Everyone with student loan debt wants to know the answer to a simple question: Am I eligible for any type of student loan forgiveness program? And the answer is maybe... But you have to know the factors that determine student loan forgiveness eligibility and whether or not you could potentially qualify for a program.
It's important to note that there are a few main types of student loan forgiveness programs. Your eligibility depends on this. These types of programs are:
- Student loan forgiveness programs
- Student loan forgiveness as part of a student loan repayment program
- Student loan repayment assistance programs
- Student loan cancellation and discharge programs
Given that information, here are the biggest factors that will potentially qualify you for student loan forgiveness plans.
#1 Your Student Loan Repayment Plan
Most borrowers will potentially achieve some type of loan forgiveness because they are on an income-based repayment plan. Also, some student loan forgiveness programs require you to have a specific loan type.
For example, the following repayment plans potentially offer student loan forgiveness after a certain amount of time. We call these the secret student loan forgiveness plans:
- Income-Based Repayment (IBR): If you have loans from before July 1, 2014, your payment will not be higher than 15% of your discretionary income and you will make payments for 25 years. At that point, your loans will be forgiven. If you are a borrower with loans after July 1, 2014, your loan will not exceed 10% of your discretionary income, and the loan will be forgiven after just 20 years.
- Pay As You Earn (PAYE): With PAYE, you will not pay more than 10% of your discretionary income, and your loan will also be forgiven after 20 years.
- Revised Pay As You Earn (RePAYE): The repayment plan still caps your payment at 10% of your discretionary income, and the loan will be forgiven after 20 years.
- Income Contingent Repayment (ICR): On this plan, your payment would be capped at 20% of your discretionary income, and your loans will be forgiven at the end of 25 years.
It's important to note that some student loan forgiveness programs also require you to be on the correct repayment plan to be eligible. For example, one of the most popular student loan forgiveness programs is Public Service Loan Forgiveness (PSLF).
To be eligible, one of the requirements is that you are on one of several repayment plans: Standard 10-Year Plan, IBR, PAYE, or RePAYE. If you're not on the proper repayment plan, then your payment won't count towards student loan forgiveness.
#2 Your Job
Most student loan forgiveness programs and student loan repayment assistance programs are based on your job.
For example, Public Service Loan Forgiveness (PSLF) requires you to work in public service. However, this is a broad category of employment. Some common job types include:
- Public health workers
- State and local government
- Police, fire, and other first responders
- The military
The important aspect of qualifying for PSLF is that you actually work for the non-profit, and not a contractor. Many people are disqualified from PSLF and other loan forgiveness programs because they are not technically employed by the correct employer. Instead, they may be contract workers (those who receive a 1099), or they may be employed by a for-profit subcontractor.
For many state-based student loan repayment assistance programs, you can only get repayment assistance if you work in the specific field and location that the program allows for.
Finally, many companies are now offering student loan repayment assistance programs, but once again, to qualify, you have to work for the company and follow the terms of their program.
#3 Your Student Loan Type
Finally, it's essential that you have the correct student loan type that is required by your student loan forgiveness program. Some student loans don't qualify for student loan forgiveness programs, and borrowers might be shocked to learn that too late.
The biggest example of this is Public Service Loan Forgiveness (PSLF). Borrowers must have Direct Student Loans to be eligible for the program. They cannot have other loan types, such as FFEL.
It's essential that you know what type of loans you have before it's too late. We've seen borrowers who think they have been making qualifying payments for PSLF, only to find out they didn't have the correct loan type after years of making payments.
Also, it's important to note that private loans typically don't have any type of loan forgiveness options associated with them. If you're struggling to afford your private student loans, learn your options for private student loan debt here.
There Are Other Factors As Well
These aren't all of the factors that determine your student loan forgiveness eligibility, but they are the most common ones.
There are forgiveness and loan discharge programs available for a lot of reasons and factors, including disability, fraud, death, and more. You can read more about all of the different types of student loan forgiveness options in our Definitive Guide To Student Loan Debt.