Student loans can be burdensome to repay, especially if your chosen career doesn’t pay well. Student loan forgiveness releases your obligation to pay all or part of your student loan if you meet specific requirements and qualify for a loan forgiveness program.
Another option to remove student loan debt is student loan discharge. This will cancel your debt and can feel very similar to student loan forgiveness, but there are very different circumstances that qualify you for one or the other. For example, forgiveness is offered when something “good” has happened. Like you completed the requirements under the federal government’s Public Service Loan Forgiveness program, which is offered to those who serve as public servants for 10 years. And discharge, well that is offered when something “bad” has happened, like loans under your name were obtain fraudulently, or you become permanently disabled.
It’s worth investigating to see if you qualify for student loan forgiveness. And if you are dealing with unfortunate circumstances, it may be worth it to see if you (or the borrower who may be a family member or friend) qualifies for a student loan discharge.
Student Loan Forgiveness Programs
For the most part, student loan forgiveness options are only available for federal student loans. It’s not common to see forgiveness programs to be offered to private student loan borrowers, but there could be a few programs that will extend repayment benefits to private student loans. Federal Student Loan Forgiveness
Public Service Loan Forgiveness (PSLF).
PSLF forgives the balance of your Direct Loans AFTER 120 qualifying payments in an eligible repayment plan, while working full-time at an eligible employer.
Only Direct Loans are eligible for PSLF. Eligible loans include:
- Direct Stafford Loans, both Subsidized and Unsubsidized
- Grad PLUS Loans in the Direct PLUS Loan Program
- Parent PLUS Loans* in the Direct PLUS Loan Program
- Direct Consolidation Loans
*For Parent PLUS Loan Borrowers: your loans are not eligible for PSLF unless you consolidate them with a Direct Consolidation Loan and agree to repay them under an income-contingent repayment plan.
Other loans such as FFEL and Perkins loans do not qualify. That said, you can consolidate those loans into a Federal Direct student loan. If you choose to do this, please note, that you MUST consolidate before making the 120 qualifying payments. Payments made before the consolidation will not count towards the 120 needed.
Working full-time at an eligible employer means that you are working at least 30 hours at an eligible employer. You can work multiple part-time jobs to meet the full-time requirement. Eligible employers include federal, state, or tribal governments, as well as 501(c)(3) not-for-profit employers. Your job title doesn’t matter, any employee of an eligible employer is eligible for PSLF.
When it comes to the 120 qualifying payments, you need to repay them under an eligible repayment plan. Eligible repayment plans, that would allow for payments to be counted, include, the 10-year Standard Repayment plan, and any Income-Driven Repayment plan offered to Direct Loan borrowers.
Your PSLF qualifying payments need to be 120 separate monthly payments, made after Oct. 1, 2007. Payments should be made in full and within 15 days of your due date. Qualifying payments do not need to be consecutive. Which essentially means you could make 60 payments with an eligible employer and switch jobs. Your new employer isn’t considered an eligible employer for PSLF, so you don’t make any additional qualifying payments, but you will still have your 60 qualifying payments made. If you then return to an eligible employer, you will still be working towards your 120 payments.
Employment Certification Forms PSLF
Now when it comes to employment, there is a requirement for you to be working full-time for an eligible public service employer while making your 120 qualifying payments. In order to start determining how many qualifying payments you have made, it’s best to complete an Employment Certification Form (ECF) provided by the U.S. Department of Education. You can use the PSLF Tool to help you complete and submit the form . It is recommended that you complete an ECF at least annually.Teacher Loan Forgiveness Program.
Teachers who teach in approved low income primary or secondary schools for 5-years can have up to $17,500 or $5,000 of student loan debt forgiven, dependent on the subject area taught (math, science and special education subjects earn the highest levels of forgiveness).
Federal Perkins Loan Cancellation
The Federal Perkins Loan program offers up to 100% cancellation of your Federal Perkins Loan(s) if you meet certain employment or volunteer criteria. These cancellation programs will require you to work in a specified field for up to five years, and each year of completed service, a percentage of your loan will be forgiven. This type of forgiveness is only for your Federal Perkins Loan, a federal loan program which ended in 2017 (meaning, you may not have a Perkins Loan if you attended school after that year). If you consolidated a Perkins loan into a Direct Consolidation Loan, or refinanced it with a private lender, your loan will no longer be eligible for cancellation.
Perkins Student Loan Cancellation
There are 13 types of employment cancellation opportunities available for the Federal Perkins Loan program.
For the loans eligible for full, 100% forgiveness, this will be achieved over 5 years of eligible service. Each year you will qualify for a percentage of the original balance and all accrued interest.
Year of Service Forgiveness Amount
- 15% + interest
- 15% + interest
- 20% + interest
- 20% + interest
- 30% + interest
Total Cancellation: 100%
To determine your eligibility for 100% cancellation, it’s best to reach out to your Federal Perkins Loan servicer. They can let you know what type of forgiveness programs are available and determine if you qualify.
If you are a volunteer with AmeriCorps VISTA or Peace Corps volunteer, you could be eligible to have up to 70% of your Federal Perkins Loan forgiven. It will take you four years.
Years of Service Amount Cancelled
- 15% + interest
- 15% + interest
- 20% + interest
- 20% + interest
Total Cancellation: 70%
Private Student Loan Forgiveness
It’s not common to have private student loans forgiven, but it’s not impossible either. There are some programs that will forgive either federal or private loans if certain criteria are met. You’ll have to look to find the rare case such as:
Nurse Corps Loan Repayment Program. This program will forgive either federal or private student loans up to 60% of the outstanding educational loan balance incurred while pursuing an education in nursing, if 2-years of full-time employment is completed at an approved hospital or clinic that is experiencing a critical nursing shortage.
An additional 25% of debt can be forgiven if a third year of full-time employment is completed. It’s important to note here, that student loan debt forgiven by this program will be taxable. Please be sure to check all requirements, terms and conditions before applying.
Student Loan Refinance
If student loan forgiveness is not going to work out for you, you might want to consider a Direct Consolidation Loan or even student loan refinance.
The Department of Education offers borrowers to option to obtain a Direct Consolidation loan. This loan will combine your federal student loans into one easy to manage loan. The fixed interest rate you pay will be the weighted average of your current rates rounded up to the nearest 1/8th of a percent. This option will allow you to extend the term length of your loan up to 30 years if desired, to reduce the monthly payment. Please keep in mind that the longer you pay on the loan, the more the loan will cost you in interest.
Refinancing your loan or loans will not relieve you of making payments and you will still be responsible to repay the entire amount of the loan, however, you may be able to lower your interest rate or change your terms which could save you money over the life of the loan or lower your payment to make it more manageable. If you think this might be the best path for you, we encourage you to learn more.
Best Student Loan Refinance Lenders
College Ave Student Loans
- Variable rate range: 5.99% – 11.99% APR1
- Fixed rate range: 5.99% – 11.99% APR1
- No application or prepayment fees
- Apply in 3 minutes or less for instant credit decision
College Ave Student Loans products are made available through Firstrust Bank, member FDIC, First Citizens Community Bank, member FDIC, or M.Y. Safra Bank, FSB, member FDIC.. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
1The 0.25% auto-pay interest rate reduction applies as long as the borrower or cosigner, if applicable, enrolls in auto-pay and authorizes our loan servicer to automatically deduct your monthly payments from a valid bank account via Automated Clearing House (“ACH”). The rate reduction applies for as long as the monthly payment amount is successfully deducted from the designated bank account and is suspended during periods of forbearance and certain deferments. Variable rates may increase after consummation.
2This informational repayment example uses typical loan terms for a refi borrower who selects the Full Principal & Interest Repayment Option with a 10-year repayment term, has a $40,000 loan and a 5.5% Annual Percentage Rate (“APR”): 120 monthly payments of $434.11 while in the repayment period, for a total amount of payments of $52,092.61. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.
3$5,000 is the minimum requirement to refinance. The maximum loan amount is $250,000 for those with medical, dental, pharmacy or veterinary doctorate degrees, and $150,000 for all other undergraduate or graduate degrees.
Information advertised valid as of 03/01/2023. Variable interest rates may increase after consummation. Approved interest rate will depend on the creditworthiness of the applicant(s), lowest advertised rates only available to the most creditworthy applicants and require selection of full principal and interest payments with the shortest available loan term.
ELFI Student Loan Refinance
- Customers are saving an average of $309 every month and an average of $20,936 in total savings after refinancing their student loans with Education Loan Finance1
- Variable and fixed rates starting from 4.53% APR and 5.08% APR2
- Prequalify in as little as two minutes
- Award winning customer service from your dedicated Student Loan Advisor who is matched to you from the moment you sign up
1Average savings calculations are based on information provided by SouthEast Bank/ Education Loan Finance customers who refinanced their student loans between 8/16/2016 and 10/25/2018. While these amounts represent reported average amounts saved, actual amounts saved will vary depending upon a number of factors.
2Rates accurate as of 3/15/23. The interest rate and monthly payment for variable rate loans may increase after closing. Your actual interest rate may be different from the rates shown above and will be based on the term of your loan, your financial history, and other factors, including your cosigner’s (if any) financial history. For example, a 10 year loan with a fixed rate of 6% would have 120 payments of $11.00 per $1,000 borrowed. To qualify for refinancing or student loan consolidation through Education Loan Finance, you must have at least $10,000 in qualified student loan debt and must have earned a bachelor’s degree or higher from an approved post-secondary Education Loan Finance institution. Education Loan Finance Parent Loans are limited to a maximum of the 10-year term.
SoFi Student Loans
- Rates as low as 5.09% variable and 4.49% fixed1
- No fees or prepayment penalties
- Unemployment protection
1Fixed rates range from 4.49% APR to 8.99% APR with a 0.25% autopay discount. Variable rates from 5.09% APR to 8.99% APR with a 0.25% autopay discount. Unless required to be lower to comply with applicable law, Variable Interest rates on 5-, 7-, and 10-year terms are capped at 8.95% APR; 15- and 20-year terms are capped at 9.95% APR. Your actual rate will be within the range of rates listed above and will depend on the term you select, evaluation of your creditworthiness, income, presence of a co-signer and a variety of other factors. Lowest rates reserved for the most creditworthy borrowers. For the SoFi variable-rate product, the variable interest rate for a given month is derived by adding a margin to the 30-day average SOFR index, published two business days preceding such calendar month, rounded up to the nearest one hundredth of one percent (0.01% or 0.0001). APRs for variable-rate loans may increase after origination if the SOFR index increases. The SoFi 0.25% autopay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. This benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. The benefit lowers your interest rate but does not change the amount of your monthly payment. This benefit is suspended during periods of deferment and forbearance. Autopay is not required to receive a loan from SoFi.
Splash Financial Refinance Loan
- Rates as low as 4.59%1 Variable APR and 4.47%1 Fixed APR
- No pre-payment penalties, origination, or application fees
- See rates in 3 minutes without affecting your credit score2
1The rates displayed may include a 0.25% autopay discount.
2To check the rates and terms you qualify for, Splash Financial conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, the lender will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
Earnest Student Loan Refinancing
- Variable rates starting at 4.99% APR (including 0.25% Auto Pay discount)*
- Fixed rates starting at 4.96% APR (including 0.25% Auto Pay discount)*
- Choose your own monthly payment
- No fees of any kind and exceptional customer service for the life of your loan
- Check your rate in under 2 minutes
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Actual rate and available repayment terms will vary based on your income. Fixed rates range from 5.21% APR to 9.24% APR (excludes 0.25% Auto Pay discount). Variable rates range from 5.24% APR to 9.19% APR (excludes 0.25% Auto Pay discount). Earnest variable interest rate student loan refinance loans are based on a publicly available index, the 30-day Average Secured Overnight Financing Rate (SOFR) published by the Federal Reserve Bank of New York. The variable rate is based on the rate published on the 25th day, or the next business day, of the preceding calendar month, rounded to the nearest hundredth of a percent. The rate will not increase more than once per month. The maximum rate for your loan is 8.95% if your loan term is 10 years or less. For loan terms of more than 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95%. Please note, we are not able to offer variable rate loans in AK, IL, MN, NH, OH, TN, and TX. Our lowest rates are only available for our most credit qualified borrowers and contain our .25% auto pay discount from a checking or savings account.
*Auto Pay Discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance. Not all borrowers will qualify for our lowest rates, and your rate will be based on creditworthiness at time of application.
The information provided on this page is updated as of 03/09/2023. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice.
Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 303 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, e-mail us at [email protected], or call 888-601-2801 for more information on our student loan refinance product.
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