Loan forgiveness is a part of a federal program that pardons any outstanding balance on a student loan after certain conditions are met. Federally-backed student loans do allow loan discharge or forgiveness under specific circumstances. A student loan can be forgiven, cancelled or discharged; which means they are no longer required to repay their loan.
To qualify for a discharge, there have to be circumstances beyond the borrower’s control that prevent loan repayment from occurring.
For example, the Public Service Loan Forgiveness Program will forgive any remaining balance on Direct Loans after the individual has made 120 timely, monthly payments under a repayment plan AND is engaged in full time employment with a qualifying employer.
There are four programs that will forgive or cancel your federal student loan. The qualifying variables will be the job and repayment plan you choose. These are:
- Public Service Loan Forgiveness
- Teacher Loan Forgiveness
- Perkins Loan Cancellation
- Income-driven Repayment
To qualify for any of these loans forgiveness programs, your loans cannot be in default. This means they cannot be left unpaid past the nine month period.
Federal student loans must be paid with accrued interest in most circumstances. The borrower will not be excused due to dissatisfaction with the educational program or school, or because the borrower was unable to find employment after graduation.
To determine which type of loan forgiveness plan you qualify for, you need to speak to a qualified loan servicer. In some cases, you may consolidate different federal loans into a single loan; therefore making repayment easier. In addition, graduates entering certain professions are eligible for specific loan forgiveness programs. These professions include:
- Teachers
- Nurses
- Doctors
- Fire Fighters
- Police Officers, etc.
Eligibility for any loan forgiveness requires the borrower to demonstrate that payments were made on time, according to a repayment plan.
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