Millions of people have student loan debt, and the amount of debt continues to rise. As of 2021, the average student loan balance was $39,487. Such a large balance can be overwhelming, and it may seem impossible to pay off your loans.
Depending on the type of loans you have, you may be eligible for partial or full student loan forgiveness. A significant portion of your debt could be eliminated through programs like Public Service Loan Forgiveness or Teacher Loan Forgiveness.
What is Student Loan Forgiveness?
When you take out student loans, you must sign a promissory note stating you will repay your loans with interest. However, some borrowers can qualify for student loan forgiveness, and you won’t be required to repay the full balance of your debt.
Loan forgiveness is usually awarded after you make a certain number of payments over a certain period of time, work in a specific field, or complete other types of service.
What Are The Best Student Loan Forgiveness Programs?
You may be surprised to find out that there are many student loan forgiveness programs. Loan forgiveness may be available from the federal government, states, or government agencies. Here are the top 10 student loan forgiveness programs:
1. Public Service Student Loan Forgiveness (PSLF)
Loan Type: Federal
PSLF provides loan forgiveness to borrowers with federal student loans that work for non-profit organizations or government agencies. To qualify for forgiveness, you may work for an eligible employer full-time for at least ten years. You must also make 120 monthly qualifying payments toward the loans.
You can submit an application for forgiveness at the end of 10 years of full-time employment. If your application is approved, the entirety of your remaining loan balance is eliminated. You can use the Office of Federal Student Aid’s PSLF Help Tool to determine if your loans and employer are eligible for PSLF.
2. Student Loan Forgiveness via Income-Driven Repayment (IDR) Plans
Loan Type: Federal
If you have federal student loans, you can take advantage of IDR plans to make your monthly payments more manageable. When you enroll in an IDR plan, the government recalculates your payments based on a longer loan term and a percentage of your discretionary income. There are four options:
- Income-Based Repayment (IBR)
- Income-Contingent Repayment (ICR)
- Pay As You Earn (PAYE)
- Revised Pay As You Earn (REPAYE)
Depending on your plan, you must make payments for 20 or 25 years. The government will automatically forgive the remaining amount if you still have a balance at the end of your new loan term.
3. Teacher Student Loan Forgiveness
Loan Type: Federal
Federal loan borrowers that become teachers may be eligible for the Teacher Loan Forgiveness program. Under this initiative, teachers can qualify for up to $17,500 in forgiveness of Direct subsidized and unsubsidized loans.
To qualify for student loan forgiveness for teachers, borrowers must work for five full and consecutive years in a low-income school or educational service agency.
4. NURSE Corps Loan Repayment Program
Loan Type: Federal and Private
Under the Health Resources & Services Administration NURSE Corps Loan Repayment Program, registered nurses, advanced practice registered nurses, and nurse faculty can qualify for loan repayment assistance of up to 85% of their unpaid nursing education debt.
In exchange, you must work as a nurse or nurse faculty member at an eligible facility. Participants receive 60% of the loan repayment program after two years of service. They can participate for an additional year to get an additional 25% of loan repayment assistance.
This program provides student loan forgiveness for nurses that have either federal or private student loans.
5. Federal Perkins Loan Cancellation
Loan Type: Federal
If you have Perkins student loans and work in a public or nonprofit elementary or secondary school, you could qualify for forgiveness of up to 100% of your outstanding loan balance.
To qualify, you must meet one of the following criteria:
- You teach in a school serving low-income families
- You are a special education teacher
- You teach in the fields of math, science, foreign languages, or bilingual education
Every year that you teach at an eligible school, a portion of your debt is forgiven:
- 15% per year for the first and second years of service
- 20% per year for the third and fourth years of service
- 30% per year for the fifth year
6. The Military College Loan Repayment Program (CLRP)
Loan Type: Federal
The Military CRLP is a recruitment tool for the U.S. military that provides student loan forgiveness for newly-enlisted military personnel. Depending on which branch of the military you join, you may be eligible for $10,000 to $65,000 of loan forgiveness.
You receive a portion of the total loan forgiveness amount available for each year of completed service, and the government makes the loan payments directly to your student loan servicer.
7. Active Duty Health Professions Loan Repayment Program (LRP)
Loan Type: Federal and Private
The Active Duty Health Professions LRP is a loan forgiveness program for new active duty military personnel. Eligible borrowers can receive up to $40,000 in loan forgiveness (minus federal income taxes). To qualify, borrowers must be licensed healthcare professionals and sign a written agreement to serve on active duty providing medical care.
8. State-Sponsored Student Loan Forgiveness
Loan Type: Federal and Private
Some states operate their own loan forgiveness or loan repayment assistance programs to encourage workers to live and work within the state. Typically, these programs have a work commitment in exchange for loan repayment assistance and are geared toward professionals working in high-need fields, such as healthcare or education.
For example:
- Texas Physician Education Loan Program: In Texas, physicians that work in outpatient settings in designated healthcare shortage areas can qualify for up to $180,000 in loan repayment assistance.
- Minnesota Rural Veterinarian Loan Repayment Program: Veterinarians that work in designated rural areas, and that care for food animals at least 50% of the time, can qualify for up to $75,000 in loan repayment assistance.
To find out if your state offers loan repayment programs for your field, visit your state education agency. Or you can also get student loan forgiveness for moving if you’re willing to relocate to another state.
9. Law School Loan Repayment Assistance Programs
Loan Type: Federal and Private
If you attended law school, you might be eligible for loan repayment assistance through your university. Some schools will forgive a portion of borrowers’ debt if they practice law for non-profit or government offices.
For example, the Washington College of Law at American University operates the Public Interest LRP. Alumni of the school that work for non-profit organizations, government agencies or offices, or in judicial roles can qualify for loan repayment assistance. There is an income restriction; borrowers must make less than $75,000 per year.
Contact your school’s alumni association or law department to see if it has a student loan forgiveness program for lawyers.
10. The John R. Justice Student Loan Repayment Program
Loan Type: Federal
Lawyers that work as a state or local prosecutors, public defenders, or are full-time employees of a non-profit legal aid clinic can qualify for repayment assistance through the John R. Justice LRP.
The states handle the program, so available forgiveness amounts can vary. Generally, a portion of your debt is forgiven based on each year of full-time service in a qualifying position, and there is usually an income limit.
Student Loans Discharge Programs
Loan Type: Federal
You may be eligible for loan discharge in certain circumstances if you have federal student loans. Loan discharge eliminates the need to repay your debt, and it’s usually granted based on extenuating circumstances, such as a major disability. Discharge options include:
- Closed School Discharge: If you have federal Direct, FFEL, or Perkins loans and your school closed while you’re enrolled or a few months after you withdraw, you may be eligible for discharge of your federal student loans.
- Borrower Defense to Repayment Discharge: If you have federal loans and your school misled you, engaged in misconduct, or violated state laws, you could be eligible for loan discharge.
- False Certification: If your school falsely certifies your federal student loan eligibility, you may qualify for loan discharge.
- Total and Permanent Disability Discharge (TPDD): If you become completely and totally disabled — and are unlikely to recover — you can apply for discharge through TPDD.
Can Student Loans be Forgiven Through Bankruptcy?
In most cases, student loans cannot be forgiven or discharged through bankruptcy. It’s rare for student loans to be eliminated during bankruptcy proceedings, but it is possible in special circumstances. To qualify, you must prove to the court that repaying the loans would cause undue hardship and your situation is unlikely to improve.
Bankruptcy proceedings can be time-consuming and, because they usually involve lawyers, can be expensive.
Refinance Student Loans if You Don’t Qualify for Loan Forgiveness
Not everyone will qualify for the best student loan forgiveness programs. If that’s the case, another option for managing your debt is to refinance your student loans. Having a reliable source of income and good credit is one of the best ways to pay off student loans faster. And you can refinance both federal and private student loans.
Borrowers with good to excellent credit and stable income could potentially qualify for lower student loan interest rates, helping them save money and pay off their loans faster. And one of the benefits of student loan refinancing is that it allows you to combine your loans into one account. Once you refinance, you will have only one loan and one monthly payment.
However, make sure you understand how refinancing works. If you have federal loans, refinancing will transfer them to a private lender, and you’ll no longer be eligible for federal loan forgiveness programs or IDR plans.
To decide that student loan refinancing is right for you, you can explore your loan options and calculate your potential savings with the student loan refinance calculator.
