Student Loan Forgiveness

For many college graduates, student loan debt becomes a burden that drags them down at a time when they should be in the prime of their lives. But not all debts last. Under the right circumstances, you can have your student loan canceled.

If you have a federal student loan, such as a Perkins Loan, you'll likely have to pay it back. But the government does give some people a break. If you suffer a physical or mental impairment that makes it impossible to do the job you've been training for, the government may cancel your loan obligation. Also, your loan obligations may disappear -- as they should -- if your school shuts down while you're attending it.

In addition, if your school falsely certified your eligibility for a federal student loan, your loan may be cancelled. This might have occurred if you did not graduate from high school and didn't get a GED, and the school used an unapproved ED test for qualification. Other violations include giving you more time than allotted to pass the test, letting you discuss the answers with other students, or making changes to your test. The better you can document these violations, the better.

But the biggest opportunity to have your loan cancelled comes through student loan forgiveness programs, although you still may need to make payments for a certain number of years. Numerous student loan forgiveness and repayment programs exist for federal student loans. However, borrowers of private loans face fewer options and consumer regulatory protections. In extreme cases, even death doesn't discharge a private student loan, with some grieving families harassed by loan servicers.

If you are applying for college online or at a brick-and-mortar school and taking out a federal loan, look into loan forgiveness programs to see whether you might qualify and what they entail. If you are a recent graduate with federal loan debt who plans to work for the public good, you might be able to take advantage of loan forgiveness programs for people in certain careers.

The goal of many of these programs is to entice more individuals to dedicate their careers to certain "helping" professions such as teaching and nursing. Recipients are often required to work in underserved areas or specific locations with higher need.

Whether you went to a brick-and-mortar school or got your degree from an online college, you might qualify if you work in these professions:

  • Teachers. Full-time teachers who have taught at least five consecutive academic years may be eligible for student loan forgiveness through the Teacher Loan Forgiveness Program. The program requires that you teach in certain elementary or secondary schools or educational service agencies serving low-income families. To receive the maximum benefit, you must be a highly qualified full-time math, science or special education teacher and meet certain other requirements.
  • Nurses and other health professionals. Many programs help erase the student debt of members of health professions. If you already work full time as a licensed registered nurse at a facility where there's a critical shortage of health professionals or as a faculty member at an eligible nursing school, you may be able to pay off 60 percent of your loan balance over two years' time through the Nurse Corps Loan Repayment Program. You can reduce your original student loan amount by an additional 25 percent if you spend a third year in the program.
  • The Indian Health Service Loan Repayment Program is available to licensed health professionals such as dentists, nurse practitioners or physical therapists who agree to practice in a health facility that serves American Indians and Alaska Native communities. You receive up to $40,000 for a two-year service commitment. You may extend your contract annually after the two years to receive additional payments.
  • Research scientists. To help pay off student loans, research scientists may be able to work at one of the eight National Institutes of Health (NIH) Repayment Programs. In return for doing research that furthers an NIH mission, a researcher can receive $35,000 per year to help pay off a student loan. Many types of student loans fall under these programs, including federal, state or local loans. However, Parent PLUS loans are not eligible. Three programs are only for NIH employees, and five programs are available to non-employees.
  • Veterinarians. Vets may tap into the Veterinary Medicine Loan Repayment Program to pay off loans taken out for a degree in veterinary medicine. By serving in a high-priority veterinarian shortage area for at least three years, you can receive $25,000 each year toward your loan balance.
  • Attorneys. If you're a law school graduate, you might consider looking into whether your school offers a loan repayment assistance program for recent graduates who hold government or public sector positions. One program the Public Service Loan Forgiveness Program applies broadly to public-sector employees. Other programs, set up by lenders, are specific to AmeriCorps and Peace Corps workers.
  • Government workers. Are you a firefighter or police officer? You and other public sector workers may be able to discharge your remaining Direct Loan or Direct Consolidation Loan balance through the Public Service Loan Forgiveness Program if you work at least 30 hours per week and submit at least 10 years' worth of monthly payments toward your loan balance.
  • Armed forces members. Service members have a number of options to reduce student loan debt. The National Guard has a program designed for members who enlist or re-enlist for a minimum six-year term. The U.S. Armed Forces also provides various forms of repayment assistance or relief to service members, which largely depends on your service status.
  • National Guard. If you've enlisted with the National Guard (or if you were in the National Guard in the past or are planning to enlist), you may be able to participate in the National Guard's Student Loan Repayment Program (SLRP). This can reduce your federal student loan as long as your loan is listed in the DOE's National Student Loan Data System or it is a federal Parent PLUS loan incurred for individual use. The current maximum amount you can receive through the SLRP is $50,000 annually. To be eligible, you must enlist for a minimum of six years.

If you don't qualify for any of these programs, you'll be on the hook for your loan. Not everyone manages to keep up with their payments, and if you actually default on your loan, you may be able to negotiate with the bank. Bank officials would rather receive some money than no money at all. The process is complicated, however, and you'll have to show that you couldn't afford the regular loan payments.

One remaining option is filing for bankruptcy. However, this is a difficult way to cancel a student loan, since student loans are generally not discharged through bankruptcy. You must show that continuing to shoulder the repayment obligations of your student loans would cause you undue hardship. You must also show that you made a good-faith effort to pay your loan.

"Good-faith efforts don't just mean your attempt to maintain payments," says Joshua Cohen, student loan and bankruptcy attorney and founder of The Student Loan Law Workshop. "If you attempted to negotiate with your loan holder but were shut down, your attempt counts as a good-faith effort."

Debts are made to be repaid. But if you're looking at an overwhelming amount of student loan debt -- or debt assigned to you unfairly -- it's worth considering your options. If you can make some or all of your debt disappear, you can get back to living your life and practicing your career. After all, that's why you went to college in the first place.

References

Teacher Loan Forgiveness Program. https://studentaid.ed.gov/sa/repay-loans/forgiveness-cancellation/teacher

NURSE Corps Loan Repayment Program. https://bhw.hrsa.gov/loansscholarships/nursecorps/lrp  

Joshua Cohen, student loan and bankruptcy attorney and founder of The Student Loan Law Workshop. http://thestudentloanlawyer.com/about/

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