The average college student in 2017 graduated with $39,400 in student loan debt, and Americans owe a total of $1.48 trillion in student loans, which is $620 billion more than the total credit card debt owed by Americans. The average student loan payment for people aged 20 to 30 years old is $351 per month, which for a single person is probably their largest single bill payment after their rent or mortgage and possibly their car payment.
Most student loans begin repayment six months after graduation unless you enroll full time in another college degree program. If you are paying back student loans that helped you get your college degree, it may be a struggle to keep up with payments as you start your career in an entry-level job, maybe at a non-profit or government agency where your salary is likely to be lower than a corporate job. How will you ever get out of debt?
In some cases, you may be eligible for a student loan forgiveness, cancellation or discharge program that can help you learn how to get forgiveness on your student loans. And if you are in your 40s and still paying off your student loans from 20 or more years ago, you may also be eligible for one of these programs because of how long you’ve been paying. Unfortunately, if you got private student loans rather than government ones, they are not eligible for forgiveness, cancellation or discharge programs.
1. Forgiveness Under Income-Based Repayment
This program caps your monthly loan payment at 10 to 15 percent of your discretionary income, which helps you in the short term because you are paying less each month. Lowering your payments will stretch out your payment term, and if you still have a loan balance after 20 or 25 years, depending on your original loan terms, that balance can be forgiven.
Keep in mind that current tax laws will consider loans that are forgiven under this program taxable as income, so you could end up owing several thousand dollars on your taxes for the year in which they are forgiven, depending on your tax bracket. There is also a repayment estimator online to help you figure out whether you can benefit from this program.
2. Forgiveness Under Pay As You Earn (PAYE)
This program, which was created to deal with the 2008-2009 recession when there were very few jobs available, caps payments at 10 percent of your discretionary income, and after you make payments for 20 years, you can apply for student loan debt forgiveness. The amount forgiven will be taxable, and you have to have been a borrower on or before Oct. 1, 2007, with a loan disbursement after Oct. 1, 2011.
3. Forgiveness Under Revised Pay As You Earn (REPAYE)
Like PAYE, your payments will be capped at 10 percent of your discretionary income. Undergraduate loans will be forgiven after 20 years, and graduate loans after 25 years. The difference with this program is that there are no income limits, so you could end up with high payments if your income is high or becomes high, which could limit your forgiveness amount. This program does not place limitations related to the year(s) you received loans.
4. Public Service Loan Forgiveness
If you are a full-time employee at a federal, state, or local government agency, or an organization with a 501(c)(3) designation that is not a religious non-profit, you can qualify for student loan debt forgiveness after 120 payments. This program requires you to fill out a form each year showing that you worked for a qualifying agency, and you should also be on an income-based repayment plan, since you will already have your loan paid off in 120 payments on a standard repayment plan.
5. Forgiveness Under Income-Contingent Repayment (ICR)
ICR limits your student loan payments to 20 percent of your discretionary income or the amount you would pay on a fixed 12-year plan, whichever is less. One difference between this and other plans is that Parent Plus loans can qualify if they are consolidated first. Most other income-sensitive plans don’t include Parent Plus. 25 years of on-time payments will qualify you for forgiveness.
6. Perkins Loan Cancellation
This program applies to people in certain professions, including education, firefighters, law enforcement officers, nurses, public defenders, and service volunteers. Some in the military may also qualify. There are different requirements for each profession, but most of them involve working in areas with critical needs or shortages.
Typically, a percentage of the loan is canceled with each year of service after the first year, so you can get most or all of your loan forgiven over time with this program. You must have a Perkins Loan to qualify.
7. Teacher Loan Forgiveness
If you teach in a low-income, qualified school for five consecutive years, you can be eligible to have $5,000 (elementary) to $17,500 (secondary math, science, special education) of your loans forgiven. You have to be certified in your state to be eligible.
8. Teacher Loan Forgiveness–State Programs
Your state may have its own programs to forgive student loan debt that you could be eligible for. These programs all have different requirements for where and how long you need to teach. Student Loan Hero has a comprehensive guide for these state programs.
9. NURSE Corps Loan Repayment Program
Nurses who work in underserved areas (as qualified by the program) as a registered nurse, nurse practitioner, or nurse faculty member at an accredited nursing school could get 60 percent of their loans forgiven after two years and another 25 percent after a third year, making this one of the fastest and best loan forgiveness programs on the list.
It is, however, difficult to get into the program as applications are only accepted once a year and are limited in number. State programs are also available in many areas for nurses seeking loan forgiveness.
10. National Health Service Corps (NHSC)
This program offers $50,000 in loan forgiveness to doctors who work at an eligible site for at least two years, which offers an incentive to those doctors who may have hundreds of thousands of dollars in loans and don’t want to go into a lucrative private practice just to pay them off. Eligible doctors include primary care doctors, dentists, or mental or behavioral clinicians.
There are also numerous state programs as well as some for doctors who commit to serve as doctors for the military. The Navy Financial Assistance Program offers up to $275,000 to medical residents who commit to a certain number of years of service.
11. Programs for Lawyers
There are a number of loan forgiveness programs for lawyers, who have some of the biggest education costs besides doctors. Working for the Department of Justice for three years could get you $60,000 in forgiveness, and the John R. Justice program gives up to $10,000 per year to public defenders, for a maximum of $60,000. State programs are also available.
12. Army College Loan Repayment Program
This program repays one-third of your loan each year for three years for up to $65,000 in forgiveness, when you serve in the Army during these years. The Navy also has a program that gives up to $65,000 in forgiveness, and the National Guard’s program gives up to $50,000.
13. Discharge Circumstances
Under certain circumstances, you could get your loan discharged. They are the following:
- Closed school discharge
- Student loan discharge in bankruptcy
- Loan cancellation for total and permanent disability
- Discharge for false certification or unauthorized payment
- Unpaid refund discharge
- Borrower defense discharge
These circumstances must meet certain requirements–most student loans cannot be discharged in bankruptcy, for instance. The Federal Office of Student Aid can give more details.
If you don’t qualify for any of these programs, you can still take steps to get your student loans paid off faster and easier. You may be able to refinance them at a lower interest rate, consolidate the loans, restructure the payments, or put them off for a while with a deferment or forbearance. I had student loans for more than 20 years after graduating from college, and I used all of these options to handle the payments through the birth of two children, after which I chose to work only part-time for about 10 years. I was never eligible for loan forgiveness, but I did get an income-sensitive repayment plan that cut my payments approximately in half and stretched them out so I could repay them more easily.