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Student Loan Forgiveness

Student loan forgiveness is a process by which you can shed some or all of your educational debt. In exchange, you enter certain fields or choose certain careers. Typically, it is only applicable to federally funded loans and not to private education loans.

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Which Careers Are Eligible?

There are several ways you can take advantage of loan forgiveness, but to have debts forgiven, you need to work in one of the following career fields:

  • Government

    Many government jobs qualify as public service work for the purposes of the Public Service Loan Forgiveness program. Anyone working for a city, county, state or the federal government qualifies, regardless of their job title. Postal workers, police officers, receptionists, accountants, military, teachers, recreation workers, emergency personnel and regular office workers are among the many government jobs eligible. If you work in one of these fields, you may qualify to have part or all of your loans forgiven:

    Emergency Management

    • Fire rescue
    • Ambulance/Paramedics
    • Rescue Workers
    • Disaster Relief

    Government Agencies

    • Federal
    • State
    • Local
  • Nonprofit

    If you work at a corporation, public charity or any other organization classified by the Internal Revenue Service as a 501(c)(3) — not including labor unions, partisan political organizations or groups engaged in religious activities — you may qualify for loan forgiveness. There are 25 categories of non-profits recognized by the IRS, but only people working for those with 501 (c)(3) status are eligible for Public Service Loan Forgiveness. The 501(c)(3) agencies – commonly referred to as “charitable” organizations – do work that serves a broad public interest in areas like education, science, sports, public safety and more. Workers for AmeriCorps and the Peace Corps also qualify in this category. It has been estimated that there are more than one million 501 (c)(3) organizations in the United States and full-time workers for all of those groups are eligible for PSLF, regardless of their job position. That means that social workers, receptionists, case managers, supervisors – anyone working full-time – is eligible.

  • Volunteering

    You can have your loans forgiven by volunteering with certain organizations. You may also be able to defer payment until after you complete your service.Volunteer with one of the following organizations to reduce your debts:

    AmeriCorps

    Volunteer within the United States by joining AmeriCorps for 12 months. You may also choose to join a Volunteers in Service to America (VISTA) program within AmeriCorps. In addition to receiving a living stipend and other potential benefits, you’ll receive about $5,000 to use toward your student loans. This amount can change year to year depending on inflation.

    Peace Corps

    Join the Peace Corps to volunteer for two or more years in any one of more than 70 developing countries. For each year of service, 15 percent of your Perkins Loans will be forgiven, for a maximum total of 70 percent.

  • Public Education

    You can have up to $17,500 of your student debt forgiven if you teach full-time for five complete and consecutive academic years in a Title 1 school that serves students from low-income families. To qualify, you also must have subsidized or unsubsidized Direct Loans or federal Stafford Loans.

    Perkins Loans

    If you have a Perkins Loan, you may qualify for a loan cancellation. You must teach full-time for one complete academic year or part-time at multiple schools for a full year. You may also be eligible if you teach special education, if you teach in a field with a shortage of teachers, such as math, science and foreign language; or if you are a Head Start worker.

    For each of your first and second years, 15 percent of your Perkins Loans will be forgiven. For each of your third and fourth years, you’ll have 20 percent of them forgiven. After your fifth year, the remaining 30 percent of your Perkins Loans will be forgiven.

    Other Ways to Qualify

    If you work at a public library, school library, provide speech therapy, teach early childhood education, offer social work in a public child or family service agency, or work as full-time faculty at a tribal college or university, you also qualify for loan forgiveness.

    To take advantage of this program, contact Debt.org. We’ll help consolidate your loans and apply for your student loan cancellation, total or partial forgiveness.

  • Healthcare

    There are numerous debt forgiveness programs available if you practice medicine. Doctors, nurses and medical technicians each have programs available to help reduce their debts:

    Doctors

    National Health Serve Corps will repay $40,000 or more of your qualifying student loans if you’re a doctor willing to make a two-year commitment to work at a NHSC award site or have a pending offer from one.

    Nurses

    Nursing Education Loan Repayment Program will pay up to 85 percent of your loan over three years if you’re a nurse employed for at least 32 hours a week in an area with a medical care shortage.

    Medical Technicians

    If you’re a medical technician conducting clinical research, you may qualify for up to $35,000 in Perkins Loan forgiveness through the National Institutes of Health.

    Other Forgiveness Opportunities

    The balance of your loans can be forgiven after 10 years if you serve individuals with disabilities, the elderly, provide public health services, as well as regulated and unregulated healthcare professionals.

  • Veterinary Medicine

    The shortage of qualified veterinarians, especially in remote areas of the United States, has created a fairly deep pool of loan forgiveness programs to help those pursuing it as a career. The Veterinary Medicine Loan Repayment Program will pay up to $25,000 each year toward qualified educational loans if you’re an eligible veterinarian serving or agreeing to serve three years in a veterinarian-shortage situation designated by the National Institute of Food and Agriculture.

    Public Service Loan Forgiveness is available to all veterinarians who work for county, state or federal agencies. There are 13 states (Ark., Ga., Kan., Ky., La., Me., Minn., Mo., N.D., Oh., Penn., Vt., Wy.) that have their own loan forgiveness programs based almost exclusively on the participants willingness to practice in sparsely-populated areas. The U.S. Department of Agriculture, the U.S. Department of Health and Human Services and the National Institute of Health also have loan forgiveness programs for veterinary students. Even the U.S. Army is involved, backing two loan forgiveness programs, the Army Active Duty Health Professions Loan Repayment program and Army Specialty Pay that will assist in forgiving parts or all of the loans, in return for a commitment to serve in the Army.

  • Military

    Some of your loans can be forgiven if you enlist in the military. Different military branches have their own Loan Repayment Programs (LRPs). You can also defer payment of student loans until you complete your military service.

    Join one of these military branches to have student loans forgiven:

    Army

    The Army offers you an enlistment incentive if you meet a certain set of requirements and will repay up to $65,000 of your student loans.

    Navy

    Similar to the Army’s LRP, you may receive up to $65,000 to use toward student loans when you enlist in the Navy.

    Air Force

    You’ll receive money toward your student loans for each year you’re enlisted. You’ll receive either $1,500 or 33.3 percent of the remaining principal amount, whichever is greater.

  • Law

    If you practice law as a prosecutor, public defender or provide advocacy on behalf of low-income communities at a nonprofit organization, you may have a portion of your federal student loans forgiven. Any lawyer working full-time at any position for a city, county, state or federal government agency is eligible. Lawyers working for charitable non-profit organizations with 501 (c)(3) status qualify as do those working for community outreach programs. The key to qualifying for Public Service Loan Forgiveness as an attorney is to work full-time for a qualified organization. Many lawyers volunteer their time or do the work “pro-bono” but that does not meet the requirements for full-time employment in a qualified agency.

  • Law Enforcement

    There are two paths to loan forgiveness for police and corrections officers: the Public Service Loan Forgiveness program and the Perkins Loan Forgiveness program. Each program has its own set of requirements. Police and corrections officers automatically qualify for the Public Service Loan Forgiveness program by virtue of being employees at city, county, state or federal agencies. The requirements beyond that are to make 120 monthly payments towards their student loan while being employed fulltime by a law enforcement agency or prison facility.

    The Perkins Loan Forgiveness program offers up to 100 percent forgiveness, but is more specific about requirements. You also must work full-time at a law enforcement or corrections agency for five years. To qualify, you must be a sworn law enforcement or corrections officer or a person whose principal responsibilities are unique to the criminal justice system and essential in the performance of the agency’s primary mission. The agency must be able to document those functions. If you had a Perkins Loan, you must apply to the school that made the loan or to the loan servicer the school has designated to receive forgiveness. The total amount that can be forgiven depends on the type of service you performed.

Public Service Loan Forgiveness Program (PSLF)

Congress created the Public Service Loan Forgiveness Program in 2007 to encourage people to take full-time public service jobs in return for having some portion of their student loans eliminated.

How to Qualify

To qualify, you must be using one of the six repayment plans in the Direct Loan Repayment Plan Program and work at a federal, state, local or tribal government agency, or nonprofit 501(c)(3) organization.

You must make 120 on-time student loan payments during that time that are within 15 days of the due date. Only payments after Oct. 7, 2007 are eligible.

You must be employed full-time by a qualifying public service organization at the time you make each of the 120 qualifying payments. You must also not be in default. If you work at a nonprofit that is not tax exempt, you still may qualify.

After you have made the 120 payments, you may qualify to have your remaining student loan balance eliminated. The application is under development and will be available prior to the date when the first borrowers will be eligible for forgiveness in October 2017.

Planning for Forgiveness

It is important to understand which plan is right for you to handle your debt properly. If you do decide to pursue student loan debt forgiveness, you should be aware that the amount of debt that is forgiven may be counted as taxable income. Look into each program you’d like to participate in to make sure you are eligible.

Other Debt Relief Options

If you can’t afford your student loans and you do not qualify for a student loan forgiveness program, look into other debt relief options. Consolidate your student loans to make repayment easier, and try debt settlement to ease the burden of any other debts you have. In rare cases, student loans can be erased through bankruptcy.

Disability Eligibility May Eliminate Loans

Students unable to work because of total and permanent disability may qualify to have the entirety of their loans forgiven.

The Department of Education defines disability as a physical or mental illness or injury that has been in continuous existence for five years, or is expected to last at least five years or may result in death.

A physician must confirm the impairment and provide the DOE with a completed discharge application, including an explanation of your condition and how it inhibits your ability to work.

If students meet the federal requirements, they may have their federal loans discharged, including Federal Family Education Loans (FFEL), Direct and Perkins loans. PLUS Loans may be discharged if a parent becomes disabled.

Private student loans do not qualify for a disability discharge.

Three-year Monitoring Period

During the three years following an approval for a student loan disability discharge, the borrower will be monitored to determine that certain criteria are continually met.

The borrower may not:

  • Receive any new loans.
  • Earn an income above the poverty guidelines for a family of two.
  • Change their total and permanent disability status.
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Author

Cecillia Barr

Cecillia Barr

Cecillia Barr is a graduate of the University of Central Florida. She blogs about her extensive knowledge on student loans in order to help others reduce their debt and live financially independent lives.

Sources

  1. FinAid (2012). Loan Forgiveness. Retrieved from http://www.finaid.org/loans/forgiveness.phtml
  2. Military.com (2012). The Armed Forces Offer Relief for Student Loan Debt. Retrieved from http://www.military.com/Resources/ResourcesContent/0,13964,44245--,00.html
  3. National Health Service Corps (2012). Loan Repayment. Retrieved from http://nhsc.hrsa.gov/loanrepayment/index.html#calculator
  4. Health Resources and Services Administration (2012). Nursing Education Loan Repayment Program. Retrieved from http://www.hrsa.gov/loanscholarships/repayment/nursing/
  5. Shelton, M.V. (2012). Student Loans Now Exceed $1 Trillion. Retrieved from http://www.investopedia.com/financial-edge/0412/Student-Loans-Now-Exceed-1-Trillion.aspx#axzz1wqCJRxZf
  6. Burnsed (2012).Know Where to Find Graduate School Loan Forgiveness. U.S. News and World Report. Retrieved from http://www.usnews.com/education/best-graduate-schools/top-graduate-schools/paying/articles/2012/03/16/know-where-to-find-graduate-school-loan-forgiveness
  7. Bodnar, J. (2011). Lighten the Burden of Student Loans. Kiplinger. Retrieved from http://www.kiplinger.com/columns/drt/archive/lighten-the-burden-of-student-loans.html
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