Popular payback plans lead to forgiveness
After 20 to 25 years of payments, borrowers enrolled in so-called income-based repayment plans receive all residual debt forgiveness from the federal government.
“Income-based repayment plans are also student loan forgiveness plans,” Kantrowitz said.
Meanwhile, borrowers’ monthly bills are capped at a portion of their discretionary income, and some payments are as low as $0. Therefore, experts recommend low-income borrowers to explore the options.
Many qualify for government loan forgiveness
The Government Loan Forgiveness Program, signed into law by then-President George W. Bush in 2007, allows certain nonprofit and government employees to call in their government student loans after 10 years or 120 payments.
Although the program has had some issues, the Biden administration has recently made a number of improvements to it.
Andriy Dodonov | Istock | Getty Images
There are typically three main requirements to qualify for the program, although recent changes have allowed a little more wiggle room in certain cases:
The best way to find out if your job qualifies as a public service is to fill out an employer attestation form.
In 2013, the Consumer Financial Protection Bureau estimated that one in four American workers could be eligible for the program.
Forgiveness options for teachers, nurses and others
In addition to these two main programs, there are numerous other forgiveness opportunities that many borrowers miss out on by not knowing about them, experts say.
Full-time teachers who have worked at a low-income school for five consecutive years may be eligible for loan forgiveness of up to $17,500 under the Teacher Loan Forgiveness Program.
The Nurse Corps Loan Repayment Program allows certain nurses to forgive up to 85% of their student debt.
There are many other loan forgiveness opportunities that often go unnoticed…
Markus Kantrowitz
university expert
Health professionals who commit to working at least two years in a Native American community can receive up to $40,000 in student loan assistance through the Indian Health Service Loan Repayment Program.
The John R. Justice Student Loan Repayment Program provides loan assistance of up to $4,000 per year, or up to $60,000 total, to state and federal defense attorneys and prosecutors who agree to remain in those positions for at least three years.
Federal agencies also offer student loan repayment assistance programs, Kantrowitz said. According to the US Office of Personnel Management, government agencies can make payments to a federal employee up to $10,000 per year, for a total of $60,000.
There are now numerous student loan forgiveness programs at the state level.
For example, the Get on Your Feet Loan Forgiveness Program in New York offers 24 monthly payments of relief to certain college graduates who are enrolled in an income-tested repayment plan.
And Texas attorneys working for certain legal assistance programs may be eligible for the Texas Student Loan Repayment Assistance Program.
“Student loan forgiveness, in most cases, is based on the borrower’s occupation,” Kantrowitz said. “So they should seek forgiveness because of their work, especially for their condition.”