How Do I Know if I Qualify for Loan Forgiveness, Cancellation, or Discharge?

Students may qualify for student loan forgiveness, cancellation or discharge in the following situations: If they work in public service or as a teacher in a low-income school; if they are physically or mentally incapable of working; or if their loans were obtained under illegitimate circumstances.

Qualifying for Student Loan Forgiveness

The government offers two forgiveness programs for federal loans:

Public Service Loan Forgiveness

You are eligible for loan forgiveness if you have made 120 qualifying loan payments while working full-time for a qualifying employer. The following industries are considered to be under the eligible “public service” umbrella:

  • Government organizations (federal, state or local level)
  • Tax-exempt non-profit organizations
  • Other not-for-profit organizations whose primary purpose is to provide qualifying public service

The key to the Public Service Loan Forgiveness program is to make sure you are making “qualifying” loan payments while employed in one of the above fields. Fill out the certification form as soon as possible to declare your intention to apply for loan forgiveness to confirm that you are indeed making qualifying payments.

The Public Service Loan Forgiveness applies to direct loans, as well as any Perkins loans that have been converted into a direct consolidated loan.

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You can read more about the Public Service Loan Forgiveness program here.

Teacher Loan Forgiveness Program

Highly qualified teachers who have taught for five consecutive years in a low-income school are eligible for up to $17,500 in loan forgiveness. To be considered a highly qualified teacher, you must have at least a bachelor’s degree and full state teaching certification.

Elementary and middle school teachers may need to meet additional qualifications to demonstrate their proficiency.

For more information about the Teacher Loan Forgiveness Program, click here. Teachers may also be eligible for a full Perkins loan cancellation.

Loan Discharge

You are eligible for a discharge of your federal student loans in the following circumstances:

  • You’ve been rendered permanently unable to work due to disability
  • Death
  • You were unable to complete your academic program because your school shut down
  • Your school knowingly accepted you into an academic program from which you would not be able to benefit
  • Your loan agreements were forged either by the school or because you were the victim of identity theft
  • In very rare cases, your student loans may be discharged in bankruptcy

Private Student Loans

Unlike federal loans, there are no specific programs for the forgiveness, cancellation or discharge of private student loans. Even in the event of death, your remaining debt will be transferred to your estate.

Some lenders may be willing to work with you if you are unable to pay back your loans due to circumstances beyond your control, but it is at their discretion.