Federal programs that discharge, or cancel, your loans after a period of time fall into two categories: those based on your job and those based on your repayment plan. Follow these steps to learn what programs are out there, whether you’re eligible and how to take advantage of them.
Step 1: Explore forgiveness optionsThere are four primary ways to have your federal loans canceled or reduced. It’s important to remember that your loans can’t be in default — meaning they’ve gone unpaid for more than nine months — in order for them to qualify for forgiveness. Follow the links on each program’s name for more details.
Private student loans don’t offer forgiveness, though some lenders will let you make interest-only payments or take a temporary interest rate reduction if you’re having trouble affording your bill. Call your private lender to see what options are available to you.
- How it works: If you work full time for a nonprofit or the government for at least 10 years — qualifying workers include firefighters, teachers, military personnel and nurses, among others — your remaining federal loan balance will be forgiven. You’ll save the most money on PSLF if you repay your loans on an income-driven plan for those 10 years. The program started in 2007, so the first PSLF recipients will have their loans discharged in 2017.