Loan Forgiveness Program
Under certain circumstances, the federal government will cancel all or part of an educational loan. This practice is called Loan Forgiveness. To qualify, students must:
- Perform volunteer work;
- Perform military service;
- Teach or practice medicine in certain types of communities; or
- Meet other criteria specified by the forgiveness program.
Some, but not all, loan forgiveness is excluded from income. See Taxability of Student Loan Forgiveness for additional details.
Volunteer Work
These volunteer organizations offer loan forgiveness:
- AmeriCorps. Volunteers serve for 12 months and receive up to $7,400 in stipends plus $4,725 to be used toward their loan. Call 800-942-2677.
- Peace Corps. Volunteers may apply for deferment of Federal Stafford Loans, Federal Perkins Loans and consolidation loans and partial cancellation of Federal Perkins Loans (15 percent for each year of service, up to 70 percent in total). Volunteers make a real difference in the lives of real people with two years of service in more than 70 developing countries. Contact the Peace Corps at 1111 20th St., NW, Washington, DC 20526 or call 800-424-8580 or 202-692-1845.
- Volunteers in Service to America (VISTA). Private, nonprofit groups help eradicate hunger, homelessness, poverty and illiteracy. Volunteers receive $4,725 for 1,700 hours of service. Call 800-942-2677 or 202-606-5000.
Military
Students who are in the Army National Guard may be eligible for the military’s Student Loan Repayment Program, which offers up to $10,000. (Note, the military and veterans' associations provide many scholarships and tuition assistance programs. See the section on Military Aid for details.)
National Defense Education Act for Teachers
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 Federal Perkins Loan forgiven under the National Defense Education Act. This program forgives 15 percent of a loan for the first and second years of teaching service, 20 percent for the third and fourth, and 30 percent for the fifth. Contact the school district's administration office to see which schools are eligible.
The American Federation of Teachers maintains a list of other loan forgiveness programs for teachers.
Click here for more information.
Federal Government Loan Forgiveness Programs
Federal Perkins Loans and Federal Stafford Loans can be cancelled for the following full-time occupations: teacher in a designated elementary or secondary school serving students from low-income families; special education teacher (includes teaching children with disabilities in a public or other nonprofit elementary or secondary school); qualified professional provider of early intervention services for the disabled; teacher of math, science, foreign languages, bilingual education, or other fields designated as teacher shortage areas; employee of a public or nonprofit child or family service agency providing services to high-risk children and their families from low-income communities; nurse or medical technician; law enforcement or corrections officer; staff member in the educational component of a Head Start Program; VISTA or Peace Corps volunteer; and service in the Armed Forces (up to 50 percent in areas of hostilities or imminent danger).
See also the U.S. Department of Education's pages on Cancellation/Deferment Options for Teachers and Cancellation for Childcare Providers, as well as the Teacher Loan Forgiveness Form.
The U.S. Department of Education maintains a database of low-income schools eligible for teacher loan cancellation for the Federal Perkins Loan and Federal Stafford Loans.
Secondary school math and science teachers, and elementary/secondary school special education teachers who commit to working in high-need schools for five years can obtain up to $17,500 in Federal Stafford Loans forgiveness. They must teach full time for five consecutive years in a qualifying low-income school and be designated as "highly qualified." (The Taxpayer-Teacher Protection Act of 2004, HR 5186, increased the amount of forgiveness from $5,000 to $17,500 on October 30, 2004.)
Assumption Program of Loans for Education
K-12 teacher candidates may apply for the Assumption Program of Loans for Education (APLE) in return for teaching service. To receive loan-assumption benefits, applicants must teach in a California K-12 public school in a designated subject shortage area, a low-performing school or in a school serving a high proportion of low-income students for a designated number of years. Applications are available at the School of Education Office or online at www.csac.ca.gov
Public Service Loan Forgiveness
The College Cost Reduction and Access Act of 2007 established a new public service loan forgiveness program. This program discharges any remaining debt after 10 years of full-time employment in public service. The borrower must have made 120 payments as part of the Direct Loan program in order to obtain this benefit. Only payments made on or after October 1, 2007, count toward the required 120 monthly payments. (Borrowers were allowed to consolidate into Direct Lending in order to qualify for this loan forgiveness program starting July 1, 2008.)
