What Is Student Loan Debt Forgiveness?
7 Min Read | Last updated: December 15, 2023
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Learn about student loan debt forgiveness, including different types of forgiveness and their requirements.
At-A-Glance
- Many student loan debt forgiveness programs are government-sponsored ways to pay off student loans.
- In addition to federal student loan forgiveness programs, state-sponsored programs also exist.
- But requirements can be stringent—it’s important to ensure that you qualify.
For the nearly 44 million Americans with a total of $1.65 trillion in federal student loan debt, few things may sound as uplifting as the concept of student loan debt forgiveness.1 But in practice, student loan forgiveness programs can be complicated—which led to controversy and criticism in 2019 after less than 1% of applicants were approved for the federal Public Service Loan Forgiveness (PSLF) program.2 Since 2021, however, access to the program has continued to expand in an attempt to increase these numbers.3
Although PSLF might be the most well-known student loan forgiveness program, it’s far from the only one out there. In addition to several other federal programs, every state in the country offers some sort of debt forgiveness for former students who work specific jobs or live in specific regions.
What Exactly Is Student Loan Debt Forgiveness?
Sometimes referred to as student loan cancellation, student loan debt forgiveness is when an eligible borrower is no longer required to make payments on their student loans, typically due to their job, location, or other specific circumstances.
Another option is student loan discharge, in which a borrower is no longer responsible for paying the remainder of their loans due to a life event like permanent disability, bankruptcy, or if your school closes or has engaged in misconduct.4
Federal Student Loan Debt Forgiveness Programs
There are several types of federal student loan forgiveness programs, and all have their own specific requirements. Here are some of the options available to borrowers:
Public Service Loan Forgiveness (PSLF): Perhaps the most well-known student loan forgiveness program, PSLF was created by the federal government in 2007 to help public service professionals pay off their Federal Direct Loans.5 It sounds straightforward, but the requirements are stringent—so paying close attention to the necessary documentation and eligibility requirements is paramount for applicants. Still, qualifying is possible. You just need to carefully follow several requirements and stay on top of payments to make sure they count toward your forgiveness progress.
Teacher Loan Forgiveness: Created by the Higher Education Amendments in 1998,6 the teacher loan forgiveness program lets qualifying teachers receive up to $17,500 in loan forgiveness on certain federal loans, depending on what subject they teach and other qualifying factors.7
Perkins Loan Cancellation: This federal student loan forgiveness program lets eligible nurses, firefighters, public defenders, and other qualified professionals discharge their federal Perkins Loans. Typically, a percentage of the loan is forgiven for each year of service. Depending on the borrower’s situation, Perkins Loans may be forgiven in full as long as the borrower is employed full-time in an eligible position.8
Income-Driven Repayment (IDR) Forgiveness: Income-driven federal loan repayment plans, such as Income-Based Repayment (IBR), Pay As You Earn (PAYE), Income-Contingent Repayment (ICR), and Saving on a Valuable Education (SAVE) were created to ensure that low-income borrowers would not be faced with monthly payments above their means. In addition to adjusting payments according to income, they offer a forgiveness option after 10 to 25 years of on-time payments (depending on the plan and terms of the loan).9
Military Forgiveness Programs: The U.S. military offers several student loan forgiveness and student loan relief options, such as the College Loan Repayment Program (LRP). LRP is an Army incentive that repays part of a soldier’s qualified student loans, as long as they meet specific requirements, including a minimum enlistment period and test scores.10
State Sponsored Student Loan Forgiveness Programs
All 50 states in the U.S. offer at least one student loan repayment assistance program. Like federal programs, requirements are highly specific. For states, student loan forgiveness is typically tied to a certain profession, local region, or both, usually in the health care, education, or legal services fields. What sets state-sponsored programs apart from federal student debt forgiveness programs is that state programs may cover private loans in addition to federal loans. Rather than an official discharge of your debt, as with federal programs, state programs generally offer funds for you to use toward your loans—even private ones.11
Employer-Sponsored Student Loan Repayment Is on the Rise
In addition to federal- and state-sponsored student loan forgiveness programs, some employers are taking it upon themselves to provide student loan repayment incentives, ranging anywhere from matching student loan repayments with 401(k) contributions to letting employees apply the value of unused benefits (like vacation time or health insurance) to their federal and private loans.
Watch Out for Student Loan Debt Relief Scams
Scattered among the many student loan debt forgiveness and student debt relief options is the occasional illicit service.
These warning signs from the Federal Trade Commission (FTC) can help you to spot potential scams:12
- Never give away your Federal Student Aid ID login information. Anyone who says they need it in order to help you is a scammer.
- Never trust anyone who contacts you promising debt relief or loan forgiveness. Even if they say they are affiliated with the Department of Education.
Your best source for information on your federal student loans is Federal Student Aid.13
Frequently Asked Questions
If you’re enrolled in an income-driven repayment plan or applying for PSLF and have kept up with the payment requirements, you may be eligible for forgiveness after 10 to 25 years, depending on the program. But you still need to apply for forgiveness to show that you have fulfilled the requirements for debt cancellation.
Yes, depending on the type of forgiveness program you’re applying for. Check with your loan servicer to find out whether you must continue making payments during the application review period.
First, double-check your paperwork and make sure your application was not denied due to human error (including yours). If you have a qualifying loan and believe your payments were miscounted by your loan servicer, you can request a reconsideration. You can also investigate other options, such as repayment programs, consolidation, or borrower defense programs. Check the Federal Student Aid website for more information.
The Takeaway
Student loan debt forgiveness might sound like a dream come true, but it’s important to do your research and check the details on each program to ensure you qualify. You must have the right loan type, payment history, and often career or location of work to qualify for certain federal and state forgiveness programs. Investigate all your options—including employer assistance programs—and beware of scams in your journey toward freedom from student loan debt.
1 “Student Loan Debt Statistics,” Education Data Initiative
2 “Public Service Loan Forgiveness: Improving the Temporary Expanded Process Could Help Reduce Borrower Confusion,” U.S. Government Accountability Office
3 “Student Loan Forgiveness Statistics," Education Data Initiative
4 “Student Loan Forgiveness,” Federal Student Aid
5 "Public Service Loan Forgiveness Data,” Federal Student Aid
6 "Teacher Loan Forgiveness,” Ed Financial Services
7 "Teacher Loan Forgiveness," Federal Student Aid
8 “How to get Perkins Loan forgiveness,” Bankrate
9 “Student Loan Forgiveness: Programs for Relief As Repayment Restarts,” LendingTree
10 “College Loan Repayment Program (LRP),” U.S. Army MyArmyBenefits
11 "Student Loan Forgiveness Programs by State,” Forbes
12,13 "Pay your student loans — not scammers," Federal Trade Commission
Megan Doyle is a business technology writer and researcher whose work focuses on financial services and cross-cultural diversity and inclusion.
All Credit Intel content is written by freelance authors and commissioned and paid for by American Express.
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