Forgiveness and Discharge Programs for Student Loans 2023

Broad federal student loan forgiveness by President Biden appears unlikely. Still, the Department of Education is improving existing programs to grant relief to more borrowers.

The U.S. Department of Education offers different programs to wipe away some or all of your federal student loan debt. If it eliminates your loan balance because of your job, the government will refer to that as forgiveness or cancellation. And if it clears your student loan debt because of disability, death, or your school closed, the Department will label that as a discharge.

Ahead, learn the federal student loan forgiveness and discharge options available to you. But first, let’s talk about student loan forgiveness scams.

Student loan forgiveness programs typically don’t call you. If you’re receiving phone calls promising you loan forgiveness, the chances are that it’s a scam.

During the pandemic, financial scams have been on the rise. People are financially vulnerable and looking for debt relief wherever they can find it. Before you respond to a call, email, or letter with your personal information, confirm who the communication is coming from. If it’s not the Department of Education or your student loan servicer, you don’t have to respond.

Learn More: How to Apply for Student Loan Forgiveness

Will student loans ever go away? Possibly. Progressive lawmakers continue to push the Biden administration to wipe out borrowers’ education loans with a flick of the pen. But blanket cancellation doesn’t appear near. Instead, Mr. Biden’s education secretary, Miguel Cardona, has worked to fix existing relief programs.

In the past year, the Department of Education has forgiven nearly $12 billion in federal student loans for borrowers under current programs, including:

• $1.5 billion for borrowers who attended schools that misled them or engaged in misconduct, e.g., ITT Tech students (Borrower Defense to Repayment)

• $4.5 billion for public service workers and military service members who made payments on non-qualifying FFELP loans, late payments, payments for less than the full amount (PSLF Limited Waiver Opportunity)

• $5.8 billion for borrowers who have a total and permanent disability (Total and Permanent Disability Discharge)

Seeing what’s been done for others may leave you questioning, “Do I qualify for student loan forgiveness?” Chances are you do, but it may not come quickly. Many borrowers qualify for student loan forgiveness after 20 years of monthly payments under an income-driven repayment plan — more on that relief option below.

Would student loan forgiveness include private student loans? Private student loans likely won’t be included in any student loan forgiveness passed by the Biden Administration. The loan forgiveness being discussed by Biden and members of Congress applies only to federal student loans.

Learn More: Are There Options for Private Student Loan Forgiveness?

Read the summaries below for a quick view of the types of forgiveness options for federal student loans.

1. Public Service Loan Forgiveness (PSLF) Program

Public Service Loan Forgiveness is designed for people working full-time for the government or a nonprofit organization. PSLF forgives the remaining federal student loan balance tax-free after making 120 qualifying loan payments. Although this program hasn’t worked in the past, the Education Department has added a PSLF Waiver through Oct. 31, 2022.

This temporary waiver gives eligible student loan borrowers credit retroactively for payments made on the wrong type of loan, late payments, and payments made on any repayment plan.

• Who qualifies: All full-time employees of the local, state, or federal government or qualified nonprofit organization. Here’s a list of PSLF qualifying employers. You can also use the PSLF Help tool to determine if your employer is eligible.

• Which loans are eligible: All Direct Loans, Direct Consolidation Loans, Direct Parent PLUS Loans, and, if consolidated, FFEL and Federal Perkins Loans. You can click here to learn how to consolidate student loans.

• How to apply: Before applying for PSLF, you have to make 10 years of qualifying payments towards Direct Loans while working full-time in public service. Once you’ve done those things, you can submit a PSLF Employment Certification and Application Form to your loan servicer.

• How long until loans are forgiven: At least 10 years. You have to make 120 monthly payments before you’re eligible.

2. Repayment Plans With Loan Forgiveness

Even if you don’t work in public service, you can still get your student debt forgiven. But it will take a lot longer. Each of the income-driven repayment plans promises to forgive your remaining loan balance after you’ve made payments for 20 to 25 years.

• Who qualifies: Borrowers enrolled in one of the federal student loan IDR plans — Income-Based Repayment (IBR), Income-Contingent Repayment (ICR), Pay As You Earn (PAYE), and Revised Pay As You Earn (REPAYE).

• Which loans are eligible: All Direct Loans, FFEL Loans, and, if consolidated, Parent PLUS Loans and Federal Perkins Loans.

• How to apply: You’re automatically enrolled when you submit your income-driven repayment application to your student loan servicer. Your servicer will track your payments and notify you once you’ve qualified for forgiveness.

• How long until loans are forgiven: Most borrowers with student loan debt only from undergraduate studies will qualify for loan forgiveness after they’ve made 240 monthly payments (20 years). However, if you have debt from graduate school or are paying under the income-contingent repayment plan, you need to make 300 monthly payments (25 years) before you’re eligible for loan forgiveness.

3. Parent PLUS Loan Forgiveness

Parent borrowers are eligible for forgiveness under the other existing forgiveness programs, including PSLF, repayment plan forgiveness, Total and Permanent Disability, and the death of you or the child for whom you borrowed.

• Who qualifies: Parents who borrowed PLUS Loans for their child’s undergraduate studies.

• Which loans are eligible: All Direct Loans, FFEL Loans, and, if consolidated, Parent PLUS Loans and Federal Perkins Loans.

• How to apply: Check the program you’re seeking forgiveness under for application details. You can also read this guide to parent student loan forgiveness programs.

• How long until loans are forgiven: The time period for your loans being forgiven depends on which program you’re seeking forgiveness, discharge, or cancellation under. Check that program for details.

4. Teacher Loan Forgiveness Program

Full-time teachers in low-income schools or educational service agencies are eligible for forgiveness of up to $17,500. Math, science, and special education teachers can qualify for the maximum amount. You may get more of your loans forgiven under the PSLF Program, depending on your loan balance. You can’t receive credit for the same qualifying payments or period service for Teacher Loan Forgiveness and Public Service Loan Forgiveness.

• Who qualifies: Full-time, highly qualified teachers who have been employed at an elementary school, secondary school, or educational service agency that serves low-income students.

• Which loans are eligible: All Direct Loans and FFEL Loans

• How to apply: You apply by submitting a completed Teacher Loan Forgiveness Application to your student loan servicer after you have completed the required five consecutive years of qualifying teaching.

• How long until loans are forgiven: You’re not eligible for Teacher Loan Forgiveness until after you’ve taught five years consecutively. Once the application is received, it typically takes a few months for the servicer to process.

5. Borrower Defense to Repayment

The Borrower Defense to Repayment program forgives the federal student loan debt for borrowers who attended a school that misled students or engaged in other misconduct that violated certain state laws.

• Who qualifies: Borrowers enrolled in one of the federal student loan IDR plans — Income-Based Repayment (IBR), Income-Contingent Repayment (ICR), Pay As You Earn (PAYE), and Revised Pay As You Earn (REPAYE).

• Which loans are eligible: All loans made under the Direct Loan Program and, if consolidated, loans made under the Federal Family Education Loan Program.

• How to apply: You must file a claim with the Department of Education, along with evidence that the school broke the law, significantly misled you, or misrepresented itself. You can apply online at studentaid.gov.

• How long until loans are forgiven: Under the Trump administration, it took several years to receive a decision about whether their loans would be forgiven. Decisions have come sooner under the Biden administration.

6. Job-Based Loan Forgiveness Programs

Borrowers who work or volunteer for certain organizations may be eligible for additional forgiveness programs. Here are some examples:

• AmeriCorps – volunteers can receive up to the maximum Pell Grant award (~$6500) toward repaying qualified student loans through the Segal AmeriCorps Education Award.

• Lawyers – may be eligible for state-sponsored Loan Repayment Assistance Programs (LRAPS), the Department of Justice Student Loan Repayment Program, and the John R. Justice Program (prosecutors and defense attorneys)

• Medical and nursing school professionals – who agree to work in underserved areas for a period of time can qualify for student loan forgiveness under some state programs.

• Army National Guard – offers up to $50 thousand towards loans under its Student Loan Repayment Program.

• Work for a nonprofit? Student loan forgiveness for nonprofit employees

• Protect and serve? Law enforcement student loan forgiveness

• Work in social service? Student loan forgiveness for social workers

• ‍Teach on a college campus? Student loan forgiveness for professors

Unlike the forgiveness programs, which take years to qualify for, discharge can lead to your remaining balance being immediately wiped out. It also can lead to you receiving a refund of payments previously made on a loan.

• Total and Permanent Disability Discharge: according to a doctor, the Social Security Administration, or Veterans Administration, you are totally and permanently disabled.

• Student Loan Bankruptcy Discharge: you can’t afford to cover your minimal living expenses and pay your student loans without undue hardship.

• Discharge Due to Death: you die, or, if you’re a parent with PLUS Loans, you die, or the child you borrowed the loan for dies.

• False Certification Discharge: your school falsely certified your eligibility to receive a loan.

• Identity theft: your information was used to receive Federal Student Aid (loans and grants).

• Unpaid Refund Discharge: you withdrew from school, and the school didn’t make a required return of loan funds to the loan servicer.

• Closed School Discharge: your school closes while you’re enrolled or soon after you withdraw

• Perkins Loan Cancellation: you work full-time in a public or nonprofit elementary or secondary school system as a teacher in a low-income area, special education teacher, or in the fields of mathematics, science, foreign languages, or bilingual education, or in any other field of expertise determined by a state education agency to have a shortage of qualified teachers in that state.

There are three main drawbacks to student loan forgiveness programs. First, loan forgiveness is tied to politics. When the administration changes, access to loan forgiveness may change as well. Under the Trump administration, it was nearly impossible for borrowers who attended fraudulent schools to get their loans forgiven under the Borrower Defense to Repayment program. However, within weeks of taking office, President Biden approved many of those same applications.

Second, it can take years to meet the eligibility requirements for the forgiveness programs. Depending on your interest rate, your loan balance could double, leaving you in a deeper financial hole if you don’t qualify for forgiveness.

Finally, the program requirements for student loan forgiveness are complicated and filled with technicalities that could disqualify you. Hopefully, pressure from consumer rights organizations and letters like this from Senators Elizabeth Warren and Dick Durbin will simplify the forgiveness process.

There are many options to get partial or total forgiveness of your federal student loans. If you’re not eligible, look you could qualify for partial or total forgiveness of your student loans. If you aren’t eligible, look into other repayment options available to you.

And if you want help developing a strategy to deal with your student loans, I’m here to help. My entire law practice is dedicated to helping borrowers with federal and private loans.

Schedule a free 10-minute call with me today. We’ll work together to develop a plan that allows you to meet your future goals.

UP NEXT: How to Get Out of Student Loan Debt (Legally)