Student Forgiveness Programs: Do You Qualify?

Student loan debt is no picnic. The average college grad owes $37,000 in educational loans, and roughly 2 million people owe more than $100,000.

So much debt can make people feel like they’re drowning, or like they can’t achieve their dreams after graduation. It can also put a damper on home ownership, saving for retirement, or even fun things, like going on vacation. Worse, student loan debt may even prevent some people from pursuing the careers they want, because they owe so much money.

Unlike other kinds of debt, which can be discharged if you file for bankruptcy, you generally can’t rid of student loan debt.

Debt forgiveness programs

But in some cases, all or part of your debt could be eligible for loan forgiveness through various state and federal programs.

To be eligible for these programs, you typically have to be involved in some sort of public work, such as medicine or teaching. A few words of warning, though: Qualification requirements are strict, and generally require years of regular repayment.

Here’s a rundown of some options:

Federal forgiveness programs

The U.S. Department of Education (DOE) is the biggest educational lender in the country, issuing loans worth $1.4 trillion to 43 million people as of 2018, according to the DOE.

To qualify for federal debt forgiveness, you must work in some area of public service, which generally means for the federal government, for a state or municipality, school district, public hospitals, or some other nonprofit organization. People enlisted in the armed services, who continue working in the military, or some other public sector job, are also eligible.

Only federal Direct Loans, made by the Department of Education, are eligible for the program. And you must make 120 months, or ten years, of regular consecutive payments on your outstanding loans. (Generally speaking, other types of loans the federal government provides, such as Family Education and Perkins loans, are not eligible.)

Exceptions for teachers

The government will forgive up to $17,500 of student debt if you become a teacher. That means if you have $50,000 in loans, you’ll still be responsible for $32,500. You must also have worked for five consecutive, full-time years in an underserved educational area or educational service agency to qualify for forgiveness, according to the Department of Education.

State forgiveness programs

Forty-five states and the District of Columbia have their own debt forgiveness programs. And they run the gamut for professionals working in a variety of fields, from education to dentistry and law.

Colorado, for example, forgives debt up to $90,000 for health professionals working in underserved areas of the state.

Maine has a program for teachers that forgives loans based on years of service in its elementary school system.

And North Dakota offers forgiveness to people working in so-called STEM professional jobs, which focus on engineering, math, and sciences.

You can find out if your state offers its own student debt forgiveness program here.

Other ways debt can be forgiven

If you become permanently disabled and can’t work, your debt may be eligible for discharge, according to the Department of Education.

Similarly, if the school you borrowed to attend closes, your debts may also be canceled. (A relatively recent example is Corinthian Colleges.)

What’s the difference between discharge, loan forgiveness, and cancellation?

Often you’ll hear the words loan forgiveness, cancellation and discharge used in relation to student loans. Forgiveness and cancellation, according to the Department of Education, is generally used in relation to working in a profession. Discharge, on the other hand, is used in relation to a death or disability.

These are only some of the options available to you. As always, you should thoroughly research all possibilities around loan forgiveness and loan cancellation.