Under certain circumstances, the federal government will cancel all or part of an educational loan. This practice is called Loan Forgiveness. To qualify, you must:
- Perform volunteer work
- Perform military service
- Teach or practice medicine in certain types of communities
- Meet other criteria specified by the forgiveness program
Volunteer Work – These volunteer organizations offer loan forgiveness: AmeriCorps, AmeriCorps Volunteers in Service to America (VISTA) and the Peace Corps.
Military – Students who are in the Army National Guard may be eligible for their Student Loan Repayment Program. See the section on Military Aid for details.)
Teaching – Students who become full-time teachers in an elementary or secondary school that serves students from low-income families can have a portion of their Direct or PLUS loans forgiven under The National Defense Education Act. The American Federation of Teachers maintains a list of other loan forgiveness programs for teachers.
See the US Department of Education’s pages on Teacher Loan Forgiveness program and their database of low-income schools eligible for teacher loan cancellation. The TCLI Directory lists low-income elementary schools, secondary schools and educational service agencies (ESAs) that are eligible schools or ESAs for purposes of the William D. Ford Federal Direct Loan (Direct Loan) and Federal Family Education Loan (FFEL) teacher loan forgiveness program, Federal Perkins Loan/National Direct Student Loan teacher cancellation, and the Teacher Education Assistance for College and Higher Education (TEACH) Grant Program.
Legal and Medical Studies – Many law schools forgive the loans of students who serve in public interest or non-profit positions. For more information, contact Equal Justice Works. The American Bar Association (ABA) also has a summary of Loan Repayment Assistance Programs (LRAP),(LRAP) and State Loan Repayment Assistance Programs.
The US Department of Health and Human Services offers loan forgiveness programs through the National Health Service Corps and the Nurse Corps Loan Repayment Program. These programs offer loan forgiveness to physicians and registered nurses who agree to practice for a set number of years in areas that lack adequate medical care (including remote and/or economically depressed regions). The US National Institutes of Health’s NIH Loan Repayment Programs repays a portion of student loan debt for US citizens who are conducting clinical medical research.
Many hospitals and private healthcare facilities use loan forgiveness to recruit occupational and physical therapists. Contact the American Physical Therapy Association or the American Occupational Therapy Association.
The American Association of Medical Colleges (AAMC) maintains a database of state and other loan repayment programs for medical school students.
The US Department of Agriculture’s Veterinary Medicine Loan Repayment Program (VMLRP) offers loan forgiveness for veterinarians who commit to work in a veterinary shortage area for three years.
Other loan repayment programs for medical school students include:
- HRSA Faculty Loan Repayment Program
- Indian Health Service (IHS) Loan Repayment Program
- US Air Force, Army, and Navy Financial Assistance Programs
- Nurse Corps Loan Repayment Program
Federal Employee – The Federal Student Loan Repayment Program allows federal agencies to establish loan forgiveness programs to help recruit and retain employees. This is technically a loan repayment program and not a loan forgiveness program, as the agencies make payments directly to the loan holder and the payments represent taxable income to the employee. The agencies can repay up to $10,000 in Federal student loans per employee per calendar year, with a cumulative maximum of $60,000 per employee.
See also Finaid’s Public Service Loan Forgiveness section. Some, but not all, loan forgiveness is excluded from income. See Taxability of Student Loan Forgiveness for additional details.
Borrowers Defense – Borrower defense is a long standing, rarely-used, provision of law [Higher Education Act, Sec. 455(h)] that enables students who have been the victims of certain types of institutional misconduct to have their federal student loans forgiven. In 2022, there is new focus on situation that fall under this act. According the National Association of Financial Aid Administrators, The Department of Education (ED) announced the approval of $415 million in borrower defense claims. More information is available from The Department of Education and can be found here on their site here: Borrowers Defense Loan Discharge.
