Who qualifies for Loan Forgiveness?

The following careers qualify for Federal student loan forgiveness programs.

Public service employees working in the above-listed fields are eligible for loan forgiveness under the Public Service Loan Forgiveness Program (PSLF), passed by Congress in 2007. The Federal government created this program to inspire young people, many of whom carry a high debt burden, to pursue careers in public service. Recognizing that big debts were preventing some of the nation’s best and brightest from giving back, this program provides an incentive for college graduates to build a career in public service.

Loan Forgiveness Checklist

  • Consolidate and enroll in an eligible repayment plan. In order to receive loan forgiveness under this program, you must first consolidate an enroll in an eligible repayment plan. Not all repayment plans qualify for this program. If you’re income is relatively low, compared to your debt, you will save the most money by choosing an income-based repayment plan. For help determining the lowest possible monthly payment on a qualifying plan, contact a Student Loan Peace specialist.
  • Verify your public service employment status with the Department of Education. Because your loan forgiveness depends on your field, you’ll need to certify your employment with the DOE. It’s best to do this every year.
  • Make 120 on-time payments. Debt forgiveness is provided after you make 10 years of on-time payments, on a qualifying repayment plan (see item #1).

Public service workers with high student loan balances relative to their income can benefit by consolidating and choosing income-based repayment. To learn more about your options, call today.

Frequently Asked Questions about Loan Forgiveness

Can my loans be forgiven if I declare bankruptcy?

With rare exception, student loans cannot be discharged in bankruptcy court. Many people who complete bankruptcy must continue to pay on their student loans. If your student loan payments are unaffordable, consider consolidating under an income-based repayment plan for a lower monthly payment.

I’m eligible for Teacher Loan Forgiveness ($5000 for teaching in a low-income school, $17,500 for teaching math, science or special education). Can I receive this forgiveness and Public Service Loan Forgiveness?

If you accept loan forgiveness under the Teacher Loan Forgiveness Program ($5000 or $17,5000) after five years of qualifying service, the 10 year clock for Public Service Loan Forgiveness starts after you receive your Teacher Loan Forgiveness award. You cannot be enrolled in both forgiveness programs at the same time. If you have a high balance, it may be a better idea for you to skip the Teacher Loan Forgiveness grant, and have your entire remaining loan balance waived after 10 years (versus 15).

What if I leave my public service employment before 10 years? Can I have part of my remaining loan balance waived?

No. You must complete 10 years of employment as a public servant. These years do not have to be consecutive.

Is the forgiven balance taxable?

Student loan balances that are forgiven under the Public Service Loan Program is not taxable.


Author: Karen Carlson

Karen Carlson is personal finance expert and writer. Her financial advice has been published in Time, US News & World Report and Fox Business News. Carlson is an Emmy Award-winning producer of educational television and recent nominee for the NFCC Financial Educator of the year award.