Here’s a question I get: My student loans are with AES, can I still qualify for loan forgiveness?
The short answer is likely not.
For the student loans American Education Services acts as a student loan servicer for, there simply aren’t many loan forgiveness programs available.
In this post, we’ll review the 3 main loan forgiveness programs for the federal student loans AES services:
- Public Service Loan Forgiveness
- Teacher Loan Forgiveness
- Income-Based Repayment Forgiveness
As for the private student loans it services? Good luck. Private student loan forgiveness doesn’t exist. I don't know of a single private lender that wants to write off private student loans that are providing returns.
That said, I'll end this post by answering whether AES student loans are discharged after you die (maybe) and whether you can discharge them in bankruptcy (maybe).
With that roadmap in hand, let’s get started.
But first, let's answer this:
Is AES a Federal Loan?
AES is a loan servicer for both federal student loan debt and private student loan debt. That means your AES student loans can be federal or private loans.
You can identify what type of loans you have by logging into your online account.
You can also check if your loans are federal student loans by using the National Student Loan Data System at studentaid.gov.
Once logged in, you should be able to view the loan description.
Federal student loans should have the term FFEL in the description.
A FFEL loan is a loan made under the Federal Family Education Loan Program.
FFEL Program loans were made by a private lender and backed by the federal government.
Private student loans may say something like NCSLT in the description. AES is the primary servicer for loans held by National Collegiate Student Loan Trust.
Let's move on to the forgiveness programs.
Public Service Loan Forgiveness Isn’t Available for AES Loans
The Public Service Loan Forgiveness program will forgive certain federal student loan debt after you make 120 monthly payments under certain repayment plans.
To qualify for the PSLF program, you have to:
- Work full-time
- Work in the public service for a qualifying employer
- Make 120 monthly payments
- Make those payments under an income-driven repayment plan and
- Have Direct Loans
The last qualification is key.
The PSLF program only forgives federal loans made under the Direct Loan Program.
AES is not a loan servicer for Direct Loans.
AES is a part of the Pennsylvania Higher Education Assistance Agency. PHEAA also has FedLoan Servicing under its portfolio, which PHEAA created to act as a servicer for various federal loan programs.
AES is a loan servicer for loans made under the Federal Family Education Loan Program.
So if you’re making payments on federal student loans to AES, your loans aren’t eligible for the PSLF program.
That’s the bad news.
The good news is that you can make those FFEL loans eligible by consolidating them into a Direct Consolidation Loan. The new loan you get is eligible for the PSLF Program.
Check studentaid.gov to see what type of federal loans you have. Specifically, you want to see if you have any other FFEL loans or a Perkins Loan you’d want to include in the student loan consolidation application.
The Department of Education allows you to consolidate your loans, regardless of your credit score, free of charge at studentaid.gov.
Teacher Loan Forgiveness for AES Loans
If you’re a teacher with federal loans being serviced by AES, you may be able to qualify for the teacher loan forgiveness program.
But here’s the thing.
Teachers with student loan debt greater than $40 thousand, will likely want to pursue loan forgiveness under the PSLF program.
You’ll get more of your federal student debt forgiven.
But remember, to qualify for the PSLF program, you have to move your loans from AES to FedLoan by consolidating them into a Direct Loan.
Here’s a Guide to the Teacher Loan Forgiveness Program if you want to deep dive into the program.
Income-Based Student Loan Forgiveness
The last loan forgiveness program for federal student loans with AES is loan forgiveness under the various income-driven repayment plans.
The Department of Education offers 4 income-driven repayment options:
- Revised Pay As You Earn
- Pay As You Earn
- Income-Based Repayment
- Income-Contingent Repayment
Each repayment plan will forgive the balance of your loan after at least 20 years of student loan payments.
Of course, while you’re in an income-driven repayment plan, your payments likely will be pretty low. Because of that, your balance will continue to accrue interest. And as interest accrues, your loan balance will grow larger and larger and larger.
Here’s the problem with that:
Under current law, you may have to pay taxes on the balance of your student loan debt that is forgiven.
The looming tax liability scares a lot of student loan borrowers.
But what’s the alternative?
Aggressively pay your student debt? If you could afford to do that, you’d be doing that.
Until that changes, you’re stuck. And that sucks.
But it’s not that bad.
There are ways to deal with the pending tax liability.
I strongly suggest that as you age, and prepare for retirement, and getting Medicare, you speak with an estate planning attorney.
Do AES student loans discharge after death?
Your federal student loans that AES services will discharge after your death.
And if you borrowed a Parent Plus Loan that AES servicer, that loan will discharge after you or the child your borrowed the loan for dies.
Your private student loans that AES services will not discharge after you or your cosigner dies.
The loan holder could go after your estate.
Are AES student loans dischargeable in bankruptcy?
You can discharge AES student loans in bankruptcy. But it's hard to do. Not impossible. Just hard.
To discharge your federal student loan debt, you'll need to prove your they're causing you an undue hardship. And that means you'll likely need to pass the Brunner Test.
Your private student loan with AES may be easier to get rid of in bankruptcy. That's because you may be able to prove the loan isn't a qualified education loan.
Click here to learn Can You File Bankruptcy on Student Loan Debt?