Several jobs offer loan repayment programs that pay off some or all of your debt in exchange for your service. Almost all programs apply to federal loans, not private.
As of 2018, there are 1.3 trillion dollars in outstanding student loan debt in America. This staggering number highlights the financial struggle that many people face when pursuing an education. Whether you currently feel the weight of your own student loan debt, or are just beginning to embark on the (harrowing) borrowing process, learning about loan forgiveness provides valuable information that may alleviate some stress.
Though having some of your student loans forgiven might sound too good to be true, the Public Service Loan Forgiveness (PSLF) Program makes this dream possible for some qualifying borrowers. If you are eligible, you could potentially save thousands of dollars on your student loans.
Still, applying for public student loan forgiveness is far from simple, easy, or guaranteed. We’ve put together some FAQs and must-know information to help you learn more about the criteria for potential student loan forgiveness, whether you might qualify, and how to get started.
PUBLIC SERVICE LOAN FORGIVENESS PROGRAM (PSLF)
Under the PSLF program, your Direct Loans may be forgiven after you have made 120 qualifying monthly payments toward your student loan debt while working full-time for a qualifying public service or nonprofit employer. There is no cap on how much debt can be forgiven, but you only qualify for PSLF after you have made 10 years of repayments through an income-driven repayment plan.
Teachers, lawyers, healthcare professionals, members of the military and professionals are the different types of jobs with student loan forgiveness programs.
How Does Loan Forgiveness Work?
The Public Service Loan Forgiveness (PSLF) Program was designed to offer some debt relief to students who work full-time in public service. In a nutshell, you may be eligible to have the remainder of your federal Direct Loans forgiven after you have made 120 qualifying monthly payments under a qualifying repayment plan, while working for an approved employer.
How Do You Qualify for Student Loan Forgiveness?
There are a few major criteria for potentially having the balance of your federal Direct Loans forgiven. They include:
- Your employer. It doesn’t matter what job functions you perform, as long as you work for a qualifying employer. (We’ll learn more about qualifying employers later.)
- Whether or not you work full time. You must either meet your employer’s definition of full-time employment or work at least 30 hours per week, whichever is greater.
- What kind of loan you have. Only non-defaulted student loans borrowed under the William D. Ford Federal Direct Loan (Direct Loan) Program qualify for forgiveness. Private loans and other kinds of federal loans are not eligible.
- The number of qualifying payments you have made. You must make 120 qualifying payments before the balance of your loans is forgiven. Only payments made after Oct. 1, 2007 can be counted. (We’ll learn more about what counts as a qualifying payment, later.)
- Your repayment plan. Not all repayment plans qualify for the Public Service Loan Forgiveness Program. You’ll need to select an income-driven repayment plan, which bases your monthly payment on how much you earn.
What Counts as a Qualifying Employer for Public Student Loan Forgiveness?
There are all kinds of employers you might be able to work for, like the U.S. military, public schools, and many not-for-profit organizations. Let’s learn more about employers who count, and those who don’t. Qualifying employers include the following:
- Government organizations at the federal, state, local, or tribal level
- Not-for-profit organizations that are tax-exempt under Section 501(c)(3) of the Internal Revenue Code
- Not-for-profit organizations that are not tax-exempt under Section 501(c)(3) of the Internal Revenue Code may also qualify, if their primary function is to provide a qualifying public service, like education, emergency management, or public healthcare. Visit StudentAid.gov for the full list of qualifying services.
- AmeriCorps or Peace Corps (You must be a full-time volunteer in one of these organizations. Other kinds of volunteer positions do not qualify.)
Employers who don’t qualify include the following:
- Labor unions
- Partisan political organizations
- For-profit organizations
- Not-for-profit organizations that are not tax-exempt under Section 501(c)(3) of the Internal Revenue Code and do not provide a qualifying public service as their primary function
- Government contractors
Healthcare Forgiveness Options
There are several loan repayment programs available for professionals in the health field such as doctors and nurses, as well as mental health clinicians, pharmacists and dentists.
- NATIONAL HEALTH SERVICE CORPS (NHSC) LOAN REPAYMENT ASSISTANCE PROGRAM
This program awards up to $50,000 to primary care doctors, dentists, nurse practitioners, mental health nurse practitioners, certified nurse midwives, psychiatric nurse specialists and mental health care providers who work for at least two years at a site that is in a Health Professional Shortage Area.
- THE STUDENTS TO SERVICE LOAN REPAYMENT PROGRAM
Also offered through the National Health Service Corps (NHSC), this program provides up to $120,000 for students in their last year of medical school or dental school who commit to three years of service as a primary care provider at an NHSC-approved site.
- INDIAN HEALTH SERVICE LOAN REPAYMENT PROGRAM
The IHS LRP offers qualifying health care providers up to $40,000 in repayment of eligible health education loans in exchange for a two-year service commitment to practicing in a facility that serves American Indian and Alaska Native communities.
- NURSE CORPS LOAN REPAYMENT PROGRAM
Program benefits nurses who work in underserved areas in Critical Shortage Facilities (CSFs) in Health Professional Shortage Areas, or in any eligible school of nursing. The program offers debt relief in exchange for three years of full-time employment. It pays up to 60% of your loan balance if you serve for two years, and an additional 25% if you serve for a third year, for a total of 85%.
- HEALTH RESOURCES AND SERVICE ADMINISTRATION NURSE FACULTY LOAN PROGRAM (NLFP)
The NFLP is a loan for advanced education nursing students who plan to be nurse faculty, which means they plan to teach nursing. To be clear, this is not only a loan forgiveness program, but also a legitimate loan that covers two semesters of costs for tuition, software, books and fees. Between 20% and 80% of the loan is forgiven in exchange for working as nurse faculty full-time for one to four years.
- HEALTH RESOURCES AND SERVICE ADMINISTRATION FACULTY LOAN REPAYMENT PROGRAM
The HRSA FLRP offers $40,000 in repayment assistance to nurses and other health care professionals who come from a disadvantaged background (either economically or environmentally) and commit to serving as faculty in a Health Professions School for a term of two years.
- NATIONAL INSTITUTES OF HEALTH (NIH) LOAN REPAYMENT PROGRAMS
These are a set of programs designed to recruit and retain health care professionals into biomedical or biobehavioral research career tracks. They repay up to $35,000 annually of a researcher’s educational debt in return for a commitment to conduct NIH mission-relevant research.
Military Repayment Options
The military does not just offer repayment plans for health care professionals, but also for its other service members and veterans as well. The Army and Navy’s loan repayment programs offer up to $65,000 in total aid. Multiple programs are available, so visit each military branch’s websites for more details.
Repayment Options for Lawyers
JOHN R. JUSTICE STUDENT LOAN REPAYMENT PROGRAM (JRJ SLRP)
JRJ SLRP provides loan repayment for state and federal public defenders and state prosecutors who commit to at least three years of work in this area. The benefits are $10,000 maximum per year, but cannot exceed $60,000 overall. Attorneys with the greatest financial need are given priority.
DEPARTMENT OF JUSTICE ATTORNEY STUDENT LOAN REPAYMENT PROGRAM (ASLRP)
Attorneys who work for the Department of Justice may be eligible for the ASLRP, which gives up to $6,000 per year, with a maximum amount of $60,000. In order to qualify, lawyers must commit to three years of service with the Department of Justice.
HERBERT S. GARTEN LOAN REPAYMENT ASSISTANCE PROGRAM
Through a lottery system, this program offers loan repayment rewards for attorneys who work for Legal Service Corporation and its grantees. LSC is a nonprofit that provides legal civil services to low-income Americans. The program gives $5,600 to approximately 70 eligible attorneys each year.
AIR FORCE JUDGE ADVOCATE GENERAL’S CORPS LOAN REPAYMENT PROGRAM
Lawyers who join the Air Force Judge Advocate General’s Corps program (known as JAG) could receive up to $65,000 total in loan repayments. JAG officers deal with all legal matters in the U.S. military. After your first year of service as a JAG officer, you will collect the payments over a three-year period.
Teacher Loan Forgiveness Program
Under the Teacher Loan Forgiveness Program (TLFP), if you are a special education, secondary math, or science teacher, you could be eligible for forgiveness of up to $17,500 of your Direct Subsidized and Unsubsidized loans and Subsidized and Unsubsidized Federal Stafford Loans. Teachers of other subjects are eligible for up to $5,000 of forgiveness of these loans. You may be eligible for forgiveness under the TLFP if, among other things, you have been employed as a highly qualified teacher for five complete, consecutive academic years at a school or educational service agency that services lower-income students.
Employer & State Loan Repayment Programs
Almost all states offer loan repayment programs, usually for those who work in public service. Visit your state’s website to find out if you qualify for an available program.
Some employers offer loan repayment plans and/or will help pay for you to receive an advanced degree. Be sure to ask your Human Resources department about any student loan aid your company might provide.
Income Based Repayment Programs
You can use income-based repayment (IBR) options for both private and federal loans. These are not loan forgiveness programs; they are repayment plans that base payments on your actual income. With IBR, maximum monthly payments are 10-15% of your income over 20-25 years. After the 20-25 years, the remaining balance will be forgiven.
Revised Pay as You Earn (REPAYE) is an IBR that caps monthly payments at 10% of your income for 20 years. After 20 years, the remaining balance will be forgiven.
In an Income-Contingent Repayment Plan, monthly payments are capped at 20% of your discretionary income or what your payment would be on a fixed, 12-year payment plan—whichever is less. Balances are forgiven after 25 years if you make steady payments.
Note that loan forgiveness is not the same thing as loan discharge, which is when circumstances beyond the borrower’s control prohibit repayment. Some reasons for discharge may be death, permanent disability, or closure of a school while the borrower is attending it.
Be sure to read each program’s terms and eligibility requirements thoroughly, and note whether the rewards are taxable or accrue interest. Getting an education can be expensive, but these programs can do much to offset some of the costs of pursuing your goals.
What Kinds of Student Loans May Qualify for Forgiveness?
The following loan types are eligible:
- Federal Direct Subsidized Stafford/Direct Loans
- Federal Direct Unsubsidized Stafford/Direct Loans
- Federal Direct PLUS Loans
- Federal Direct Consolidation Loans
A word of warning about Federal Direct Consolidation Loans: If you begin making qualifying payments on a Direct Loan and later decide to consolidate it, you will lose credit for the payments you’ve made so far. You will have to start from the beginning and make 120 qualifying payments on your new Federal Direct Consolidation Loan.
What Counts as a Qualifying Payment?
You must make 120 qualifying monthly payments in order to be eligible for student loan forgiveness. Payments qualify when they have been paid:
- After Oct. 1, 2007
- Under a qualifying repayment plan
- For the full amount due
- No later than 15 days after the due date
- While you are employed full-time by a qualifying employer
And, keep in mind that you cannot make qualifying payments while you are still in school, during your grace payment, or when your loan is in deferment or forbearance.
What Counts as a Qualifying Repayment Plan?
You must choose an income-driven repayment plan. These are plans that base the size of your monthly student loan payment on your income and family size. There are currently four types of income-driven repayment plan:
- Revised Pay As You Earn Repayment Plan (REPAYE Plan)
- Pay As You Earn Repayment Plan (PAYE Plan)
- Income-Based Repayment Plan (IBR Plan)
- Income-Contingent Repayment Plan (ICR Plan)
Each plan has different criteria, as well as potential pros and cons. Learn more about types of repayment plans.
I’m on My Way to Qualifying for Federal Student Loan Forgiveness. What’s My Next Step?
You’re working in public service. You’re making your payments on time. That’s awesome, but there are still some steps you need to take to make sure you are on the right track (and avoid an unpleasant surprise in the event your employer, payments, or repayment plan don’t qualify for PSLF).
Every year, and when you change employers, you should complete and submit the Employment Certification for Public Service Loan Forgiveness form. After the U.S. Department of Education receives your form, they will you let know if your employer is eligible, and whether you are making qualifying payments. Remember that if you don’t regularly submit these forms, you’ll be in the dark about whether you are successfully working toward loan forgiveness.
When Are Student Loans Forgiven?
After at least 120 months, or ten years, you can apply to have the remaining balance on your student loans forgiven. Once you have made your 120th qualifying monthly payment, you can submit a PSLF application (and hopefully celebrate the forgiveness of your remaining debt).
It may take some time for your application to be processed. Remember, you must be working for a qualifying employer at the time you submit the application for forgiveness, as well as at the time the balance on your loan is forgiven.
Is the PSLF Program Ending?
Not yet. However, the PROSPER Act, which was introduced in the House of Representatives in February of 2018, proposes to eliminate PSLF. This and other potential threats to federal student loan forgiveness may be discouraging. However, that doesn’t mean you shouldn’t keep working toward loan forgiveness for the time being, as long as it makes sense for your personal and financial situation.