By: Sahil Luthra
Student loan forgiveness releases borrowers from their obligation to repay part or all of their federal student loan debt. These borrowers have taken out loans to pay for their post-secondary education.
The recent highly publicized collapse of several for-profit colleges and the pandemic-induced 2020 economic crisis have intensified longstanding concern about the mounting burden of student debt.
Loan forgiveness means a debt (or part of a debt) is eliminated or “forgiven” in finance parlance relieving the borrower of obligation to repay it.
The Public Service Loan Forgiveness Program (PSLF) is designed specifically for people who work in public service jobs for either the government or a nonprofit organization.
You may also be able to get all or part of your loan forgiven by providing specified volunteer work, military service, or medical practice.
Under regular PSLF rules, only payments made on the combined loan counted toward the 120-payment minimum; earlier payments made on the old loans weren’t considered.
You do still have to have direct loans or apply to combine them into direct consolidation loans, though, by the Oct. 31, 2022 deadline. Of course, the rule changes also apply to those already in the PSLF program.
This limited waiver is available to borrowers who currently have FFEL, Perkins, or other indirect loans if they apply to consolidate into the Direct Loan program and submit a PSLF form by Oct. 31, 2022.
To apply for PSLF—whether for the first time or to take advantage of the waived restrictions—both you and your employer need to complete and file the program’s Public Service Loan Forgiveness (PSLF) & Temporary Expanded PSLF (TEPSLF) Certification & Application (PSLF form).
If you aren’t working in a public service position, you may still be able to get a portion of your student debt forgiven but it will take longer.
If your school misled you or engaged in other misconduct in violation of certain state laws, you may be eligible for a loan discharge, officially known as “borrower defense to loan repayment” forgiveness.
If you work or volunteer for certain organizations, you may be eligible for additional programs that will forgive or reduce your student debt.
The U.S. government does. Most student loan lenders are huge institutions, such as commercial banks or the government (specifically, the Department of Education).
All is not perfect with forgiveness plans. The kinds of jobs that may make you eligible for student loan forgiveness often pay significantly less than private-sector positions. You might be able to repay your loans more quickly by getting a job with a higher earning potential, even if it doesn’t qualify you for loan forgiveness.