Most college students leave with a substantial amount of debt. According to the Federal Reserve, adults in 2019 who had college debt owed between $20,000 and $24,999. For those struggling with student debt, student loan relief options can sound like a dream come true. However, these programs are only available for federal student loans, not private ones, and the qualification requirements can be rigorous.
What Is Student Loan Relief?
The U.S. Department of Education offers several forgiveness and discharge programs for federal student loans. You may qualify to have some or all of your loans forgiven or discharged in certain situations. While the terms student loan forgiveness or cancellation and loan discharge are often used interchangeably, they’re very different from one another. You may qualify for student loan relief options, based on your qualifications, such as your career path. You may even be eligible for loan discharge based on circumstances beyond your control, such as becoming totally and permanently disabled.
Student Loan Relief Options
With student loan forgiveness programs, you typically make payments for a set period. After you meet the forgiveness programs’ requirements, the remaining loan balance is cancelled.
1. Income-Driven Repayment Forgiveness
Income-driven repayment (IDR) plan forgiveness is a good option if you cannot afford your payments under a 10-year standard repayment plan. With this approach, you enter into an IDR plan, which bases your monthly payment on your family size and disposable income. Depending on your situation, you could qualify for a much lower monthly payment than you’re making now. Your repayment term may be 20 or 25 years, depending on what plan you choose. If you still have a balance at the end of your repayment period, the remaining amount is forgiven. However, the cancelled loan amount may be taxable as income.
You can apply for an IDR plan online or by contacting your loan servicer. To be eligible for the IDR plan student loan relief options, you must qualify for one of the following IDR plans and have a balance after making payments for the full repayment term:
- Income-based repayment
- Income-contingent repayment
- Pay As You Earn (PAYE)
- Revised Pay As You Earn (REPAYE)
2. Perkins Loan Cancellation and Discharge
If you have Perkins loans, the last of which were issued in 2018 and work in public service. You may be eligible for partial or full loan student loan relief options. Depending on your position, you could have up to 100% of your loans forgiven within five years. To apply for Perkins loan cancellation, you must contact the school that made the loan.
3. Public Service Loan Forgiveness
Under Public Service Loan Forgiveness (PSLF), some federal loan borrowers can have their loans forgiven after 120 monthly loan payments. To qualify, you must work for an eligible non-profit organization or government agency full-time while making 120 monthly qualifying payments. Payments made under an IDR plan count as qualifying payments for PSLF. The loan balance forgiven through PSLF is not taxable as income. You can use the PSLF Help Tool to find out if your employment and loans qualify for forgiveness.
4. Teacher Loan Forgiveness
With the Teacher Loan Forgiveness Program, you can qualify for up to $17,500 in loan forgiveness if you teach full-time for five full and consecutive academic years in a low-income elementary or secondary school or educational agency.
Eligibility For Borrowers Based On The Type Of Loan:
- Federal direct unsubsidized (alternatively referred to as unsubsidized Stafford loans)
- Federal direct subsidized (alternatively referred to as subsidized Stafford loans)
Only teachers of certain subjects, such as mathematics or science, are eligible for the full $17,500 of forgiveness. Teachers of other subjects may qualify for $5,000 of forgiveness instead. To apply, submit the Teacher Loan Forgiveness Application to your loan servicer after completing five years of service.
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Federal Student Loan Forgiveness And Private Student Loan Relief Options
U.S. Department of Education Resources: Student Aid On The Web
- Income-Based Repayment Plan
Information on the IBR Plan for federal student loans, including eligibility requirements and an IBR payment calculator.
- Public Service Loan Forgiveness Program
Details on the Public Service Loan Forgiveness program, which forgives federal loans after ten years of eligible employment and eligible payments.
- Pay as You Earn Repayment Plan
If your student loan debt is high relative to your income, you may qualify for the Pay As You Earn Repayment Plan. Most Direct Loans (except for Direct PLUS Loans for parents and Direct Consolidation Loans that repaid PLUS loans for parents) are eligible for Pay As You Earn.
National Consumer Law Center: Loan Repayment Assistance Programs (LRAPs)
- Law School-Based
LRAPs are offered to graduates from over 100 law schools. Eligibility for most, but not all, of these programs is based on the level of your income and public interest employment.
- Statewide Loan Repayment Assistance Programs (LRAPs)
LRAPs from states that provide repayment assistance to public interest attorneys. Eligibility and assistance levels vary.
- Repayment Assistance for Federal Employees
Repayment assistance for federally insured loans to employees of some federal loan services.
- Additional Options for Government and Non-Profit Employees
Military service, AmeriCorps service, and other public service programs provide specific assistance with educational debt.
- Lowering the Stakes: How Law Schools Can Help Next Gen Lawyers Take Gamble Out of Hefty Tuition
In this audio program, ABA Journal Podcast moderator chats with our guests about tuition, disclosure and what could and should change about legal education to train the next generation of lawyers without saddling them with crushing debt
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