Federal Student Loan Forgiveness Programs You Should Know

Student loan debt in the U.S. has reached crisis levels, with over 45 million borrowers collectively owing more than $1.7 trillion. For many, this financial burden delays major life milestones—buying a home, starting a family, or even saving for retirement. Fortunately, the federal government offers several student loan forgiveness programs designed to ease this burden. Whether you work in public service, education, or healthcare—or simply struggle with unmanageable debt—there may be a program that can help.

Below, we break down the most important federal student loan forgiveness programs available today, including eligibility requirements, application processes, and recent policy changes.

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1. Public Service Loan Forgiveness (PSLF)

What Is PSLF?

The Public Service Loan Forgiveness (PSLF) program forgives the remaining balance on your federal Direct Loans after you’ve made 120 qualifying monthly payments while working full-time for a qualifying employer (e.g., government agencies, nonprofits, or certain public service organizations).

Key Eligibility Requirements

• Employment: Must work for a qualifying public service employer.
• Loan Type: Only Direct Loans qualify (FFEL and Perkins Loans must be consolidated into a Direct Consolidation Loan).
• Payment Plan: Must be on an income-driven repayment (IDR) plan or the 10-Year Standard Repayment Plan.
• Payments: Must make 120 on-time, full payments while employed in public service.

Recent Changes & Waivers

The Biden administration introduced the PSLF Limited Waiver, which temporarily expanded eligibility by counting past payments that previously didn’t qualify (e.g., payments made under non-IDR plans or FFEL loans). While the waiver expired in October 2022, the Department of Education continues to review applications under relaxed rules.

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2. Income-Driven Repayment (IDR) Forgiveness

How IDR Forgiveness Works

If you enroll in an income-driven repayment plan, your monthly payments are capped at a percentage of your discretionary income. After 20 or 25 years of payments (depending on the plan), any remaining balance is forgiven.

Types of IDR Plans

1. Revised Pay As You Earn (REPAYE) – 20 years (undergrad loans) or 25 years (grad loans).
2. Pay As You Earn (PAYE) – 20 years.
3. Income-Based Repayment (IBR) – 20 or 25 years.
4. Income-Contingent Repayment (ICR) – 25 years.

Tax Implications

Unlike PSLF, IDR forgiveness may be taxable as income (though the American Rescue Plan Act temporarily waived this tax through 2025).

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3. Teacher Loan Forgiveness

Who Qualifies?

Teachers who work five consecutive years in a low-income school (as defined by the Department of Education) may be eligible for up to $17,500 in forgiveness on Direct Subsidized/Unsubsidized Loans and Subsidized/Unsubsidized Federal Stafford Loans.

Eligibility Details

• Must be a full-time, highly qualified teacher (state-certified).
• Must teach in a Title I school or an educational service agency.
• Forgiveness amounts:
  • $5,000 for most subjects.
  • $17,500 for STEM, special education, or bilingual education teachers.

Can You Combine with PSLF?

Yes, but the five years of teaching cannot count toward both programs simultaneously.

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4. Borrower Defense to Repayment

What Is Borrower Defense?

If your school misled you or engaged in fraudulent practices, you may qualify for full or partial loan discharge under the Borrower Defense to Repayment program.

Recent Updates

• The Biden administration has approved billions in loan discharges for defrauded borrowers, particularly those who attended for-profit colleges (e.g., ITT Tech, Corinthian Colleges).
• A new rule (effective July 2023) simplifies the application process and expands eligibility.

How to Apply

Submit a claim via the Federal Student Aid (FSA) website, providing evidence of misconduct (e.g., false job placement rates, deceptive marketing).

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5. Closed School Discharge

When Does This Apply?

If your school closed while you were enrolled or shortly after you withdrew, you may qualify for a full discharge of your federal loans.

Key Requirements

• You did not complete the program (no degree/certificate earned).
• You did not transfer credits to another school.

Automatic vs. Manual Discharge

Some borrowers receive automatic discharges, but others must apply through their loan servicer.

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6. Total and Permanent Disability (TPD) Discharge

Who Is Eligible?

Borrowers who are totally and permanently disabled may qualify for full loan discharge.

Three Ways to Qualify

1. Veterans: Receiving VA disability benefits due to 100% disability or being unemployable.
2. Social Security: Receiving SSDI or SSI with a medical review period of 5-7 years or longer.
3. Physician Certification: A doctor certifies that you are unable to work due to a severe, long-term condition.

Post-Discharge Monitoring

The Department of Education may monitor your income for three years to ensure you remain eligible.

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7. Military Service Forgiveness Programs

National Defense Student Loan Discharge

• Available to active-duty military personnel deployed to war zones or hostile areas.
• Partial or full forgiveness depending on service length.

Perkins Loan Cancellation for Service Members

• Up to 100% forgiveness for Perkins Loans if you serve in the military, Peace Corps, or other qualifying roles.

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8. State-Sponsored Loan Forgiveness Programs

Many states offer additional forgiveness programs for professionals in high-need fields:
- Doctors & Nurses: State programs like NHSC Loan Repayment Program.
- Lawyers: Public Interest Loan Forgiveness in some states.
- Farmers & Vets: Some states provide agricultural or veterinary loan assistance.

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Final Tips for Maximizing Forgiveness

• Consolidate FFEL/Perkins Loans if needed for PSLF or IDR.
• Certify employment annually for PSLF.
• Stay updated on policy changes (e.g., Biden’s proposed $10,000-$20,000 blanket forgiveness, currently blocked by the Supreme Court).
• Avoid scams—only use official FSA resources.

Student loan forgiveness isn’t a one-size-fits-all solution, but with the right strategy, you can drastically reduce—or even eliminate—your debt.