Under certain circumstances, the federal government will cancel the remaining balance on your student loan bill. To qualify, you must meet certain criteria:
Low-income School Teachers
If you initiated a FFEL or Direct Loan after Oct. 1, 1998 and worked as a teacher for five years or more in an elementary or secondary school where the majority of students are considered low-income, the federal government may be willing to erase up to $17,500 of your student loan debt, including subsidized or unsubsidized loans. Teacher debt forgiveness is not available for PLUS loans. Some specialty teachers are also eligible.
Public Service
Borrowers who work at certain public service jobs qualify for Direct Loan cancellation after ten years. Qualifying public service positions include emergency management, public health care facility nurses and nurse practitioners, police officers and firemen, military service people, social workers, librarians, and many other state or federal government jobs that focus on public service. Public service workers who work for ten years and make 120 payments are eligible under certain types of repayment plans. The Direct Loan must have been initiated after October 1, 2007 and the loan may not be in default.
Volunteer Work
Some volunteer organizations, like Americorps, the Peace Corps, and Volunteers in Service to America (VISTA) offer loan forgiveness as part of the benefits package for volunteering.
Legal and Medical Students
Many law schools and medical schools will forgive debt to students who work on non-profit organizations. Terms vary, but in most cases, part of your loan will be canceled after working a specific length of time.
School-related Forgiveness
If the school you attended did not deliver as promised, you may be eligible for student loan forgiveness. Eligible criteria include the school closing before or immediately after your studies are finished, malfeasance, like forgery of your signature or other identity theft, or if the school withholds a refund after you withdraw.
If you are dissatisfied with the school or your education, don’t graduate, can’t find work, you still have to repay your student loans.
Bankruptcy, Disability, and Death
If you become permanently disabled or you die, your debt is canceled. You or your survivors must provide documentation of permanent disability or death, then the government will not expect your family to pay.
If you declare bankruptcy, in most cases you will still be obligated to pay your student loans. If you can prove that making the payments will cause financial hardship, you may be able to get student loans discharged in bankruptcy.
