Student Loan Forgiveness


A Look at Student Loan Forgiveness

Student debt can sometimes become overbearing if not managed properly. In some cases, the debt can even deplete savings resulting into very serious financial problems. Although private student debt/loans is treated as a form of permanent debt, recent changes in legislation have bared individuals from discharging private student loans through bankruptcy.

There are however other options i.e. student loan or debt forgiveness options which exist to help student borrowers deal with their debt burden by eliminating part of the student loan debt or eliminating it completely. It is also possible to pursue other options such as student loan consolidation aimed at reducing the amount of monthly repayments.

Beneficiaries of loan forgiveness

The main beneficiaries of student debt forgiveness are private and government sponsored students. It is important to note that there are two main types of forgiveness i.e. Federal & private student loan or debt forgiveness. Federal forgiveness of student loans is more common of the two because of obvious reasons i.e. government sponsored students need more financial help compared to privately sponsored students.

Individuals/graduates who benefit from federal loan forgiveness must have made regular federal student loan payments for at least of 20 years. According to recent legislation changes, such individuals do not need to pay their remaining federal student loan debt. It is important to note that the main beneficiaries of federal loan/debt forgiveness programs include individuals in certain career paths that have contributed/offered service to the public. This type of loan or debt forgiveness partly aims at recognizing the service of such individuals to the public.

For instance, public school teachers, public hospital nurses, members of armed forces among other professionals are among the individuals who easily qualify for forgiveness programs for their federal student loans. These programs include; student loan forgiveness for nurses, student loan forgiveness for teachers etc. Students with private loans can also easily qualify for private loan/debt forgiveness if they are working in the above professions.

Getting loan forgiveness

Qualifying is easy if you meet the preset qualifications. If you are currently employed and you meet the requirements mentioned above, you should inquire from your employer if you are eligible for any kind of loan repayment or forgiveness program for your student loan.

Some private employers offer repayment programs that are aimed at assisting employees to pay off their student debt by matching contributions. Other employers may help their employees cover student debt and tuition for graduate programs provided that the student (employees) returns to work for their companies once they have finished studying.

Obama student loan forgiveness

This simply refers to the debt forgiveness plan for individuals with student loans that was introduced by Obama earlier in his presidency. According to the loan act on forgiveness, student loan borrowers can only pay a maximum of 10% of their income as their monthly loan repayment regardless of the amount of money one earns.The Obama plan has provisions i.e. offering forgiveness for 10 years in case of economic hardship.

The Obama forgiveness loan program for student loan borrowers is intended to benefit individuals who are unable to finish repaying their student loans. The program also benefits individuals who have already finished paying a significant portion of their student loan i.e. individuals who have repaid their loans consistently for 10 or more years.

The program automatically clears all remaining student loan debt for individuals who have made regular federal student loan payments for 20 or more years. The program also caps the interest rates on federal student loans which helps in lowering repayments thus increasing affordability.

loan forgiveness

Loans eligible for Obama loan/debt forgiveness

Currently, only federal loans i.e. Stafford and Perkins loans qualify for the Obama forgiveness program for loans. Private student loan programs are not eligible for the program. Individuals with private student debt/loans can benefit from other programs offered by many private employers.

As mentioned above, it is possible to find private employers willing to pay your student loan debt under certain circumstances i.e. you agree to sign a working agreement. Although this mostly applies to employers in specialized fields i.e. healthcare, different employers have different policies on forgiveness of loans for student loan borrowers.

Borrowers covered under the Obama loan forgiveness program

The Obama program covers federal borrowers who have direct federal loans as well as guaranteed federal loans. Such borrowers can lower their total payment costs by consolidating their monthly payments to bringing them down. All loans enjoy further discounts if borrowers agree to enroll in automatic payments.

Federal Student Loan Forgiveness

There are very many students who can’t afford to pay for college tuition fees as well as living expense fees without help. Such students facing financial difficulty can get financial support in the form of loans which can either be private or federal loans.

In cases where students with financial difficulties take out federal student loans, they can qualify for forgiveness of their loans in case they encounter challenges with their student loan repayments.

The federal government through programs such as the Federal student forgiveness program offers loan cancellation of the entire or part of the outstanding student loan for individuals with federal student loans. Such individuals must however meet certain conditions to qualify for forgiveness i.e. meet repayments for a minimum of 20 years as mentioned above.

Federal Loan Forgiveness Programs

There are many organizations offering forgiveness for Federal student loan borrowers. Such organizations include AmeriCorps, VISTA and Peace Corps. Students who have association with such organizations i.e. students who do volunteer work for these organizations can benefit from forgiveness programs.

The forgiven loan amount varies depending on the organization. The amount many also vary depending on the terms and conditions. For instance, different volunteer work may be governed by different terms and conditions which may in turn affect the forgiveness amount.

In most cases, students who join the armed forces among other public service divisions benefit the most from loans forgiveness. Such organizations have programs in place that help students cover the costs incurred in college i.e. college tuition and accommodation fees. Apart from members of the armed forces, students who become employed as public school teachers also enjoy the benefits of federal forgiveness of student loans.

You don’t have to be a public school teacher, a public healthcare worker among other public service positions to enjoy federal forgiveness of loans. There are many other ways of applying for financial assistance. For instance, you can enroll for various law enforcement programs to enjoy federal loan forgiveness.

There are certain states that offer forgiveness to individuals with federal loans working for state governments through applicable programs. There are also many federal organizations offering forgiveness programs for students as well. For instance, it is possible to get forgiveness for your federal student loan if you decide to work in a non-profit or public interest positions as a lawyer. Many law schools pay student loans for students who decide to handle cases in the interest of the public for free.

Application for Federal loans forgiveness

To be able to benefit from federal student loans forgiveness, one must fulfill certain conditions. It is important to note that most of these conditions depend on the institution offering federal student debt forgiveness. Some of the most common conditions include; doing volunteer work, performing military service, teaching in public schools, practicing medicine etc.

If or conditions such as; teaching in public schools, you don’t have to become a permanent public school teacher. You can volunteer to teach certain subjects for a given time period in a public school to increase your chances of qualifying for federal student debt forgiveness. To apply for forgiveness of student debt/loans this way, you must contact the education department in your local residence/state.

Benefits of Federal student forgiveness

The benefits of forgiveness for your federal student loan are obvious. First and foremost, your federal student loan debt gets paid for in full if you have consistently been meeting your monthly repayments. You also get to enjoy lower repayment rates on your federal student loan if you are employed by the government and you are not earning above average monthly pay.

Another benefit is that; you get to enjoy a complete right off or lower repayments on your federal student loan debt through volunteer programs initiated by the government or other institutions.

Peace of mind

Peace of mind


From the above, it is clear that these programs are necessary and beneficial to individuals with both federal and private loans for students. According to recent statistics, the rate of student loan default has increased beyond the rate of credit card debt default. It is therefore important for programs/plans such as loan forgiveness to exist to help individuals struggling with student loan debt come out of debt.

Student debt defaulting can have very severe consequences on an individual’s credit rating and overall credit health in the future. Student loan default must therefore be avoided by seeking other suitable alternatives i.e. seeking forgiveness for your student debt or loan.


  1. This is a timely post. I was just reading some related information in the Wall Street Journal a few days ago, but it was not quite as indepth as what is provided here.

  2. I didn’t even know that student loans could be forgiven. On the flip side of things, I don’t have any student loans. Thanks for the great info! I’ll definitely pass it along to some friends that are struggling!

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