Q: How to apply for student loan forgiveness in 2021?

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Stanley tate

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You have 7 main programs to apply for student loan forgiveness in 2021:

  1. Public Service Loan Forgiveness Program
  2. Temporary Expanded Public Service Loan Forgiveness Program
  3. Income-Driven Repayment Plan Loan Forgiveness
  4. Borrower DefenseDischarge
  5. Teacher Loan Forgiveness Program
  6. Federal Perkins Loan Cancellation
  7. Total and Permanent Disability Discharge

I'll go over each below.

I'll also list student loan repayment programs.

But before I review those student loan forgiveness options, let me answer two questions about potential student loan forgiveness.

Update: ITT Tech Student Loan Forgiveness

Will student loans be forgiven in 2021?

The federal government has not yet passed a law allowing student loans to be forgiven in 2021. In fact, President Joe Biden's new budget proposal does not mention forgiving student debt. Still, Biden has discussed forgiving either $10 thousand or $50 thousand in federal student loan debt. But so far, that's just talk.

What isn't talk is this:

President Biden signed the American Rescue Plan Act. The Act includes a provision that makes any student debt forgiveness tax-free from December 2020 through December 31, 2025.

Click here to learn Will Biden Extend Student Loan Forbearance?

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.

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 will need to 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.

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. These loans include:

  • Direct Subsidized Loans
  • Direct Unsubsidized Loans
  • Direct Consolidation Loans
  • Federal Family Education Loans (FFEL)
  • Federal Perkins Loans

Currently, Education Secretary Miguel Cardona is reviewing whether Pres. Biden can sign an executive order canceling federal student loan debt without congressional approval.

Click here to learn about options for Student Loan Forgiveness Age 65

1. Public Service Loan Forgiveness Program

The Public Service Loan Forgiveness Program forgives federal loans after 10 years of monthly payments. You're eligible for the PSLF program if:

  • You work full-time for the government or nonprofit
  • You have Direct Loans
  • You make 120 qualifying payments
  • You make those payments under a qualified repayment plan

Download: Public Service Loan Forgiveness (PSLF) & Temporary Expanded PSLF (TEPSLF) Certification & Application

Full-time

The PSLF Program considers you to be a full-time employee if:

  • you meet your employer's definition of "full-time" OR
  • you work at least 30 hours per week, whichever is greater.

But what if you work part-time for two qualifying employers?

In that case, part-time employees can still meet the full-time eligibility requirements by working a combined 30 hours per week on average.

How to certify employment

Until recently, borrowers could submit a PSLF Employment Certification Form to certify they work for a qualifying employer. As part of a policy change, the certification form has now been merged into the Public Service Loan Forgiveness (PSLF) & Temporary Expanded PSLF (TEPSLF) Certification & Application.

Eligible loans

Only loans made under the Direct Loan Program are eligible for forgiveness under the PSLF Program.

Loans made under the Federal Family Education Loan Program and Federal Perkins Loan Program do not qualify. But you can make them eligible for forgiveness by consolidating them into a Direct Consolidation Loan.

Private loans made by private lenders do not qualify for PSLF.

Click here to read FFEL Loan Forgiveness for Public Service

If you consolidate, choose FedLoan Servicing as the loan servicer. FedLoan Servicing is the designated loan servicer to process the PSLF Program.

Monthly payments

You must make your monthly payments:

  • under a qualifying repayment plan;
  • for the full amount due as shown on your bill;
  • within 15 days after your due date and
  • while you're employed full-time by a qualifying employer.

Federal student loan payments are suspended due to the Covid-19 emergency administrative forbearance. Student loan borrowers are receiving credit towards their 120 monthly payments from March 2020 through September 2021 (19 months of credit).

Qualified repayment plan

Each of the income-driven repayment plans is considered a qualified repayment plan:

  • Pay As You Earn (PAYE)
  • Revised Pay As You Earn (REPAYE)
  • Income-Based Repayment (IBR)
  • Income-Contingent Repayment (ICR)

Neither the Extended Plan nor Graduated Plan is eligible for PSLF.

You can change to an IDR Plan by submitting an Income-Driven Repayment Application to your loan servicer.

2. Temporary Expanded Public Service Loan Forgiveness Program

Federal student loan borrowers are eligible for loan forgiveness under the TEPSLF Program if:

  • you're ineligible for PSLF because not all of your payments were made under a qualifying repayment plan; and
  • you have at least 10-years of qualifying employment in the public service.

A qualifying monthly payment is a payment that you made:

  • after October 1, 2007
  • for the full amount due as shown on your bill;
  • no later than 15 days after your due date; and
  • while employed full-time by a qualifying employer.

Eligible loans for TEPSLF

Only Direct Loans are eligible for TEPSLF relief.

The following loans are ineligible for TEPSLF:

  • Direct Parent Plus Loans
  • Direct Loans in default
  • Federal Family Education Program Loans (FFELP Loans)
  • Federal Perkins Loans
  • Private student loans

Click here to learn How to Apply for FFELP Student Loan Forgiveness

How to apply for TEPSLF

You can apply for TEPSLF relief by submitting the Public Service Loan Forgiveness (PSLF) & Temporary Expanded PSLF (TEPSLF) Certification & Application to FedLoan Servicing:

  • Fax: 717-720-1628
  • Upload: https://myfedloan.org/
  • Mail: US Department of Education, FedLoan Servicing, PO Box 69184, Harrisburg, PA 17106-9184

You can also use the PSLF Help Tool.

3. Income-Driven Repayment Plan Loan Forgiveness

The Department of Education offers borrowers four income-driven repayment (IDR) plans. These plans allow student loan borrowers to pay 10% to 15% of their discretionary income for 20 to 25 years.

After 20 to 25 years of payments, the Department will forgive your remaining student loan balance. IDR forgiveness is typically the best loan forgiveness program for borrowers seeking Parent Plus Loan forgiveness.

The 4 types of IDR plans are:

  • Pay As You Earn (PAYE)
  • Revised Pay As You Earn (REPAYE)
  • Income-Based Repayment (IBR)
  • Income-Contingent Repayment (ICR)

How to apply for IDR forgiveness

Under the IDR plans, you don't have to apply to have your student debt forgiven.

Your loan servicer is supposed to track your monthly payments and grant you forgiveness once you've made 240 or 300 monthly payments.

4. Borrower Defense Discharge

Borrowers with Direct Loans may be eligible for discharge of their federal student loans if:

  • they borrowed loans to attend a school; and
  • the school did something or failed to do something related to the loans or the education services the loan was borrowed to pay for.

The eligibility requirements for Borrower Defense Discharge vary depending on when you received your loan.

President Biden announced it was discharging $1 billion in student loan debt for 72 thousand borrowers who attended Corinthian Colleges.

Despite that massive amount of student loan discharge, it remains challenging for most borrowers to get a Borrower Defense Discharge. Under the Trump Administration, less than 1% of applications were approved.

You can apply for a Borrower Defense Discharge at https://studentaid.gov/borrower-defense/.

5. Teacher Loan Forgiveness Program

Teachers qualify for both the PSLF Program and the Teacher Loan Forgiveness Program.

The PSLF Program is the better program for most teachers who owe over $50 thousand.

It forgives more of your student loan debt.

The PSLF Program will forgive your remaining balance after 10 years of payments.

The Teacher Loan Forgiveness Program will forgive up to $17,500.

Amount of loan forgiveness

The amount of loan forgiveness you'll get opens on what subject you teach.

Most elementary school teachers receive up to $5,000.

Secondary school teachers who teach math or science get up to $17,500.

Special education teachers at either level could get up to $17,500 in loan forgiveness.

Eligibility requirements

You're eligible for the Teacher Loan Forgiveness Program if:

  • You must teach in a qualifying organization (elementary school, secondary school, or educational service agency that serves low-income schools.
  • You cannot have loans that originated before October 1, 1998.
  • Your loans must not be in good standing.
  • You have to work full-time as a teacher for five consecutive academic years.
  • You're a highly qualified teacher, meaning you have state certification or a teaching license.

How to apply

You can apply for teacher loan forgiveness after you teach for five consecutive academic years.

You apply by submitting a completed Teacher Loan Forgiveness Application to your loan servicer.

Click here to learn How Teachers Can Qualify for Loan Forgiveness

6. Perkins Loan Cancellation

You can get 100% of your Federal Perkins Loan canceled if you serve full-time in a public or nonprofit elementary or secondary school system as a:

  • teacher in a school serving students from low-income families;
  • special education teacher, including teachers of infants, toddlers, children, or youth with disabilities; or
  • teacher in 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.

Your eligibility is based on the duties listed in the official position description. The position title doesn't matter.

The school system must directly employ you to qualify.

Contact the school you got the Perkins Loan from to find out how to apply for cancellation.

7. Total and Permanent Disability Discharge

You can qualify for a Total and Permanent Disability Discharge of your federal student loan debt if you're 100% disabled.

You have three options to prove that you are totally and permanently disabled:

  1. a disability letter from the US Department of Veterans Affairs (VA)
  2. a disability benefits letter from the Social Security Administration (SSA)
  3. a letter from your physician

Nelnet is the loan servicer responsible for administering the TPD process. You can apply for a TPD discharge at disability discharge.com.

Veterans Affairs

Veterans would qualify for a TPD discharge if they received a VA disability determination because they:

  • have a service-connected disability with a 100% rating; or
  • are totally disabled based on an individual unemployability rating.

You can get your VA disability letter at va.gov.

The Department of Education works with the VA to identify veterans who are eligible for permanent disability discharges. You will get a letter from the Department and a TPD application if they've identified that you're eligible.

Social Security Administration

Borrowers eligible for Social Security Disability Insurance or Supplemental Security Income can also qualify for a TPD discharge. To qualify, your SSA notice of award or Benefits Planning Query (BPQY) must show that your next scheduled disability review will be at least 5 years from the date of your last SSA disability determination.

You can get your SSA notice of award letter and BPQY at www.sa.gov or by calling 1-800-772-1213.

The Department of Education works with the SSA to identify disabled borrowers eligible for permanent disability discharges. You will get a letter from the Department and a TPD application if they've identified that you're eligible.

Physician

Borrowers can qualify for a TPD discharge by getting their physician to certify they're unable to engage in substantial gainful activity due to a physical or mental impairment.

Substantial gainful activity is work performed for pay or profit that involves doing significant physical or mental activities or a combination of the two.

The physical or mental impairment must either

  • be expected to result in death;
  • have lasted for a continuous period of at least 60 months; or
  • be expected to last for a continuous period of at least 60 months.

Your physician must complete and sign page 2 of the TPD discharge application.

The physician must be:

  • a doctor of medicine (MD) or doctor of osteopathy/osteopathic medicine (DO) and
  • licensed to practice in the United States.

Profession based student loan repayment programs

Medical professionals (doctors, nurses, etc.)

Lawyers

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