1. Income-Driven Repayment
Loans are forgiven under income-driven repayment plans if you pay a certain percentage of your monthly income (up to 10%) each month for 20 or 25 years. According to a new type of plan proposed by the Biden administration, this time period will be cut in half for certain borrowers.
2. Loan Forbearance
Forbearance is a temporary delay in repaying the principal and interest on your loan. Although interest continues to accrue, the federal government may pay the interest depending on the type of loan you have. You may be eligible for forbearance if you are:
- Receiving cancer treatment
- Facing economic hardship
- Attending graduate school
- Enrolled in an eligible school at least half-time
- Joined the Peace Corps
- Serving in the military
- Unemployed
3. Loan Deferment
You may be able to stop making payments or reduce your monthly payment for up to 12 months; however, interest will continue to accrue on both subsidized and unsubsidized loans. You may be eligible for deferment due to:
- Financial difficulties
- Participation in a training program or medical residency
- Enrollment in certain public service programs
- Excessive student loan burden (20% or more of your total monthly gross income)
4. Loan Cancellation for Closed Schools
You may be eligible for federal student loan cancellation if your school closed while you were enrolled or soon after you withdrew. Your school must have closed while you were enrolled, while you were on leave, or within 120 or 180 days of your withdrawal, depending on when your loans were disbursed.
5. Public Service
You may be able to receive loan forgiveness under the Public Service Loan Forgiveness (PSLF) program if you work full-time in government or a non-profit organization. This program forgives the remaining balance on federal direct student loans after you have made 120 qualifying monthly payments under a qualified repayment plan.
The Federal Student Aid website recommends submitting the Public Service Loan Forgiveness certification and application each year or whenever changing employers to ensure that your payments count toward your qualifications.
If you believe you may qualify for one of these options, please contact your loan servicer to determine the steps you need to take. Remember that these options officially only apply to federal student loans. If you have a private student loan, check with your loan servicer to see if they have similar programs available.
6. Teacher Loan Forgiveness
If you teach full-time for five consecutive academic years in certain elementary and secondary schools or educational service agencies that serve low-income families and meet other requirements, you may qualify for forgiveness. This forgiveness can be as much as a combined total of $17,500 on subsidized and unsubsidized federal direct loans and subsidized and unsubsidized federal Stafford loans.
All forgiven student loan debt will be tax-free until the end of 2025 thanks to the American Rescue Plan Act of 2021.
7. Additional Teacher Cancellation
You may be eligible for loan cancellation for teaching full-time in a low-income school or teaching in certain subjects. If you qualify, you can cancel 15% of your loan each year for the first two years, 20% annually for the third and fourth years, and 30% in the fifth year of teaching. You can also receive deferment through these qualifying educational services.
8. State-Sponsored Loan Cancellation Programs
Many states offer loan cancellation programs for teachers, especially if you teach in an area of critical need. The American Federation of Teachers has a database you can use to find state and local debt cancellation programs for which you might be eligible.
9.
Disability
Some physical and mental disabilities may qualify you for a permanent and total discharge of your federal student loans. You must provide documentation proving your disability from the Department of Veterans Affairs, Social Security, or a physician.
10. Borrower’s Defense
Borrowers may be eligible for forgiveness of their federal student loans if the school misled them or committed other violations of certain laws. This may apply to borrowers who attended Corinthian Colleges – Everest and Heald and WyoTech. According to current rules, you can apply for borrower defense even if your loans are in default. You must demonstrate that the school was intentionally misleading and that you suffered financial harm.
11. Death
Federal student loans can be discharged if the borrower of the federal student loan dies. Private student loans may not offer the same protection.
These are 11 situations where you do not need to repay federal student loans. You should contact your loan servicer to determine the steps you need to take if you believe you qualify for one of these options. Keep in mind that these options officially apply only to federal student loans, and similar programs for private student loans may vary.
Source: https://www.thebalancemoney.com/federal-student-loan-repayment-options-4135432
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