All About Student Loan Forgiveness

By Elizabeth Freeman , last updated December 22, 2011

After attending college in the United States and racking up student loan debt, many people wonder if there is any way to get student loan forgiveness. Having your student loans forgiven means you will not have to pay them back any longer. There are several ways you can get your student loans forgiven, particularly if they are loans from the federal government, but there is no quick way to suddenly get out of debt.

Private Vs. Public Loans

Public loans are made by the federal government in the United States. These loans are usually eligible for forgiveness under certain circumstances. Private loans are made by banks to students who either do not qualify for public loans or who need extra money to help pay for their education. Private loans are not eligible for forgiveness. If a student or graduate declares bankruptcy, neither federal nor private loans can be discharged under the bankruptcy, meaning the debtor will still need to repay them.

Income-Based Repayment Plan

If you have a Stafford, consolidation or PLUS loan made under a federal loan program, you may be eligible for the income-based repayment plan. Usually, federal loans are repaid on a 10-year plan, meaning you pay a set amount each month for 120 months. Under the IBR, you pay only up to 10 percent of your monthly income on the loans.

To be eligible for IBR, a person needs to meet certain income requirements. For example, a single person with no dependents who earns $25,000 per year would be expected to pay around $108 per month on her loan. If that amount is less than what she would pay under the standard payment plan, she can take the IBR. If she'd pay $75 per month on the standard plan, though, she cannot take IBR.

Although IBR usually increases the amount of interest a person will pay on the loan and thus the amount she'll need to pay overall, it also qualifies a person for forgiveness after a certain amount of time. If a person works in a service position for 10 years, her loans will be forgiven after 10 years under IBR. To qualify for the 10 year forgiveness program, a person needs to have a Federal Direct Loan and make 120 on-time payments. Eligible jobs include teaching, working for a 501(c)3 and working for the government.

Even if a person doesn't work in a service job, she can still have her loans forgiven under IBR. She will need to make on-time payments for a period of 25 years, though, instead of 10. She can make payments under any plan during the 25 year period and still qualify for forgiveness. In some cases, if her income is very low, she may not need to make any payments for a period of time and will still qualify for forgiveness.

Volunteer Forgiveness

Some types of student loan forgiveness are available to people who work in volunteer positions for a certain amount of time. If you sign up for Americorps or the Peace Corps, you'll receive loan deferment for the period in which you're serving and will receive an award to be used for education expenses at the end of your service period. If you serve with the Peace Corps, up to 70 percent of your Perkins loan can be forgiven after a period of several years. Fifteen percent of the loan can be forgiven for each year you serve. If you serve with Americorps or the VISTA program, you'll receive an award of $4,725 as of 2011.

Forgiveness for Teachers

If you choose to teach, you may be eligible for loan forgiveness if you also meet other qualifications. Teachers working in schools that serve low-income students may be eligible for forgiveness of up to $17,500 in Stafford loans. To qualify, you must teach for at least five years in an eligible school and one of the years must have been after 1998.

Another student loan forgiveness program for teachers forgives Perkins loans for teachers also teaching in low-income schools. During the first two years of teaching, you can have 15 percent of your loan forgiven. In the third and fourth years, 20 percent of the loan can be forgiven and in the fifth year, 30 percent of the loan will be forgiven, so that the entire loan is forgiven after 5 years of teaching.

Law and Medical School Loan Forgiveness

If you pursued a legal or medical degree and then worked in public service, in a non-profit law firm or in medically under-served areas, you may qualify for forgiveness. Your law school may forgive a portion of your loan or you may qualify for forgiveness from the National Health Services Corps.

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