Loan forgiveness happens when all or some portion of your federal student loan balance is canceled, which means you’re no longer expected to repay your loan.
While not common, there are three federal student loan forgiveness and cancellation programs for people with specific jobs or life circumstances.*
1. Public Service Loan Forgiveness
If you’re a government or nonprofit employee, you may qualify for this specialized loan forgiveness program.
- What it is: A cancellation of your remaining federal student loan balance, after you’ve made at least 120 qualifying monthly payments (on time and in full).
- Who’s eligible: Full-time government or nonprofit employees who have been employed for at least 10 years and have made 120 qualifying monthly payments on direct subsidized, unsubsidized, and PLUS federal loans. You may also need to be in an income-driven repayment program.
- How to apply: You will need to complete the Employment Certification for Public Service Loan Forgiveness form–perhaps multiple times until you qualify. Learn more about the application process at StudentAid.ed.gov.
2. Teacher Loan Forgiveness
This program was developed as an incentive for college students to enter the teaching profession.
- What it is: Up to $17,500 of relief towards your remaining federal direct or Stafford loan.
- Who’s eligible: Teachers who have worked for five consecutive academic years in certain schools.
- How to apply: Complete and submit the Teacher Loan Forgiveness Application. But first, make sure you qualify at StudentAid.ed.gov.
3. Perkins Loan Cancellation and Discharge
If you have a federal Perkins loan and work in a public service job, you may be able to take advantage of this program.
- What it is: For each complete year of service, a percentage of your loan may be canceled.
- Who’s eligible: You may be eligible if you’ve served as a:
- Volunteer in the Peace Corps or ACTION program (including VISTA)
- Teacher (see the Teacher Loan Forgiveness program above)
- Member of the U.S. armed forces (serving in area of hostilities)
- Nurse or medical technician
- Law enforcement or corrections officer
- Head Start worker
- Child or family services worker
- Professional provider of early intervention services
- How to apply: There is no standard application for a Perkins Loan Cancellation; you’ll need to contact your school’s financial aid office to apply. In the meantime, find out if you qualify at StudentAid.ed.gov.
Income-Driven Repayment (IDR) Plans
Whether or not loan forgiveness programs apply to your situation, you should consider an income-based repayment plan. These plans could help make your student loan debt more manageable.
- What it is: An IDR program sets your monthly student loan payment to an affordable amount based on your income and family size.
- Who’s eligible: Eligibility requirements vary by IDR plan. You are not eligible if your loan is in default. Learn more about the plan options at StudentAid.ed.gov.
- How to apply: Complete an Income-Driven Repayment (IDR) Plan Request.
Explore and understand all your options for loan forgiveness and repayment plans to find a smart solution.
Capella University’s Financial Aid counselors can help guide you through your federal financial aid options and application process.
*Loan forgiveness programs are run by the federal government and are subject to change or be discontinued at any time.
