Student Loan Forgiveness: How to Apply in 2021 and Updates

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Stanley tate

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What is student loan forgiveness?

Student loan forgiveness refers to a borrower being released from their responsibility to repay some or all of their federal student loan debt. The federal government provides forgiveness for the different types of loans it offers, including Parent PLUS Loans, Direct Loans, FFEL Loans, and Perkins Loans. To qualify, borrowers typically have to work in public service or for a specific organization (e.g., AmeriCorps or Army National Guard), suffer from a severe medical issue, or be the victim of misconduct by the school.

In this post, I’ll review the different opportunities to have your federal student loans forgiven, canceled, or discharged.

Note: Unfortunately, most lenders don’t offer forgiveness or loan cancellation for private student loans. If you’re struggling with private student loan debt, look to refinance, negotiate a settlement, or file student loan bankruptcy. You can also contact the servicer to see what type of repayment options it offers (deferment, forbearance, etc.).

Differences between Forgiveness, Cancellation, and Discharge

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 refer to that as discharge.

Do student loan forgiveness programs call you?

Student loan forgiveness programs typically don’t call. If you’re receiving phone calls promising you loan forgiveness, 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.

Will student loans be forgiven in 2021?

In 2021, the federal government under President Biden 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 who made payments on non-qualifying FFEL Loans, late payments, and 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)

The Biden administration is still pursuing loan forgiveness. In a wide-ranging interview, Education Secretary Miguel Cardona said that he “recognizes student loan debt is holding people back” and that “part of the conversation is examining loan forgiveness.”

However, it remains unclear whether Pres. Biden will use his executive authority to authorize widespread student loan forgiveness with the flick of a pen. While the Department of Education has recently released a memo titled, “The Secretary’s Legal Authority for Broad-Based Debt Cancellation”, we’re unable to determine where that authority stops. The memo was heavily redacted. And despite clamoring for student loan debt relief, President Biden has held steadfast in his refusal to use his executive powers.

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.

Types of 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 Program

The Public Service Loan Forgiveness (PSLF) Program is designed for people working full-time in public service jobs, either for the government or a nonprofit organization.

  • Who qualifies: All full-time employees of the local, state, or federal government or qualified non-profit organization. For example, charter school teachers, professors, police officers, military service members, nurses, etc. Here’s a list of qualifying employers.
  • Which loans are eligible: All Direct Loans, including Direct Parent PLUS Loans, and, if consolidated, FFEL and Federal Perkins 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. PSLF Limited Waiver Opportunity

Under the regular PSLF rules, only payments made on Direct Loans counted toward the 120-payment minimum. Payments made towards FFEL and Perkins Loans didn’t count. Nor did late payments or payments made under the wrong repayment plan.

On October 6, 2021, the Dept. of Education announced it was temporarily relaxing those eligibility requirements. For a limited period of time—specifically, until October 31, 2022—borrowers may receive credit for any past student loan payments, regardless if it was made for the wrong loan, under the wrong repayment plan, or was tardy, or was made for less than the full amount. The rule changes will also allow military members to count time on active duty toward the 10 years — even if they put a pause on making their payments during that time.

  • Who qualifies: All full-time employees of the local, state, or federal government or qualified non-profit organization. You also qualify for the waiver even if you no longer work in public service. Use the PSLF Help tool to find out if your employer is eligible.
  • Which loans are eligible: All Direct Loans, including Direct Parent PLUS Loans, and, if consolidated, FFEL and Federal Perkins Loans.
  • How to apply: If you already have Direct Loans and have previously certified qualified employment, you will receive an automatic payment count update. If you have Direct Loans but have not previously certified employment, you must submit a PSLF Certification and Application Form for every qualified employer you’ve worked for since October 1, 2007. If you have FFEL or Perkins Loans, you will need to consolidate those loans into a Direct Consolidation Loan and certify your employment for every qualified employer you’ve worked for since October 1, 2007.
  • How long until loans are forgiven: The Department of Education has already begun updating payment counts for borrowers with Direct Loans who previously certified employment. However, NPR reported recently that student loan borrowers have received denials from FedLoan Servicing under the regular PSLF rules. In response to that report, the head of Federal Student Aid, Richard Cordray, said that FSA will ensure that all borrowers receive the credit towards forgiveness they are entitled to.

3. 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.

4. 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.
  • 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.

5. 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. Depending on your loan balance, you may get more of your loans forgiven under the PSLF Program. 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.

6. 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.

7. 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.

Student Loan Discharge Options

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.

Drawbacks of Student Loan Forgiveness Programs

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 one from Senators Elizabeth Warren and Dick Durbin will lead to the forgiveness process being simplified.

Student Loan Forgiveness Questions

Can a defaulted student loan be forgiven? Student loans in default are eligible for loan forgiveness if you are totally and permanently disabled, your school closed, or your school made fraudulent misrepresentations. However, defaulted student loans are not eligible for the Public Service Loan Forgiveness Program or income-based student loan forgiveness. Read this guide to defaulted student loan forgiveness for more information.

Can student loans be forgiven after 10 years? A federal student loan can be forgiven after 10 years under the Public Service Loan Forgiveness Program. To qualify, public service workers must make 120 monthly payments under an IDR Plan for loans made under the Direct Loan Program.

Is the IRS forgiving student loans? The Department of Education, not the IRS, forgives student loan debt. However, in some instances, the IRS treats student loan forgiveness as taxable income. In early 2021, the Biden Administration passed a coronavirus relief package that makes all student loan forgiveness tax-free through 2026.

Explore all your options for tackling your student loan debt

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.

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I'm a student loan lawyer that helps people like you with their federal and private student loans wherever they live.

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