• If you work for the government or a nonprofit, you can have part of your student loans forgiven (tax free).
• You need to be on an income-driven repayment plan and make payments on time for 10 years.
• Teachers, nurses, firefighters, U.S. military, and others qualify for this unique program.
Loan Forgiveness Is a Real Thing (for Federal Loans)
If you work for a government agency or nonprofit company, or serve in the Peace Corps, you can actually have part of your student debt completely forgiven. The Public Service Loan Forgiveness Program forgives the remaining balance of your federal loans after you’ve made on-time payments for 120 months (over 10 years) while working full-time for a qualifying employer. Your specific job does not matter, but your employer has to be a government agency or nonprofit.
Because you still have to make on-time payments for 10 years to qualify, you need to be on one of the income-driven repayment plans for this to be worthwhile. The first people to take advantage of the forgiveness program will be in 2017, since the program started in October 2007. Only Federal Direct Loans are eligible for forgiveness – parent loans do not qualify.
You need to be on an income-driven repayment plan for this to be worthwhile.
If this is the path you’re on, you should fill out the Employment Certification for Public Service Loan Forgiveness form. The government suggests that you submit this form annually or whenever you change jobs, so they can track your progress and you can make sure you’re on your way to forgiveness.
Once you complete your 120th payment, you should submit a Forgiveness application to the government, which will be released later this year to the first class of qualifiers. The best part about this program is that you won’t have to pay any taxes on the amount that is forgiven.
If you plan to go this route, know that it is a 10-year commitment. The plus side is, there is no need to pay more than your monthly amount, as you will not receive any credit for this when the loan is forgiven. It’s even possible to make $0 monthly payments under the income-driven repayment plans and still be eligible for forgiveness.
What Types of Jobs and Employers Qualify?
According to the Brookings Institute, there are already more than 400,000 people signed up for the Public Service Forgiveness Program. If you have federal student loans, you can qualify for Student Loan Forgiveness if you work as a nurse, teacher, or public defender, for example
You qualify if you work for a government organization (at the federal, state, or local level) or a nonprofit organization. This includes the U.S. military and law enforcement (including police officers and public defenders), as well as teachers and employees at public schools and colleges. People who work in public services (such as nurses or doctors), emergency services (like firefighters), or specific government departments (such as public transportation or housing authorities) also qualify.
Teachers, nurses, firefighters, and U.S. military are among those that qualify.
Perkins Loans can be forgiven after five years if you work in a public service job in the same category as the Public Service Loan Forgiveness Program. There is no standard application form for the Perkins Loan cancellations – you should reach out directly to the school that gave you the loan.
Teacher Loan Forgiveness
There are additional benefits for teachers that you can combine with the Public Service Loan Forgiveness program. Teacher Loan Forgiveness is for educators who work five consecutive years in a low-income public school, and have loans less than $17,500. See if your school qualifies at the Low Income Schools Directory, and apply using the Teacher Loan Forgiveness Application.
In summary, if you know you’ll be working for the government or at a nonprofit over the next 10 years and your income level is low enough, make your payments on time each month (using one of the income-based plans) – and you’ll be on your way to Student Loan Forgiveness. It is an amazing program that the government has provided to help those who are in professions helping others.
- If you work for the government or a nonprofit, you can have part of your student loans forgiven (tax free).
- You need to be on an income-driven repayment plan and make payments on time for 10 years.
- Teachers, nurses, firefighters, U.S. military, and others qualify for this unique program.