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Student Loan Forgiveness

With so many people feeling the burden of student loans, student loan forgiveness is a hot topic right now—especially since Biden just announced his new plan to forgive up to $20,000 of student loan debt for millions of borrowers.

But don’t hold off on paying back the rest of your student loans because you’re counting on your loans being canceled. Keep in mind, this kind of mass student loan cancellation has never been done before. And there’s a strong chance Biden’s plan will be legally challenged since it’s still unclear if he actually has the power to cancel student loan debt with an executive order.

Up until now, the only way to have any student loan debt forgiven has been to apply for one of the federal forgiveness programs—which have very specific hoops you have to jump through. These programs are mostly based on job and payment plan, and the approval rates are pretty depressing (like the 2% for Public Service Loan Forgiveness).

But under Biden’s new plan, millions of Americans would automatically qualify to have up to a certain amount of their student loans forgiven. While this may offer you some relief, chances are, you've got more than $10,000 of student loan debt to pay off.

If you don't qualify for Biden's new forgiveness plan, let’s talk about some of the other student loan forgiveness programs out there.

Federal Student Loan Forgiveness Options

Teacher Loan Forgiveness

Public Service Loan Forgiveness

Total and Permanent Disability Discharge

Borrower Defense to Loan Repayment

Closed School Discharge

The federal government first started offering student loan forgiveness in 2007 as a way to help graduates get rid of their student loan debt if they meet certain, very specific requirements. (FYI: This is different than the government forgiving all student loan debt as a whole.) These days, lot of college grads apply for this kind of student loan forgiveness through their loan servicer, hoping they won’t have to pay part (or any) of their student loans back. It’s a nice thought—but it’s not that simple.

Student loan forgiveness, cancellation and loan discharge all fall under the umbrella of loan forgiveness but have a different set of standards you have to meet. Forgiveness (or cancellation) is when you’re not required to pay back your student loans because of your job. Discharge is when you’re not required to repay your student loans because of circumstances out of your control (like disability or your school closing). If it already sounds complicated to you, that’s because it is. And it doesn’t help that there are plenty of student loan forgiveness scams out there, preying on desperate people.

Here are the most common forgiveness and discharge options that currently exist (keep in mind that these only apply to federal student loans):

Teacher Loan Forgiveness

If you’re a teacher, you might be able to ditch up to $17,500 of your federal student loans. But you need to check a few boxes before you can get any part of this deal.

In order to apply for teacher loan forgiveness, you must first:13

  • Have Direct or FFEL Program loans, either subsidized or unsubsidized.
  • Teach full time for five academic years in a row.
  • Take out the loan before the end of your five teaching years.
  • Teach low-income students at an educational service agency or at the elementary or high-school level.
  • Make sure you’ve never had an outstanding balance on your loan (that means not a single missed payment!).

Even after all that, your application may not get approved. And the only way you can get up to $17,500 forgiven is if you’re a math, science or special education teacher—any other teachers can only get up to $5,000 forgiven. Listen, teaching is a noble and much-needed profession. But if you’re relying on the government to pay off your student loans, you may end up very disappointed.

Public Service Loan Forgiveness (PSLF)

There’s been a lot of talk around this one lately. To qualify for public service loan forgiveness, you must:14

  • Have Direct Loans
  • Work full time for a qualifying employer, like the government or a nonreligious nonprofit
  • Never miss a student loan payment for 10 years
  • Be on an income-driven repayment plan

Recently, President Biden made changes to expand income-based repayment plans—which means more people now qualify for PSLF.

But the odds of actually having your loans forgiven through this program are still lower than you may think. As of September 2021, a total of 678,373 applications were submitted for loans to be forgiven through public service.15 Out of that, only 442,277 applications met the requirements, and only 9,038 lucky folks were actually approved and granted student loan forgiveness. That means only 2% of those who apply for public service loan forgiveness are approved for it!

And even if you’re one of the chosen few who manages to get an approval letter, you might want to tread lightly. Back in 2017, some borrowers who qualified for the PSLF program received letters of denial years later!16 That means you could spend 10 years in a low-paying job, only to find out you still owe the full amount of your student loans. Not. Cool. And the harsh truth is that you could’ve been debt-free a lot sooner if you’d just paid off your loans instead of waiting around for them to be forgiven.

Total and Permanent Disability (TPD) Discharge

If you have a disability that leaves you totally or permanently disabled, your federal student loans or your Teacher Education Assistance for College and Higher Education (TEACH) grants could be discharged.

In order to qualify for TPD discharge, you have to prove your disability status through one of these:17

  • Veterans Affairs
  • The Social Security Administration
  • Your physician

If your loans do get discharged, you’ll be monitored for the next three years to make sure you’re actually disabled (so much for privacy). But if you’re no longer disabled within those three years, you’ll have to start making payments again. So, if you’re thinking about breaking your own leg to avoid student loan payments—you should reconsider.

Borrower Defense to Loan Repayment

If your school misled you or violated certain state laws, you might be able to have some or all of your student loans discharged. You only qualify if your school committed fraud related directly to your federal student loan—like claiming more graduates got jobs straight out of their program than actually did. Applying for borrower defense means you’ll have to wade through a lot of legal jargon and documentation. It’s possible that you’ll have your student loans discharged, but proving that your school committed fraud isn’t as easy as you may think.

Closed School Discharge

If you lost money because your school closed before you could get a degree, there’s a chance your student loans can be forgiven. This only applies to federal loans though.

You may qualify to have your student loans forgiven if your school closed and:18

  • You were enrolled when your school closed.
  • You were on an approved leave of absence when your school closed.
  • Your school closed within 120 days after you withdrew and you took out loans before July 1, 2020.
  • Your school closed within 180 days after you withdrew and you took out loans on or after July 1, 2020.  

Private Student Loan Forgiveness

Sorry, but private student loan forgiveness doesn’t really exist. Since private student loans aren’t given out through the government, borrowers don’t have the same protections they do with federal student loans. That means programs like teacher loan forgiveness and public service loan forgiveness are off the table for private loans.

Legally, private lenders don’t have to forgive student loans if a borrower becomes permanently disabled. They’re not even required to discharge private student loans if the borrower dies. Yeah, that’s downright low of them! But what do you expect from an industry more obsessed with making money than actually helping people?

So, while private loan lenders may have the power to forgive student loans, they’re certainly not going to let you or your student loans off the hook. At least not by choice.

There have a been a few cases (like the recent Navient settlement) where private student loans were canceled. But it’s extremely rare and usually only affects a small percentage of student loan borrowers under very specific circumstances. And it took more than 35 states suing Navient for them to agree to cancel some of their private student loans. So, if you’re hoping your lender will forgive your student loans out of the goodness of their heart . . . well, let’s just say you’ll be waiting forever.

Bottom line: Private student loan forgiveness (and student loan forgiveness in general) is not something to bank on.

Learn More About Student Loan Forgiveness
Explore your options and get the plan to ditch your student loans with our new video course—The Ultimate Guide to Getting Rid of Student Loan Debt.