a federal student loan forgiveness program, all or some of your federal student loans could be canceled after a set period of time, and you’ll no longer have to repay the remaining balance. The forgiveness timeline usually requires five to 20 years of payments and varies by program.

You can be eligible for federal student loan forgiveness in several different situations. For example, you may be eligible for student loan forgiveness if you teach in low-income areas, work for the government, or volunteer for AmeriCorps or the Peace Corps.

The type of federal student loans you have will also affect your eligibility for student loan forgiveness programs. Direct Loans are eligible for the most forgiveness programs. Other types of loans — such as Federal Family Education Loans (FFEL), Parent PLUS Loans, or Perkins Loans — may also be eligible depending on the program. To find out if you qualify for any student loan forgiveness programs, or to apply, contact your loan servicer.

It’s important to note that under certain loan forgiveness programs, the forgiven amount may normally be subject to income taxes. But a provision in the American Rescue Plan Act, which Congress passed in 2021 in response to the COVID-19 pandemic, excludes all forgiven federal loan balances from being taxed through Dec. 31, 2025.

Public Service Loan Forgiveness

The Public Service Loan Forgiveness (PSLF) Program, offered by the U.S. Department of Education, is available to federal student loan borrowers who work for a U.S. federal, state, local, or tribal government, or a not-for-profit organization.

With the PSLF Program, your remaining loan balance will be forgiven after you make 120 qualifying payments under an eligible repayment plan while being employed full-time by a qualifying employer. You must have federal Direct Loans, or consolidate your federal loans into a Direct Consolidation Loan, in order to qualify for PSLF.

If you’ve previously been denied PSLF Program benefits because you don’t have eligible federal loans, you may be eligible for a limited waiver that would give you credit for past periods of repayment that wouldn’t otherwise qualify for PSLF. Note that you’ll still need to work for a qualifying employer in order to be eligible.

The Department of Education made these changes in response to the COVID-19 pandemic. The changes apply to people with Direct Loans, borrowers who have already consolidated their federal loans into a Direct Consolidation Loan, or borrowers who consolidate before Oct. 31, 2022.

Forgiveness after income-driven repayment plans

If you’re struggling to afford your current monthly federal student loan payments, the Department of Education offers four income-driven repayment (IDR) plans designed to be affordable based on your income and family size.

Your new monthly payment will be calculated as a percentage of your income instead of a fixed dollar amount to satisfy your standard repayment term, resulting in a smaller payment. You’ll need to recertify your financial situation each year to keep your IDR plan status, even if your income or family size haven’t changed.

IDR plans will extend your repayment period to 20 to 25 years before any remaining balance will be forgiven. Depending on the plan you’re enrolled in, your total payment may exceed your costs for a 10-year Standard Repayment Plan. Here’s some additional information on the four IDR plans.

Income-Based Repayment Plan (IBR)

The IBR Plan typically reduces your monthly payment amount to 10% of your discretionary income if you’re a new borrower on or after July 1, 2014. If you’re not a new borrower on or after that date, your monthly payment amount is typically 15% of your discretionary income. Your new payment won’t be higher than the 10-year Standard Repayment Plan amount.

Eligible loans — Direct Subsidized and Unsubsidized Loans, Subsidized and Unsubsidized Federal Stafford Loans, PLUS Loans made to students, Direct or FFEL Consolidation Loans that don’t include PLUS Loans made to parents
When your loans would be forgiven — 20 years if you’re a new borrower on or after July 1, 2014; 25 years if you’re not a new borrower on or after July 1, 2014

Income-Contingent Repayment Plan (ICR)

Under an ICR Plan, your monthly payment is the lesser of your total payment amount over 12 years with a fixed monthly payment or 20% of your discretionary income.

Eligible loans — Direct Subsidized and Unsubsidized Loans, Direct PLUS Loans made to students, Direct Consolidation Loans
When your loans would be forgiven — 25 years

Pay As You Earn Plan (PAYE)

It’s possible to reduce your monthly payments to approximately 10% of your discretionary income by enrolling in the PAYE Plan. You’ll need to demonstrate "partial financial hardship" to be eligible, and your total repayment won’t exceed the 10-year Standard Repayment Plan amount.

To qualify for the PAYE Plan, you must also be a new borrower that received Direct Loans or an FFEL Program loan after Oct. 1, 2007, and didn’t have an outstanding balance in either program before this date.

Eligible loans — Direct Subsidized and Unsubsidized Loans, Direct PLUS Loans made to students, Direct Consolidation Loans that don’t include PLUS Loans (Direct or FFEL) made to parents
When your loans would be forgiven — 20 years

Revised Pay As You Earn Plan (REPAYE)

The REPAYE Plan also reduces your monthly payment to approximately 10% of your discretionary income. But unlike the PAYE Plan, your total repayment costs may exceed those of the 10-year Standard Repayment Plan amount if your income increases.

Eligible loans — Direct Subsidized and Unsubsidized Loans, Direct PLUS Loans made to students, Direct Consolidation Loans that don’t include PLUS Loans (Direct or FFEL) made to parents
When your loans would be forgiven — 20 years for undergraduate loans; 25 years for graduate and professional study loans

If you’re thinking about refinancing your student loans, you can use Credible to compare student loan refinance rates without affecting your credit score.

Student loan forgiveness by profession

Some federal student loans might be eligible for forgiveness based on your profession. These programs require a minimum number of service years with a certain employer or within select communities before your loan balance is forgiven.

Student loan forgiveness for teachers

With the Teacher Loan Forgiveness Program, you can have up to $17,500 forgiven on your federal Direct Subsidized and Unsubsidized Loans and Subsidized and Unsubsidized Federal Stafford Loans by teaching for five consecutive academic years at a low-income school or educational service agency.

You can find eligible institutions for each state or territory by visiting the StudentAid.gov Teacher Cancellation Low Income (TCLI) Directory.

Student loan forgiveness for medical professionals

Many programs offer student loan forgiveness for nurses and other healthcare professionals. Some common programs and their loan forgiveness amounts include:

National Health Service Corps — Up to $50,000 for at least two years of full-time service and up to $25,000 for at least two years of half-time service
National Institutes of Health — Up to $50,000 per year for medical researchers
Nurse Corps Loan Repayment Program — Up to 60% of qualifying loans over two years; a third year of service covers an additional 25%
United States Armed Forces — Usually up to $45,000 per year, but benefits vary by military branch
Indian Health Service — Up to $40,000 with a two-year commitment

You can also explore state-specific programs and programs for your particular field of study. These usually provide incentives to address sectors with medical professional shortages.

Student loan forgiveness for doctors

The National Health Service Corps (NHSC) requires a two-year commitment to communities in need of primary medical care, dentistry, or behavioral and mental health in order to qualify for its Loan Repayment Program.

Full-time workers at an approved site can receive up to $50,000 in student loan forgiveness per term. Half-time clinicians can get up to $25,000. After the initial two-year term, you may have the ability to continue your service on a one-year basis and receive additional loan repayment funds.

Student loan forgiveness for lawyers

With the Department of Justice Attorney Student Loan Repayment Program, you can qualify for up to $60,000 in loan forgiveness when you have at least $10,000 in qualifying federal student loan debt. The service obligation is three years, and you can receive up to $6,000 per year.

Other state-specific forgiveness programs exist for prosecutors, public defenders, and attorneys serving underserved areas.

Ways to get a student loan discharged

Federal student loan forgiveness programs and IDR plans aren’t the only way to get your federal student loans discharged. You may also be able to discharge your student loans if you’re experiencing significant hardship and don’t qualify for loan forgiveness or an IDR plan.

Similar to PSLF and income-driven repayment plans, any loan amount that’s discharged through Dec. 31, 2025, won’t be considered taxable income. Here are a few common types of federal student loan discharge.

Total and permanent disability discharge

A total and permanent disability discharge forgives your federal Direct Loans, FFEL Program loans, and Perkins Loans if you’re totally and permanently disabled. TEACH Grants may also be eligible.

A three-year monitoring period with your loan servicer can apply after qualifying for a discharge. You may need to repay the forgiven amount if you’re able to resume work.

Military veterans are also eligible for total and permanent disability discharge. Unlike the standard disability discharge for civilians, there isn’t a three-year post-discharge monitoring period.

Borrower defense to repayment discharge

If your school misled you or violated certain state laws, you may be eligible to have your federal Direct Loans discharged under borrower defense to repayment. It’s also possible to receive a refund on your previous student loan payments.

Student loan cancellation programs

The Department of Education also offers student loan cancellation programs for certain types of federal student loans.

Perkins Loan teacher cancellation

It’s possible to have up to 100% of your Perkins Loan balance canceled after teaching full-time at a public or nonprofit elementary or secondary school system in one of these capacities:

Teachers serving a low-income elementary school or secondary school
Special education teachers
Teachers of math, science, foreign language, bilingual education, or another short-staffed field

You can receive partial loan forgiveness for each full academic year of teaching service you complete, until you complete your fifth year.

Other Perkins Loan cancellation programs

Several other career fields are eligible to have up to 100% of their Perkins Loans canceled, including:

Nurse or medical technician
Firefighter
Law enforcement or corrections officer
Military service in a hostile fire or imminent danger pay area

In most cases, you receive full forgiveness after five years of full-time service. But some loans require up to seven years. You may also qualify for a Perkins Loan discharge in the event of personal bankruptcy, school closure, permanent disability, or death.

What to do if you don’t qualify for student loan forgiveness

The requirements for federal student loan forgiveness programs can be strict or require many years of qualifying payments before your balance is forgiven. If you don’t qualify for student loan forgiveness, here are some actions you can take now to pay off student loan debt:

Make extra payments. Contributing a few extra dollars toward your monthly payment accelerates your payoff date and reduces your total interest charges. Consider taking on a side hustle, using your tax refund, and seeing if your employer offers student loan repayment assistance programs.
Consolidate your federal loans. A Direct Consolidation Loan combines your existing federal student loans into a new, single loan with only one monthly payment. Consolidating may not give you a lower interest rate, because your new rate will be a weighted average of all your existing loans. But it can help lower your monthly payment by extending your repayment period. You may also be able to qualify for an IDR plan after you consolidate.
Refinance into a private loan. You may qualify for a lower interest rate by refinancing your federal student loans with a private lender. But think carefully before you refinance a federal loan into a private loan, because you’ll unfortunately lose federal loan benefits like PSLF and other loan forgiveness programs.

If you’re ready to refinance, you can compare student loan refinance rates quickly and easily with Credible.

Personal Finance