Student loans are used to pay for tuition fees. While these loans help with tuition, they add up rapidly and may leave a graduate owing a great deal of debt. More than 43 million people have student loans in the U.S., with a total debt of over $1.7 trillion [1].
Fortunately, there are development programs that can help you cancel some or all of your student loan debt. Qualifying for this isn’t as difficult as it may seem. This guide will help determine if you can cancel your student loans.
What Does it Mean to Cancel Student Loans?
Student loan cancellation eliminates some or all of a student’s debt. These programs aim to help borrowers who cannot make regular payments on their loans or have been paying for a long time without visible results.
Several such programs are available today, and they all have different terms. Some programs are based on where you work, others on how long you have been paying, or your financial situation. Knowing which program you may qualify for and taking the right steps to apply are important.
Key Types of Student Loan Cancellation Programs
Here are the programs through which student loans can be forgiven:
Public Service Loan Forgiveness (PSLF)
This program offers loan forgiveness to people working in public jobs, including government, education, and health care. To qualify, you must make 120 qualifying payments over about 10 years. Here’s how it works:
- You need to be employed full-time by an eligible employer, such as a government agency or nonprofit.
- You need to make 120 qualifying payments while on an income-driven repayment plan.
- After you complete 10 years of payments, the remainder of your loan may be forgiven.
Teacher Loan Forgiveness
You may be eligible for federal student loan forgiveness if you work full-time at a low-income school for five years. The amount of forgiveness depends on the subject you teach. Math, science, and special education teachers are eligible for up to $17,500 in loan forgiveness, whereas teachers in other subjects can receive up to $5,000.
Here’s how it works:
- You need to work full-time as a teacher for five years at a school serving low-income families or on a list maintained by the U.S. Department of Education.
- Your loans need to be Federal Direct Loans or Stafford Loans.
Income-Driven Repayment (IDR) Plan Forgiveness
This program allows you to adjust your student loan payments to your income level. Instead of a fixed payment amount, your payments are tailored to your financial situation. Any outstanding loan balance may be forgiven after 20 or 25 years of consistent payments.
Here’s how it works:
- You pick an IDR plan, like Income-Based Repayment (IBR) or Pay As You Earn (PAYE).
- Your payments are set at 10% to 20% of your income.
- After 20 or 25 years of payments, the rest of your loan is forgiven.
This plan is great for people with large loans or low incomes. It helps keep your monthly payments manageable.
Total and Permanent Disability Discharge (TPD)
The Total and Permanent Disability (TPD Discharge) program helps people who cannot work due to a permanent disability.
Here’s how it works:
- You’ll need to prove that you have a total and permanent disability. You can do this by providing documentation from a doctor, the Social Security Administration (SSA), or the U.S. Department of Veterans Affairs (VA).
- If all documentation is approved, your federal student loans will be forgiven, and you won’t have to repay them.
- After your loans are forgiven, the government will review your eligibility for the program for three years. Forgiveness may be revoked if your income rises above a certain level or your health changes.
New Developments in 2024 for Student Loan Cancellation
In 2024-2025, new measures and expansions are expected to provide more borrowers with student loan relief. Here are some notable changes:
One-Time Cancellation Programs
Recently, the U.S. government has launched debt relief programs that target very specific demographics, including low-income individuals or those affected by fraudulent schools. These programs are few and far between, but when they do come along, they might be an opportunity to wipe out some or all of your student debt without long-term payments.
Be sure to keep up to date about these opportunities. Many such programs have very short application deadlines, so if you are eligible, apply as soon as possible.
Temporary Expanded PSLF (TEPSLF)
Many people who thought they could get PSLF forgiveness were denied because they were on the wrong repayment plan. To help these people, the TEPSLF program was created to give them a second chance at debt forgiveness.
Here’s how it works:
- If you were denied PSLF because you were on the wrong repayment plan, you can try applying for TEPSLF.
- You need to have made 120 correct monthly payments while working full-time for an eligible employer in a public service job.
- TEPSLF allows you to get forgiveness even if you were paying on plans not eligible for PSLF, such as the Graduated or Extended Repayment plans.
To apply, submit a TEPSLF request form to the Department of Education.
State-Specific Forgiveness Programs
State-based debt forgiveness programs help people get rid of their student loans. These programs encourage professionals like doctors, nurses, teachers, and lawyers to work in areas of need in the state.
Here’s how it works:
- Find out what programs are available in your state.
- See if your job qualifies for the program.
- Apply and meet the program’s requirements, such as working in the right field or area for several years.
Common Pitfalls to Avoid
When searching for student debt forgiveness, there are some common mistakes to watch out for:
- Incomplete/incorrect documents: The most common cause of denial is incomplete or incorrect documentation. Ensure that all forms are properly filled out and attach the needed documents.
- Not certifying work annually: With the PSLF program, not certifying your work annually may result in a denial. One should submit an ECF every year.
- Not being aware of the payment requirements: Borrowers often are unsure which payments qualify on different forgiveness options such as PSLF and IDR. For example, only specific plan payments count toward PSLF. Make certain that your plan qualifies.
- Private loans are not eligible: Only federal student loans can qualify for debt forgiveness. If you have private loans, you will be forced to seek other options, such as refinancing.
Steps to Take Now
If you think you might qualify for student debt forgiveness in 2024, here’s what you need to do:
Contact Your Lender. Your lender can help you with your application and let you know if you qualify for forgiveness. They can also explain the different repayment options available.
Identify your loan type. Find out if your loan is federal (Direct Loans, Federal Family Education Loans) or private. Loan forgiveness only applies to federal loans.
See if you qualify for forgiveness. Review the requirements of each forgiveness program to see which one is right for you. Pay attention to details like the number of payments required or work requirements.
Gather the right documents. Have all the necessary documents ready, such as proof of employment, income verification, or disability certifications, to ensure your application is processed quickly.