Loan forgiveness means a borrower’s obligation to repay all or a portion of the principal and interest of their loan is canceled. The goal of these programs is to encourage individuals to pursue particular career areas.
Paying student loans is never fun, but it’s easier when your education has helped you to land your dream job or work in an area that you’re passionate about. However, even in instances borrowers don’t complete their college degree or can’t find a job in their field, they still have pay them back.
Here’s a list of instances and careers that qualify borrowers for federal student loan forgiveness:
Teacher Loan Forgiveness
If you’re a teacher with student loans who has worked full-time in a low-income school or an educational service agency for five consecutive years, then you may be able to have as much as $17,500 of your subsidized or unsubsidized federal loans forgiven. There also are forgiveness programs for the following professions:
- Head Start workers
- School counselors
Public Service Loan Forgiveness
If you work full-time in the public sector, you may be eligible for complete loan forgiveness. If you’ve made 120 payments on your federal loans after October 1, 2007, the remaining balance that you owe may be forgiven. You don’t qualify if you’ve defaulted on your loan payments. Here are some occupations that qualify:
- AmeriCorps or Peace Corps members
- Government workers at any level of government
- A 501(c)(3) nonprofit
- Other nonprofit organizations if they provide certain services
Other Loan Forgiveness Occupations
There are many other occupations that qualify for loan cancellation. For each complete year of service, a percentage of the loan may be canceled. Depending on the type of loan you have, and when that loan was taken out, you may be eligible to cancel a portion or all of your loan if you are:
- Technology, engineering or mathematics professionals
- Medical technicians
- Occupational therapists
- Foreign language specialists
- Speech pathologists
If Your College Closes
If you’re enrolled at a college or university that closed before you completed your academic program, you may be eligible to have your federal student loans discharged. Or, if you withdraw from a school within 120 days of the school closing down, you may also be eligible as well. You are not eligible for this forgiveness plan if you continue pursuing a similar degree at another institution.
If You Become Disabled
Your federal loans may be discharged if you become permanently disabled. Before your loans can be discharged, you must provide documentation to the U.S. Department of Education to prove your medical status. This may include providing military documentation if you’re unemployable due to a disability during a military service. Proof of Social Security Disability Insurance can also serve as adequate documentation.
If You File for Bankruptcy
Filing for Chapter 7 or Chapter 13 bankruptcy doesn’t typically result in discharged student loans. However, if a bankruptcy court finds that loan repayment imposes undue hardship on you or your dependents, your loans may be forgiven. Bankruptcy courts use a three-part test to determine hardship, which includes these questions:
- Will repayment make you unable to maintain a minimal standard of living?
- Will repayment take a considerable amount of time?
- Have you made good faith efforts to repay the loan to date?
If this criteria is met, then you may qualify.
False Certification of Eligibility
If your school falsely certified your eligibility to receive a federal loan, even though you didn’t meet the student eligibility requirements, then you may be eligible to have them discharged. Or, if your school improperly signed your name on an application or promissory note without your authorization, then you may be eligible. This includes instances if your loan was falsely certified through identity theft.
If you or someone you know wants to find out if they’re eligible for a loan forgiveness program, contact your loan servicer with questions. You may also call the U.S. Department of Education at 1-800- 433-3243 or visit the agency to learn more about qualification.
If so, subscribe now for tips on home, money, and life delivered straight to your inbox.