Discharge Due To Death
Though we dont want to think about this, if you were to pass away, your federal student loans will be forgiven.
The same is true of Parent PLUS Loans taken out on your behalf. If you die, your parents are no longer obligated to pay. If your parents pass away, you arent obligated to repay Parent PLUS Loans they took out to pay for your school.
Many, but not all, private lenders provide death discharge for borrowers and cosigners, too.
Student Loan Forgiveness: Whats Getting Fixed
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A limited waiver from the U.S. Department of Education is expected to immediately wipe the slate clean for 22,000 student borrowers seeking Public Service Loan Forgiveness and speed the process for at least 550,000 overall.
It’s not the broad student loan forgiveness borrowers may be dreaming of. Instead, it’s the latest example of the Biden administration’s strategy of tackling student loan debt through existing programs.
The Biden administration has committed to an overhaul of the student loans system and how it functions whether the programs are easy access and whether people can get forgiveness and I think this is an important step forward on that path, says Sarah Sattelmeyer, project director of education, opportunity and mobility in the higher education initiative at New America, a public policy think tank.
Neither President Joe Biden nor Congress has committed to forgiving loans en masse despite calls to do so from prominent Democrats, state officials and consumer rights advocacy groups.
Here are the improvements that have been made so far.
Student Loan Forgiveness Questions
Can a defaulted student loan be forgiven? Student loans in default are eligible for loan forgiveness if you are totally and permanently disabled, your school closed, or your school made fraudulent misrepresentations. However, defaulted student loans are not eligible for the Public Service Loan Forgiveness Program or income-based student loan forgiveness. Read this guide to defaulted student loan forgiveness for more information.
Can student loans be forgiven after 10 years? A federal student loan can be forgiven after 10 years under the Public Service Loan Forgiveness Program. To qualify, public service workers must make 120 monthly payments under an IDR Plan for loans made under the Direct Loan Program.
Is the IRS forgiving student loans? The Department of Education, not the IRS, forgives student loan debt. However, in some instances, the IRS treats student loan forgiveness as taxable income. In early 2021, the Biden Administration passed a coronavirus relief package that makes all student loan forgiveness tax-free through 2026.
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How To Apply For Itt Tech Student Loan Forgiveness
If you’re a defrauded former ITT Tech student, you’ll want to apply for loan forgiveness through a closed school discharge application.
There are two ways to complete the closed school discharge application:
If you received a closed school loan discharge application from your loan servicer, complete and return the form as you’re directed.
Fill out this application from Federal Student Aid and send it to your loan servicer.
Alternatively, you can contact your loan servicer directly and ask for assistance in the application process.
Student Loan Repayment Assistance Programs For Teachers
The Teacher Forgiveness Program isnt your only option for student loan help. Many states also offer loan repayment assistance for teachers. Most of these programs require state licensure, as well as a commitment to working for two years in a qualifying area.
The Teach for Texas Program, for example, gives yearly assistance to teachers in designated shortage areas.
To find programs in your state, check out the full list of loan repayment assistance programs and filter the results by occupation.
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Public Service Loan Forgiveness
The PSLF program is a different beast from federal student loan repayment. The government excuses whatever balance you owe on your loan if its eligible and if youve worked in a certain public service position for at least 10 years. Its a welcome benefit to Americans who decide to enter the public service realm as a career.
Obviously, this kind of student loan forgiveness is only workable for a slice of the populationparticularly those who devote their time to either government or public-aiding work. But they can be sources of huge financial help to those who are struggling with student debt and are eager to pursue those paths anyway.
Student Loan Forgiveness For Doctors
Like other health care professionals, doctors can often qualify for loan forgiveness if theyre working for the government or a qualified nonprofit.
Student loan repayment assistance might also be provided to doctors who agree to work in areas where there are shortages of doctors or treat underserved patients.
Here are some of the best student loan forgiveness programs for doctors:
- PSLF: Doctors who work for the government or qualifying nonprofits may be eligible for 100% forgiveness after making 120 monthly payments in an income-driven repayment plan.
- The National Health Service Corps Loan Repayment Program : Up to $50,000 in loan repayment in exchange for two years of service at approved sites that provide free or discounted services to Medicare beneficiaries and others.
- NIH Loan Repayment Programs: The National Institutes of Health offers eight Loan Repayment Programs that provide up to $50,000 a year in student loan repayment assistance to doctors and scientists with medical degrees who perform biomedical or biobehavioral research.
- State-based physician loan forgiveness: To attract and retain doctors, many states provide assistance repaying medical school debt.
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Student Loan Discharge Programs
Closed school discharge. You may qualify for loan discharge if your school closes. At the time of closure, you must have been enrolled or have left within 120 days, without receiving a degree. If you qualify, contact your loan servicer to start the application process. Youll need to continue making payments on your loan while your application is being processed. If youre approved, you will no longer have to make loan payments and you may be refunded some or all of the past payments you made on the loan.
Borrower defense to repayment discharge. Borrowers defrauded by their colleges may qualify for debt relief. Youll need to file a borrower defense to repayment claim with the U.S. Department of Education. If you qualify, you may have your loans automatically discharged, at the discretion of the Education Department, if your school was involved in clear, widespread fraud or misrepresentation that affected a broad group of borrowers.
Total and permanent disability discharge for veterans. Veterans who are totally and permanently disabled will have their student loan debt discharged. The process will be automatic unless they decline due to potential state tax liability .
Discharge due to death. If you die, your federal loans will be discharged once a death certificate is submitted to your loan servicer. Your parents PLUS loans used to pay for your schooling will be discharged if the parent who holds the loan or you die.
Repayment Plans With Loan Forgiveness
Even if you donât work in public service, you can still get your student debt forgiven. But it will take a lot longer. Each of the income-driven repayment plans promises to forgive your remaining loan balance after youâve made payments for 20 to 25 years.
- Who qualifies: Borrowers enrolled in one of the federal student loan IDR plans â Income-Based Repayment , Income-Contingent Repayment , Pay As You Earn , and Revised Pay As You Earn .
- Which loans are eligible: All Direct Loans, FFEL Loans, and, if consolidated, Parent PLUS Loans and Federal Perkins Loans.
- How to apply: Youâre automatically enrolled when you submit your income-driven repayment application to your student loan servicer. Your servicer will track your payments and notify you once youâve qualified for forgiveness.
- How long until loans are forgiven: Most borrowers with student loan debt only from undergraduate studies will qualify for loan forgiveness after theyâve made 240 monthly payments . However, if you have debt from graduate school or are paying under the income-contingent repayment plan, you need to make 300 monthly payments before youâre eligible for loan forgiveness.
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What To Do If You Dont Qualify For Student Loan Forgiveness
If you dont qualify for student loan forgiveness, some other options include:
- Income-driven repayment: If you dont qualify for other student loan forgiveness programs, an IDR plan could lower your monthly payments on your federal student loans. Plus, any remaining balance will be forgiven after 20 to 25 years, depending on the plan.
- Extended or graduated repayment plan: Either of these plans will extend your repayment terms to 25 years, which will lower your monthly payment. Just keep in mind that while an extended plan comes with a fixed payment, your payments will go up every two years on a graduated repayment plan. Youll also pay more interest with these longer terms.
- Loan consolidation: If you consolidate to a Direct Consolidation Loan, you can extend your repayment up to 30 years. Just remember that if you stretch your payments out over a longer period of time, you might end up paying more interest charges.
- Student loan refinancing: If you refinance, your student loans will be combined into one new loan with a new term. You might also get a lower interest rate or reduced monthly payment. If you decide to refinance, be sure to shop around and compare your rates from multiple lenders. With Credible, you can compare your rates from multiple lenders in two minutes.
What Types Of Loans Are Eligible
Previously, only payments on Direct Loans and Direct Consolidation Loans could count toward the 120 qualifying payments for forgiveness. Payments made on loans from the Federal Family Education Loan program and the Federal Perkins Loan program were not eligible. You can consolidate these loans into Direct Consolidation Loans, but any previous payments would not carry over.
Under TEPSLF, FFEL and Perkins loans still must be consolidated into Direct loans. However, payments that were made before consolidation on these loans will now count toward the required payments for PSLF. This change will affect payments retroactive to October 1, 2007. ED estimates that the average borrower could receive 23 additional qualifying payments.
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Need For Regulatory Action
The HEA provides that veterans who are totally and permanently disabled are eligible to have their Federal student loans discharged. Prior to the IFR, once determined by the Secretary of Veterans Affairs to be totally and permanently disabled due to a service-connected condition, the veteran was required to obtain documentation of that status from VA and provide it to the Secretary of Education, along with an application for total and permanent disability discharge, in order to receive the discharge of their student loans. Similarly, borrowers who are identified as eligible for a TPD discharge through the data match with SSA had to submit an application to the Department in order to receive the discharge.
The amendments in the IFR and these final regulations provide a quicker, more efficient process and will likely result in many more qualified veterans and individuals SSA determined to have a qualifying disability status receiving the discharge for which they are eligible.
Nevertheless, this final rule removes barriers and allows many more qualified veterans and other borrowers to receive the TPD discharge to which they are entitled.
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The Confusing Case Of Ffelp Loans
Almost 6 million federal student loan borrowers can’t get any relief from the CARES Act because a commercial lender holds their loans, according to calculations by Travis Hornsby, the founder of Student Loan Planner, a company that helps borrowers tackle student loan debt.
Maybe you had Stafford loans, a type of FFELP loan that hasn’t been issued since they were replaced by Direct loans in 2010. FFELP loans were federal loans, but they were issued by private lenders. Who owns them now? Sometimes, it’s the Department of Educationand that means you get the CARES Act relief. Other times, it’s a commercial lender, and you won’t qualify for CARES Act relief.
Let’s say you’ve found the part of your servicer’s website that says who owns your loans, and you see something like this:
- Current Owner: NELNET FEDERAL LOAN TRUST
- Guarantor: PA HIGHER EDUCATION ASSISTANCE AGENCY
Does “Federal Loan Trust” in the name mean the federal governmentthat is, the Department of Educationowns your loan and you should be getting automatic administrative forbearance?
Unfortunately, the answer is no. “If a Stafford FFELP loan is owned by Navient Federal Loan Trust, it is not owned by the U.S. Department of Education and therefore is not eligible for the payment pause and interest waiver,” said and one of the country’s leading experts on student loans.
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Student Loan Forgiveness If Your School Closes
You can get student loan forgiveness if your school closes. Heres how: if your college or university closes while youre enrolled or shortly after you withdraw, you could qualify for partial student loan forgiveness or total student loan forgiveness. Direct Loans, Perkins Loans and FFEL Loans are all eligible.
Q Are Student Loan Burdens Economically Handicapping An Entire Generation
A. More adults between 18 and 35 are living at home, and fewer of them own homes than was the case for their counterparts a decade or two ago. But these trends are mostly due to these folks entering the work force during the Great Recession rather than due to their student loans. Federal Reserve researchers estimate that 20% of the decline in homeownership can be attributed to their increased student loan debt the bulk of the decline reflects other factors.
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Differences Between Forgiveness Cancellation And Discharge
The U.S. Department of Education offers different programs to wipe away some or all of your federal student loan debt. If it eliminates your loan balance because of your job, the government will refer to that as forgiveness or cancellation. And if it clears your student loan debt because of disability, death, or your school closed, the Department will refer to that as discharge.
Discharge After 20 Or 25 Years In An Income
After 20 or 25 years in an income-driven repayment plan, the remaining debt is forgiven.
- 25 years under Income-Contingent Repayment
- 25 years under Income-Based Repayment
- 20 years under Pay-As-You-Earn Repayment
- 20 years under Revised Pay-As-You-Earn Repayment for borrowers who have only loans for undergraduate school
- 25 years under Revised Pay-As-You-Earn Repayment for borrowers with any federal loans for graduate or professional school
Time spent in an economic hardship deferment counts toward the 20 or 25-year repayment term in an income-driven repayment plan, but not toward Public Service Loan Forgiveness, according to the current regulations.
The payment pause and interest waiver counts toward the 20 or 25-year forgiveness.
Time spent in other deferments or forbearances does not count toward the 20 or 25-year forgiveness. Likewise, periods of delinquency and default does not count toward loan forgiveness. Any payments made on a defaulted loan, whether voluntary or involuntary, do not count toward the 20 or 25-year forgiveness period.
The forgiveness will be automatic. Borrowers do not need to apply for the 20 or 25-year forgiveness, but must continue repaying their loans until they are notified that the remaining balance has been forgiven. Any excess payments will be refunded to the borrower.
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Public Service Loan Forgiveness Program
The Public Service Loan Forgiveness Program is designed for people working full-time in public service jobs, either for the government or a nonprofit organization.
- Who qualifies: All full-time employees of the local, state, or federal government or qualified non-profit organization. For example, charter school teachers, professors, police officers, military service members, nurses, etc. Hereâs a list of qualifying employers.
- Which loans are eligible: All Direct Loans, including Direct Parent PLUS Loans, and, if consolidated, FFEL and Federal Perkins Loans.
- How to apply: Before applying for PSLF, you have to make 10 years of qualifying payments towards Direct Loans while working full-time in public service. Once youâve done those things, you can submit a PSLF Employment Certification and Application Form to your loan servicer.
- How long until loans are forgiven: At least 10 years. You have to make 120 monthly payments before youâre eligible.
Student Loan Forgiveness Programs
Income-driven repayment forgiveness. The federal government offers four main income-driven repayment plans, which allow you to cap your loan payments at a percentage of your monthly income. When enrolled in one of these plans, your remaining loan balance will be eligible for forgiveness after 20 or 25 years, depending on the plan. These plans are most beneficial for those with large loan balances relative to their income. Only 32 borrowers have received loan forgiveness through income-driven repayment forgiveness, according to the National Consumer Law Center. This forgiveness was made tax free retroactive to Dec. 2020 through the end of 2025, as part of the March 2021 American Rescue Plan. However, most borrowers will not qualify for forgiveness through income-driven repayment until the early 2030s.
Public Service Loan Forgiveness.Public Service Loan Forgiveness is available to government and qualifying nonprofit employees with federal student loans. Eligible borrowers can have their remaining loan balance forgiven tax-free after making 120 qualifying loan payments. Until Oct. 31, 2022, the Education Department has expanded which payments on federal student loans count toward PSLF through a limited waiver now, payments on FFEL and Perkins loans, late payments and payments made on any repayment plan will retroactively count as qualifying payments.
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