Perkins Loan Cancellation Options
Perkins loans operate very differently that most student loans. These loans are offered and administered by where you attended school. They also have a lot more loan forgiveness options than other loan types.
Perkins loans have unique requirements for loan cancellation based on the field you work in. Schools award these Federal loans to high-need students attending or planning to attend college. Make sure you fill out the FAFSA each year and check your financial aid award to see if you qualify.
Depending on the profession , Perkins loan borrowers can have up to 100% of their loan cancelled over the course of 5 years .
Heres how it works:
- 15% of their principal balance and accrued interest can be cancelled after their first and second year of qualifying service.
- 20% of their principal balance and accrued interest can be cancelled after their third and fourth year.
- 30% of their principal balance and accrued interest can be cancelled after their fifth year.
Perkins loans also offer concurrent deferment if you are performing qualifying service.
Combining that postponement with these cancellation options means you could potentially never have to make payments on these loans. That’s a fantastic deal!
The professions eligible for cancellation and the requirements are listed below.
Nurse or Medical Technician: You must be a full-time nurse or medical technician. You may receive up to 100% student loan forgiveness. Check out our full guide to student loan forgiveness for nurses.
Student Loan Forgiveness For Doctors And Nurses In Canada
Eligible family doctors, residents in family medicine, nurse practitioners, and nurses can get Canada Student Loan forgiveness through the federal government. However, only the federal portion of the loan can be forgiven .
Eligibility For Student Loan Forgiveness For Doctors and Nurses in Canada
To qualify for this type of Canada Student Loan forgiveness, you must:
- Have a Canada Student Loan thats in good financial standing
- Be working as an eligible medical professional in an under-served or remote region with a lack of proper healthcare .
- Have been employed for at least one consecutive year in an underserved or remote community and provided at least 400 hours of in-person service.
- Submit an this application
Eligible Medical Professionals
To qualify for Canada Student Loan forgiveness, you must be one of the following medical professionals :
- Family
- Nurse Practitioner
- Family Medical Resident
You may get Canada Student Loan forgiveness for nurses and family doctors and if you are:
- Enrolled in full-time studies
- Repaying a student loan
- In your non-repayment period
If your loan is in its repayment period, your monthly payments are still mandatory. That said, youre allowed to work as an eligible medical professional in more than one remote or under-served community and with multiple employers if you perform at least 400 in-person hours over a maximum period of 12-months.
Check out what happens to your student debt when you die.
National Institutes Of Health Loan Forgiveness
The five NIH extramural Loan Repayment Programs include the Clinical Research LRP, Pediatric Research LRP, Contraception & Infertility Research LRP, Health Disparities Research LRP, and Clinical Research LRP for Individuals from Disadvantaged Backgrounds
In return for loan repayments, LRP awardees are legally bound to a service obligation to conduct qualifying research supported by a domestic nonprofit or U.S. government entity for 50 percent of their time for two years. NIH makes quarterly loan repayments concurrent with the awardees satisfaction of their service obligation.
Payment projections are based on eligible educational debt at the start date of the LRP contract. The NIH will repay 25 percent of the eligible education debt, up to a maximum of $35,000 per year.
Learn more about this program here.
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Student Loan Forgiveness: Which Loans Are Eligible
Only direct loans made by the federal government are eligible for forgiveness. Stafford loans, which were replaced by direct loans in 2010, are also eligible. If you have other federal loans, you may be able to consolidate them into one direct consolidation loan that would make you eligible. Non-federal loans do not qualify for forgiveness.
In 2020, borrowers with federal student loans who attended for-profit colleges and seeked loan forgiveness because their school defrauded them or broke specific laws were dealt a setback when former President Trump vetoed a bipartisan resolution that overturned new regulations that make it much more difficult to access loan forgiveness. The new, more onerous regulations went into effect on July 1, 2020.
In 2021, under the Biden Administration, the Department of Education canceled a total of $1.5 billion in student loan debt for nearly 92,000 students, who were victims of for-profit college fraud.
Student Loan Forgiveness Is Not The Same As Forbearance
Forgiveness eliminates your debt forbearance postpones your payments. If you’re having trouble making student loan payments, you can ask your lender for forbearance. Your lender may not give you a forbearance if you don’t meet eligibility requirements, such as being unemployed or having major medical expenses.
Interest on your loan will still accrue, and you can pay that interest during the forbearance period if you want. If you don’t pay it, the accrued interest will be added to your principal balance once your forbearance period is up. Your new monthly payment will be slightly higher as a result, and you’ll pay more interest in the long run.
The only relationship between forbearance and forgiveness is that when you’re in forbearance, since you’re not making payments, you’re not making progress toward the payment requirements of a forgiveness program you might be participating in.
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The Pros And Cons Of Student Loan Forgiveness
For many students, the thought of taking out loans to pay for college can be daunting. The idea of being in debt for years after graduation can be discouraging, to say the least. However, there is some good news: student loan forgiveness programs can provide some relief.
The Pros:
1. Student loan forgiveness can help reduce your overall debt burden.
2. If you work in public service or non-profit job, you may be eligible for loan forgiveness after 10 years of repayments.
3. You may be able to have your student loans forgiven if you become disabled or die.
4. Student loan forgiveness can provide some financial stability after graduation.
The Cons:
1. You may have to pay taxes on the forgiven amount.
2. If you work in a private-sector job, you generally wont be eligible for loan forgiveness.
3. Student loan forgiveness programs can be complex and difficult to navigate.
4. There is no guarantee that your loans will be forgiven, even if you meet all the requirements.
Overall, student loan forgiveness can be a helpful option for some borrowers. However, its important to understand the pros and cons before making any decisions about your student loans.
Student Loan Discharge Options
There are also ways to get your student loans discharged in some circumstances. We consider student loan discharged to be a little bit different than forgiveness, both due to the nature of the way the loan is eliminated and the potential taxability surrounding it.
There are various discharge options you may qualify for.
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State Lrap Programs For Doctors And Other Health Care Professionals
While many programs are available nationally, you might also find loan assistance from your state. There are a variety of state LRAPs across the country.
The Massachusetts Loan Repayment Program, for instance, awards up to $50,000 to health professionals working in shortage areas. You might find other repayment assistance options in your state.
Latest Student Loan Forgiveness Updates
President Biden announced on April 6, 2022 in a video posted to Twitter that the pause on federal student loan repayments would be extended again, until August 31, 2022. The President ended the video by telling borrowers to visit studentaid.gov if they need help preparing for repayment. This continues a period of uncertainty for federal student loan borrowers who have not been required to make payments since March 2020. A further announcement related to the payment pause or large-scale student loan forgiveness is not expected until later in the Summer.
The Administration has thus far focused on discharging student loans borrowed to attend for-profit colleges that were found to be defrauding student borrowers, such as Corinthian Colleges. The Education Department announced a $5.8 billion group discharge to cancel loans associated with those schools on June 1, 2022.
On December 22, 2021, Joe Biden announced his third extension of the federal student loan payment pause and interest waiver. Federal student loans would remain interest-free until May 1, 2022. There was no reference in that announcement about a loan forgiveness or cancellation program that the Biden administration might be pursuing but President Biden asked borrowers to do their part to prepare for repayment.
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Student Loan Forgiveness Faqs
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? After 10 years under the Public Service Loan Forgiveness Program, a federal student loan can be forgiven. To qualify, public service workers must make 120 monthly payments under an IDR Plan for loans made under the Direct Loan Program. Read more about the PSLF Program.
Is the IRS forgiving student loans? The Department of Education, not the IRS, forgives student loan debt. However, the IRS treats student loan forgiveness as taxable income in some instances. In early 2021, the Biden Administration passed a coronavirus relief package that makes all student loan forgiveness tax-free through 2026.
Federal Perkins Loan Cancellation
Federal Perkins Loans have a separate forgiveness program because your school is the lender, not the federal government. To apply, contact the financial aid office at the school that administered your Perkins Loan and request the application forms. You need to be a full-time employee in a qualified career.
Qualifying Perkins Loan Forgiveness Jobs:
- Soldier in hostile fire or imminent danger pay areas
- Firefighter
- Law enforcement or corrections officer
- Nurse or medical technician
- VISTA or Peace Corps volunteer
- Librarian with a masters degree
- Attorney employed in a federal public or community defender organization
- Employee for public or nonprofit organization that serves high-risk children and their families from low-income communities
- Staff member for educational component of the Head Start program
- Staff member for a state-licensed or regulated pre-kindergarten or child care program
- Professional provider of early intervention services for the disabled
- Speech pathologist with a masters degree
- Special education teacher for children with disabilities in public, other nonprofit schools or educational service agency
- Teacher in a field designated by the state as teacher shortage areas
- Teacher in a designated educational service agency that serves students from low-income families
- Faculty member at a tribal college or university
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Likely Future Student Loan Forgiveness Developments
The next event will occur when the U.S. Department of Education and Justice Department issue reports concerning the executive branchs legal authority to implement broad loan forgiveness without Congress.
These reports will likely conclude that the President does not have the legal authority to implement broad student loan forgiveness through executive action. This will force Congress to act. Congress might consider legislation to forgive student loans in the fall, as part of a budget reconciliation bill. The Biden Administration has repeatedly reiterated that the President would sign a bill offering $10,000 in federal student loan forgiveness to all borrowers.
The timing of loan forgiveness will also depend on which loans are eligible.
Revised Pay As You Earn
RePAYE is a modified version of PAYE that has become available to borrowers after December 17, 2015. Unlike PAYE, which was available for loans taken out after 2007, RePAYE is open to all Direct Loan Borrowers, regardless of when the loan was taken out.
The repayment plan still caps your payment at 10% of your discretionary income, and the loan will be forgiven after 20 years.
The RePAYE plan also includes an interest subsidy that would help cover 50% of the interest in cases where the new payments cannot keep up with the accruing interest.
You can learn more about RePAYE and the interest subsidy here.
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What Student Loan Forgiveness Scams Should I Avoid
Student loan financing can seem ripe for scams. Since borrowers are hungry for relief from student loan debt, theyre often willing to try anything, and some companies promise to offer help sometimes for a fee.
This may be a scam. When it comes to student loans, your lender or loan servicer can help you for free.
See also:
What Is The Cost Of Education In Canada
Post-secondary education in Canada is generally cheaper than in the United States. On average, the cost of post-secondary education for Canadian students is $19.498.75 per year. Students who live with their parents spend less, about $9,300 per year. However, students who live in school dorms or rental apartments spend almost $20,000 per year.
These averages consider the cost of tuition, transportation, groceries, entertainment, books, supplies, rent, and extra-curricular. And, international students usually face higher fees for housing and tuition than local students. Generally, post-secondary education costs depend on many factors, including:
- The school
- Residency
- Living expenses
Tuition fees vary depending on a students program of study. For example, professional programs like dentistry, medicine, law, and pharmacy usually cost more than programs in the arts. And, masters programs are usually more costly per year than undergraduate programs.
For more information about the cost of education in Canada, visit Statistics Canada.
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What Should I Do If My Student Loan Forgiveness Was Denied
If you went through the 10-year process for PSLF, and you were denied, know youre not alone. This is a common issue borrowers have encountered.
The good news: You have a second chance under a Congress-approved fix called the Temporary Expanded Public Service Loan Forgiveness . This loosens the rules a little bit to bring relief to borrowers who bargained on getting their loan balance discharged but were denied PSLF.
Heres what you need to know. This temporary fix applies to you if you were rejected for PSLF and you:
- Were enrolled in an extended or graduated repayment plan, rather than an income-driven repayment plan.
- Have Federal Direct loans.
- Paid as much in the past 12 months as would have under income-driven repayment.
To apply for TEPSLF, send an email to FedLoan Servicing at .
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You Have A Permanent Disability
The Department of Education wipes away the balances on your federal student loans if you suffer a severe and permanent disability that leaves you unable to work full-time. You can still work and earn an income, but that income ordinarily must be below the Poverty Guideline amount for a family of two, regardless of your family size. The Education Department has temporarily waived the three-year monitoring period during the Covid-19 Pandemic.
- Whose eligible: Youâre eligible if a doctor, SSA, or VA determines you are severely and permanently disabled. Your disability can be mental or physical.
- How to apply: Submit the Total and Permanent Disability Discharge Application to Nelnet or through disabilitydischarge.com.
- When to apply: You can apply for a TPD discharge after the doctor signs the discharge application or the SSA or VA determine you are totally and permanently disabled.
Learn More:Student Loan Forgiveness for Disability Options
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Millions Of Americans Have Had $25b In Student Loan Debt Forgiven: Who Why And How
Peter Butler
How To and Money writer
I’m a writer/editor for CNET How-To and Money, living in South Berkeley, CA with two kids and two cats. I enjoy a variety of games and sports — particularly poker, ping-pong, disc golf, basketball, baseball, puzzles and independent video games.
What’s happening
President Biden still hasn’t announced his decision on widespread student loan forgiveness, but millions of borrowers have already had $25 billion in debt canceled during his term.
Why it matters
With one in five Americans owing student debt, loan forgiveness can help ease the pain of soaring inflation and economic uncertainty.
Time is running out on President Joe Biden to make a decision on federal student loan forgiveness. The pause on student loan payments expires on Aug. 31, and borrowers will be asked to resume payments after more than two years of forbearance.
Biden campaigned in 2020 on a platform of canceling a “minimum of $10,000” in student loan debt for everyone and on April 28 promised a decision “in the next couple of weeks,” but months have passed with no action on widespread student loan relief. About one in five Americans owe money on student loans for a total of $1.6 trillion, or an average of $37,013 per borrower.
What Is Student Loan Forgiveness And How Does It Work
Student loan forgiveness partially or fully cancels education debt owed by the primary borrower and, in some cases with private loans, the cosigner. Forgiveness programs are available based on the borrowers loan type , repayment plan, career, employer and financial or personal situation. There are also special circumstances, such as attending a predatory for-profit school, that may qualify for student loan forgiveness.
Student loan forgiveness programs arent going to cancel your debt overnight, but they could ease it or even erase it after a certain number of years of repayment. Many federal and state-based forgiveness programs are meant for borrowers who work in public service, education, health care and other fields for a certain period.
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