The Ultimate Guide to Student Loan Forgiveness Programs

People with student loan debt don’t dream about sugar plums and gumdrops or falling in love with their soul mate.

They dream about tying the knot with a filthy rich trust fund baby or self-made millionaire who’s charmed enough to throw some scraps to Sallie Mae and pay off all that debt. Not paying isn’t exactly an option, after all.

Before you go combing through the classifieds and dating apps, you should know that there’s someone else who might pay your loans off for you: the government.

There are a number of different student loan forgiveness programs offered by the government that will pay your debt off in part or in full, as long as you meet their requirement.

Many of them do require you to forgo career opportunities that might net you more income than the amount you’re saving through the loan forgiveness program. And, if you’ve ever defaulted on your loans, you do not qualify for federal loan forgiveness. Still, it could be the best way for you to salvage your credit.

Read through our student loan forgiveness guide to learn about the benefits and drawbacks of each program to find out.

Public Service Loan Forgiveness
After ten years of “public service” (full-time work for a nonprofit or the government), whatever you have left in federal loans is forgiven.

For those ten years, you can repay your loans on an income-driven repayment plan which calculates the minimum you’re able to pay based on your annual earnings. They likely won’t be much as a public servant! However, therefore, neither will your monthly payments. In the end, when your loans are forgiven, you’ll save more money.

This one’s a commitment. You have to know you’ll want to stay in the field ten years from now, although you don’t have to spend those ten years working in the same place. I wouldn’t adjust your future for it, because the low-paying salaries for most public servants can cancel out the loan forgiveness. But your heart is set on a public servant career, this is a great option.

How to qualify: You have to hold one of the qualifying jobs, which includes state, federal, and local government agency employees, and workers at a 501(C)(3) nonprofit organization (that is not based in religion). You have to make 120 on-time payments (10 years), and you have to work in these sectors for 10 years.
Time investment: 10 years
Amount forgiven: Full remaining balance on federal direct loans, including Federal Direct Consolidation Loans

Teacher Loan Forgiveness
This one is for teachers who work full-time in low-income schools for at least five consecutive years, and it offers forgiveness for Direct and Stafford federal loans.

Given that low-income schools likely pay poorly, you’ll have to weight that with the amount you’d receive in forgiveness.

How to qualify: You must teach in low-income elementary or secondary schools for a minimum of five consecutive years, and you must be “highly qualified”, which includes obtaining certifications and licenses where you teach. You cannot have loans that were granted to you before October 1, 1998.
Time investment: 5 years
Amount forgiven: Up to $17,500 for math, science, and special education teachers, up to $5,000 for other teachers

Perkins Loan Cancellation
Although the previous two programs don’t forgive Perkins loans, there is a Perkins loan cancellation program for teachers and public servants that will forgive 100% of your loans if you’re eligible.

How to qualify: This program is for either teacher in low-income public or nonprofit elementary and secondary schools or teachers who specializing in math, science, or special education. Public servants such as firefighters, police officers, and nurses also qualify.

Time investment: One academic year minimum, five for full forgiveness

Amount forgiven: 15% of your Perkins loans are forgiven after the first and second years of full-time service, 20% after the third and fourth, and the final 30% after the fifth year.

Income-Driven Repayment
This is a plan that sounds great at first glance. It is available to almost everyone, regardless of your career path. But, it is risky.

There are four different income-driven repayment plans that calculate your monthly payments based on a small fraction of your income, usually 10-15%. If you stay on one of these income-driven repayment plans, rather than trying to pay off your loans in larger amounts, for 20-25 years, your remaining loan balance is forgiven.

The problem is that you’re accumulating lots of interest (and at a higher rate) by paying the minimum payment on an income-driven repayment plan. Even after years, your loan balance might not look that different.

Should something happen – say you miss payments, forget to update your repayment plan when your income changes, or future administrations decide to change the law – you’re stuck with the massive bill and all its accumulated interest with no hope of forgiveness.

Even if you get your loans forgiven, you still have to pay taxes on that amount.

This program is a last resort for people with lots of loans and low-paying careers who don’t expect to be able to pay off their loans.

How to qualify: You must be on an income-driven repayment plan, making consistent payments, for 20 years. You have to pay taxes on the amount forgiven.
Time investment: 20-25 years, depending on when you withdrew the loans
Amount forgiven: Remaining balance

AmeriCorps or VISTA (Volunteers in Service to America)
This is a fairly fast way to knock off a little chunk of your student debt, and it’s a great options for people who are already looking to volunteer after graduation for a year.

That being said, I wouldn’t do it for the loan forgiveness alone. AmeriCorps and VISTA pay volunteers monthly stipends for living expenses that are very low. Often volunteers are technically living below the poverty line.

While it can be a life-changing experience, it isn’t the wisest from a purely financial standpoint. Spending that year working a decent paying job and saving the extra income could knock a bigger chunk off your student loan debt.

How to qualify: Serve in an AmeriCorps position for one year.
Time investment: 12 months
Amount forgiven: $4,725 to be used toward loan repayment

Peace Corps
Again, another wonderful perk for those already considering joining the Peace Corps, but definitely not for people who are simply looking for loan forgiveness.

The Peace Corps is a big commitment. It’s two years, minimum, of hard work in foreign places, often in very remote and rural locations.

How to qualify: Serve in the Peace Corps for 1-5 years
Time investment: 2 years (minimum length of Peace Corps placements)
Amount forgiven: Up to 70% of your Perkins loans (15% for each year of service)

Military Loan Forgiveness
There are loan forgiveness and repayment programs for most branches of the military with various requirements for term length and repayment amount. The National Guard Repayment Program is particularly generous, offering up to $50,000 in payments toward your student loans.

Here are links to more information for each branch:
National Guard
Army
Air Force
Navy

Legal and Medical Studies
Law school and medical will put you in a debt hole the size of the Grand Canyon.

Luckily, if you practice law in a way that serves the public interest, or in non-profit positions, some law schools will forgive your loans. Also, both the National Health Service Corps and the Nurse Corps Loan Repayment Program offer loan forgiveness options to medical professionals who work in areas that lack adequate medical care.

Check out the American Bar Association’s summary of Loan Repayment Assistance Programs or the Nurse Corps and National Health Service Corps Loan Repayment Programs.

How will you get your student loans forgiven?