July 20, 2021

What Qualifies You For Student Loan Forgiveness?


Student loans are a cost that many Americans carry throughout their adulthood. Over $40 million Americans owe an average of $40,000. Many attest to the difficulty of paying the loans off with the ups and downs of their life. However, the government has given the option for student loan forgiveness. To claim forgiveness, you’d have to qualify for it first.

Student Loan Forgiveness Qualification

If you qualify for student loan forgiveness, the government can release you from the obligation of paying the debt. You can get forgiven completely, or partly. There are two main ways to qualify for forgiveness:

  1. Working in public service
  2. Agreement to a payment plan based on your income

Public Service

The government has the Public Service Loan Forgiveness Program or PSLF. It is only available for those who’ve worked in the government or for a nonprofit organization. You can also qualify for it if you’ve served in the following:

  • Military
  • Medical
  • Volunteer work
  • Social work
  • Police department
  • Fire department

To qualify, you first must have made 120 qualifying payments. It means that you have paid the minimum at least 120 times as a part of the government or nonprofit organization. In other terms, you've been on the job for at least ten years, making monthly payments consistently. You also only qualified for it if you made a federal government student loan (William D. Ford).

If you don’t have a William D. Ford loan, you must first merge the debt into another federal loan eligible for forgiveness. For example, a Perkins Loan or an FFEL must consolidate into another loan. Note that the qualifying payments only start counting after the consolidation.

Payment Plan

If you’re not in public service, you’ll need to join a federal income-driven repayment plan. You can apply for this if you feel unable to pay off the debt within a 10-year timeframe. The plans include:

  • Income-Based Repayment or IBR: Monthly payments amounting to 10-15% of discretionary income. You’ll have to maintain this plan for 25 years.
  • Pay as you earn or PAYE: Maximum monthly payments of 10% of discretionary income. You’ll have to maintain the plan for 20 years.
  • Income Contingent Repayment (ICR): Payments depend on your balance, gross income, and family size. They usually amount to 20% of discretionary income, and you have to pay after 25 years.

Things To Consider

While income-based repayment is a path to forgiveness, it can also stretch your finances thin for a long time. You can opt for an extended or graduated repayment plan instead. These only extend the time you need to pay off the debt and not commit you to decades of payments.

Another thing to consider is that the government is working on student loan forgiveness. While there has yet to be finalization, you could experience at least $10,000 forgiveness.

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