How Does Student Loan Forgiveness Work?

Let's Get Real!

The terms forgiveness, cancellation, and discharge mean the same thing, but the context they are used in varies. 

If you’re no longer required to make payments on your student loans due to your job, this is generally called forgiveness or cancellation.

If you’re no longer required to make payments on your student loans due to other circumstances, such as a total and permanent disability or the closure of the school where you received your student loans, this is generally called discharge.

However, before you get too excited, know that just like any government program, there are a lot of strings and red tape when it comes to who qualifies and under what circumstances.

We’ve summarized the most common plans available. Here are the basics.

Jackie Chan Wait What V2

The Public Service Loan Forgiveness (PSLF) Program forgives the remaining balance on your Direct Student Loans after you have:

  • Made 120 qualifying monthly payments
  • Payments have been paid while on a qualified repayment plan
  • Must work full-time for a qualifying employer
  • Teacher Loan Forgiveness Program (TLF), forgives up to $17,500 in federal student loans. To qualify you must teach:

  • Full-time for 5 complete and consecutive academic years
  • In a low-income school
  • Or in a educational service agency
  • Not In Public Service?

    Not A Teacher?

    Roughly, 3 out of every 4 student loan borrowers qualify for an income based repayment plan. Once you are on an income based repayment plan then you may be elegible for student loan forgiveness.

    Income Based Repayment Plan Benefits:

  • Lower monthly payments
  • Student loan forgiveness becomes an option
  • Principle balance and interest are not taxed by the IRS
  • Student loan payments change with income
  • Student loan payments could be as low as $0 per month

  • If you are not already on one of these plans, we can work with you to find the best repayment plan for you circumstances.

    Student Loan Discharge

    The last common form of student loan forgiveness is obtained if the borrower becomes permanently disabled or passes away.

    Still not sure what to do?
    Call: 877-200-6724

    Schedule a Consultation