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Student Loan Forgiveness: All You Need to Know

student loan forgiveness
what is student loan forgiveness

Student loan forgiveness means you are no longer required to make payments on the loans you used to pay for college. It’s an incentive program for those who took out more money than they can afford to repay.

These borrowers have taken out loans to pay for their post-secondary education. There are some loans that can be forgiven, but only those who work in particular public service, academic, or military fields are eligible. In this post, we’ll tell you how student loan forgiveness works, the different repayment plans for loan forgiveness, the different lenders of student loans, and how you can get loan forgiveness.

Ways to Get Your Student Loan Forgiven

You can qualify for federal student loan forgiveness based on a range of circumstances, including the type of work you do, your disability status, and whether the college you attended defrauded you. But before you get qualified and apply for  the student loan forgiveness program, there are the five characteristics borrowers must fulfill, according to the Department of Education’s Office of Federal Student Aid website:

  1. Borrowers must be employed by a U.S. federal, state, local, or tribal government or not-for-profit organization. Federal service includes U.S. military service.
  2. Borrowers must work full-time for that agency or organization.
  3. Borrowers must have Direct Loans (or consolidate other federal student loans into a Direct Loan).
  4. Borrowers must repay their loans under an income-driven repayment plan. (This provision has been temporarily waived through October 31, 2022, as part of the limited PSLF waiver.)
  5. Borrowers must make 120 qualifying payments.

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Public Service Loan Forgiveness (PSLF)

People who work in public service positions are the only target audience for the Public Service Loan Forgiveness Program (PSLF). This program excludes loans from non-federal sources, such as private lenders and lending businesses. Jobs in the government, law enforcement, fire departments, and social service are also potentially qualified for loan forgiveness. Additionally, if you perform certain voluntary tasks, serve in the military, or practice medicine, you could be eligible to get all or a portion of your debt forgiven.

 Repayment Plans With Loan Forgiveness

You could be qualified for loan forgiveness even if you don’t have a position in the public service. However, it is going to take longer. There are several repayment plans put in place for loan forgiveness after a certain length of time. These plans include:

  1. Income-Based Repayment (IBR): A maximum of 10% to 15% of discretionary income may be paid each month. It takes 20 or 25 years of qualified payments to be eligible for forgiveness.
  2. Income-Contingent Repayment (ICR): Payments are adjusted annually depending on gross income, family size, and the remaining debt of federal loans; they typically amount to 20% of discretionary income. It takes 25 years of qualified payments to be eligible for forgiveness.
  3. Pay As You Earn (PAYE) and Revised Pay As You Earn (REPAYE): Payments will not exceed 10% of discretionary income every month. 20 years of qualified payments are necessary for forgiveness eligibility. The interest on the loan may even be partially covered by the government.

Who are the Student Loan Lenders?

Large organizations like commercial banks or the US Department of Education make up the majority of student loan lenders. Prior to 2010, the majority of student loans were originated by private lenders with government guarantees. The Health Care and Education Reconciliation Act of 2010 put a stop to such governmental guarantees with direct loans. However, public loans make up more than 90% of student debt today.

Who Pays for the Loan Forgiveness?

The U. S government pays for the loan forgiveness.

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How to Get Loans Forgiveness

Getting student loans forgiveness has two basic parts: consolidating all your loans into one debt, then applying for forgiveness by filing a special application to the Federal Student Aid’s Public Service Loan Forgiveness (PSLF) & Temporary Expanded PSLF (TEPSLF) Certification & Application.

What You Should Know about Loan Forgiveness

Before applying for the student loan forgiveness program there are some things you should have in mind;

It Takes Long for Your Loan to be Eliminated

Even if you qualify for federal loan forgiveness, it can take a long time for your loans to be eliminated. Depending on the program, you could be in debt and making payments for up to 25 years before your loans are forgiven. And your debt can affect your ability to pursue other goals.

Forgiveness Isn’t Guaranteed

Only a small number of students will meet the strict criteria for loan forgiveness and successfully get their loans forgiven. Since November 2020, just 1.6% of PSLF applicants have been approved for loan forgiveness. The vast majority will be responsible for making their own loan payments. The government started TEPSLF because so many people were turned away.

Your Debt Could Increase While You Wait

You should be aware that your debt might escalate, causing you to pay considerably more in interest than you borrowed if you’re a member of an IDR plan and hoping to have your debts forgiven after 20 or 25 years. For instance, if you had $50,000 in graduate PLUS loans at 5.3% interest and a $45,000 salary, your monthly payment under a 10-year regular repayment plan would be $538, and you would return your loan in full at that time, totaling $64,523.

You Could Lose Out On Higher Salaries

You must work for an eligible nonprofit or governmental organization for ten years in order to be eligible for Public Service Loan Forgiveness. When compared to for-profit businesses, employers who adhere to PSLF’s standards frequently pay considerably less. That compensation disparity can become significant over time.

You Might Be Taxed

Loans forgiven through IDR have typically been taxable, while PSLF is never taxed. Forgiveness is free from federal income taxes under the American Rescue Plan Act, which was approved last year. Only loans forgiven between 2021 and 2026 are covered by this clause, which is transitory. You could have to pay income taxes on the forgiven amount if you later qualify for forgiveness.


You can qualify for federal student loan forgiveness based on a range of circumstances, including the type of work you do, your disability status, and whether the college you attended defrauded you. Only direct loans made by the federal government are eligible for student loan forgiveness. Non-federal loans (those issued by private lenders and loan companies) aren’t part of this program.

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