How does loan forgiveness work?

For specific information about loan forgiveness program, please visit http://studentaid.ed.gov/ and search “loan forgiveness.”

Public Service Loan Forgiveness (PSLF)
The Public Service Loan Forgiveness Program was created to encourage individuals to enter and continue to work full-time in public service jobs. Under this program, you may qualify for forgiveness of the remaining balance due on your eligible federal student loans after you have made 120 payments on loans under certain repayment plans while employed full time by certain public service employers.

Only non-defaulted loans made under the William D. Ford Direct Loan ProgramSM are eligible for loan forgiveness. The Direct Loan Program includes the following types of loans:

  • Federal Direct Stafford Loans (Direct Subsidized Loans)
  • Federal Direct Unsubsidized Stafford Loans (Direct Unsubsidized Loans)
  • Federal Direct PLUS Loans (Direct PLUS Loans)- for parents and graduate or professional students
  • Federal Direct Consolidation Loans (Direct Consolidation Loans)

Although loan forgiveness under this program is available only for loans made and repaid under the Direct Loan Program, loans made under other federal student loan programs may qualify for forgiveness if they are consolidated into a Direct Consolidation Loan. Therefore, only payments made on the Direct Consolidation Loan will count toward the required 120 monthly payments.

Teacher Loan Forgiveness Program
The Teacher Loan Forgiveness Program is intended to encourage individuals to enter and continue in the teaching profession. Under this program, individuals who teach full time for five consecutive, complete academic years in certain elementary and secondary schools that serve low-income families and meet other qualifications may be eligible for forgiveness of up to a combined total of $17,500 in principal and interest on their FFEL and/or Direct Loan program loans. (Note: As of August 14, 2008, an otherwise eligible borrower may qualify for forgiveness if the borrower has provided qualifying teaching services at one or more locations that are operated by an educational service agency.)

 Federal Perkins Loan Teacher Cancellation
You qualify for cancellation (discharge) of up to 100 percent of a Federal Perkins Loan if you have served full time in a public or nonprofit elementary or secondary school system as a

  • teacher in a school serving students from low-income families; or
  • special-education teacher, including teachers of infants, toddlers, children, or youth with disabilities; or
  • teacher in the fields of mathematics, science, foreign languages, or bilingual education, or in any other field of expertise determined by a state education agency to have a shortage of qualified teachers in that state.

Eligibility for teacher cancellation is based on the duties presented in an official position description, not on the position title. To receive a cancellation, you must be directly employed by the school system. There is no provision for canceling Perkins Loans for teaching in postsecondary schools.

Note that you also qualify for deferment while you’re performing teaching service that qualifies for cancellation. Contact the school that holds your loan for information on applying for deferment.

For specific information about loan forgiveness program, please visit http://studentaid.ed.gov/ and search “loan forgiveness.”

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