If you borrowed student loans to pay for college or graduate school, you might have a long road of debt repayment ahead of you. But you could reach your destination much faster — and end up paying much less, or in some cases nothing at all — once you know how to get out of student loan debt with a loan forgiveness or discharge program.
Now just to be clear, you generally can’t “get out of” owing your debt completely, but forgiveness and discharge can excuse you from paying a sizable chunk of it. Many of these programs offer loan cancelation or assistance in exchange for qualifying employment or other eligibility requirements. Others may throw out your entire remaining student loan bill in special circumstances, for example, if your school closed.
If you’re struggling to pay back your student debt, read on to potentially find a program that fits your situation.
How to get out of student loan debt
From income-driven repayment plans to Public Service Loan Forgiveness, the government offers various ways to wipe away your college debt balance. Read on to learn about how to get out of student loan debt without paying the entire amount yourself.
1. Income-driven repayment plans
If you still have a balance at the end of 20 or 25 years on an income-driven repayment plan, it will be forgiven. And at the same time, these plans can decrease your monthly payment, as your regular bill will be capped at a percentage of your discretionary income.
Just keep in mind that stretching your payments over 20 to 25 years may actually end up costing you more in the long run due to interest. And any forgiven amount at the end of the repayment period might be considered taxable income, so you’ll likely have to pay one last bill before saying goodbye to your student loan debt for good.
2. Public Service Loan Forgiveness (PSLF)
If you work in public service for 10 years, you could be eligible for the Public Service Loan Forgiveness (PSLF) program.
To qualify, you must work for 10 years in public service for at least 30 hours per week. You must also must make at least 120 qualifying monthly payments under one of the income-driven repayment plans.
That said, the future of the PSLF program isn’t certain, and it could be phased out in the years to come. What’s more, some PSLF applicants have reported that their applications were denied for unclear reasons.
Although the PSLF program remains in effect for now, the road to getting loan forgiveness hasn’t been as easy as borrowers hoped. In fact, as of last September, more than 41,000 borrowers had applied for forgiveness, but just a tiny fraction — 206 — successfully had their loans discharged.
If it sounds like you might not qualify for PSLF, answer a few questions below so we can help point you towards other repayment options. Otherwise, scroll down to read on.
3. Perkins Loan Cancellation and Discharge
If you have a loan from the now-closed Perkins Loan program, you may be able to get out of paying back student debt if you volunteer in the Peace Corps or AmeriCorps Vista program, serve in the U.S. armed forces in a hostile area, or work in a variety of other professions including teaching, medicine, social service or law enforcement.
4. Teacher Loan Forgiveness
If you’ve been teaching full-time in a low-income school, you might be eligible for Teacher Loan Forgiveness. You could have up to 100% of a Perkins Loan forgiven and up to $17,500 of a Direct Loan or Stafford Loan forgiven.
5. Student loan repayment assistance
A sizeable number of states and universities — and even some employers — offer student loan repayment assistance programs (LRAPs) to qualifying borrowers. Many, though not all, of these LRAPs are designed for professionals in certain fields, such as doctors, pharmacists, veterinarians or teachers.
Often, LRAPs offer financial relief after only one to three years of service. Some universities also offer student loan assistance for qualifying alumni, typically in exchange for working at a non-profit in a high-need area for a few years. Check with your college or university for details about these types of programs.
Finally, certain companies offer a student loan benefit to their employees, matching a percentage of their payments each month. Depending on where you live and work, you could potentially qualify for assistance that will help you pay off your student debt.
6. Closed School Discharge
If your school closes before you can finish your program, then you might be eligible for a Closed School Discharge of your student loan debt. To qualify, you must either be enrolled when the school closes or have withdrawn from the school less than 120 days prior to its closing.
If you did have a chance to finish your program before the school closed, and all you need is the diploma or certificate, you are not eligible for this discharge.
7. False Certification of Student Eligibility or Unauthorized Payment Discharge
Did your school make false certifications about your eligibility for the loan, or sign your name on an application or promissory note without your permission? Did they endorse a loan check without your knowledge, then fail to give you the proceeds or put the payment toward your loan?
If you answered yes to any of these questions, find out more about how you may be able to get out of student loan debt through this option. You may be eligible for this discharge.
8. Unpaid Refund Discharge
If you withdraw, the school may owe a refund to the U.S. Department of Education or lender. If the school fails to provide this refund, you may be eligible for a discharge although it will only cover the unpaid refund amount.
9. Total and Permanent Disability Discharge (TPD)
Are you a veteran with a service-connected disability? Are you receiving Social Security Disability Insurance or Supplemental Security Income? Is a medical condition preventing you from engaging in any “substantial gainful activity” for the past 60 months or the next 60 months, or expected to result in death?
You may be eligible for Total and Permanent Disability Discharge. Be sure to check out how to get out of student loan debt through this program.
10. Death Discharge
It’s grim but true, and worth noting. If the borrower dies, the loan is discharged. The same is true of parents who have PLUS loans: If the parent or the student dies, the loan is discharged.
11. Discharge in Bankruptcy
It won’t be easy, but it is possible to have your student loans discharged with Chapter 7 or Chapter 13 bankruptcy. To be considered, you must initiate an adversary proceeding by filing a Complaint to Determine Dischargeability. It is then up to you to prove that paying back your student loans will cause you undue hardship.
That said, bankruptcy should always be a last resort. Exhaust every other option for paying back your debts first, student loans included.
How to avoid paying back student loans through forgiveness or discharge
If you’re struggling with student debt, it might be tempting to walk away from your loans without paying them back. But ignoring your debt will only make a tough situation worse, since going into default comes with a host of bad consequences that could hurt your finances for years to come.
Instead of ignoring your debt, learn legitimate ways for getting out of student debt without paying your entire balance yourself. Forgiveness programs could offer relief, as could student loan assistance offered by your state, university or employer.
And if you have special circumstances, such as a closed school or permanent disability, you may want to apply to certain programs to get your loan discharged. Make sure to read over the details of any forgiveness or discharge program to ensure you’re on track toward meeting all the criteria.
Even if you can’t qualify for any of these options, look for other ways to manage your student loans. For example, there are some relatively easy side hustles out there that can pull in some cash for extra payments to get rid of your debt faster and save money on interest. You can also look into student loan refinancing to see if you could snag a lower interest rate on your debt or trim your monthly payment amount. By researching your options, you could save yourself a good deal of money.
Rebecca Safier contributed to this report.
Interested in refinancing student loans?Here are the top 7 lenders of 2019!
|Lender||Variable APR||Eligible Degrees|
|Check out the testimonials and our in-depth reviews!
1 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.45% APR (with Auto Pay) to 6.99% APR (with Auto Pay). Variable rate loan rates range from 1.81% APR (with Auto Pay) to 6.49% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of November 6, 2019, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 11/06/2019. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at firstname.lastname@example.org, or call 888-601-2801 for more information on our student loan refinance product.
© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
2 Important Disclosures for SoFi.
3 Important Disclosures for Laurel Road.
Laurel Road Disclosures
Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. Mortgage lending is not offered in Puerto Rico. All loans are provided by KeyBank National Association.
ANNUAL PERCENTAGE RATE (“APR”)
There are no origination fees or prepayment penalties associated with the loan. Lender may assess a late fee if any part of a payment is not received within 15 days of the payment due date. Any late fee assessed shall not exceed 5% of the late payment or $28, whichever is less. A borrower may be charged $20 for any payment (including a check or an electronic payment) that is returned unpaid due to non-sufficient funds (NSF) or a closed account.
For bachelor’s degrees and higher, up to 100% of outstanding private and federal student loans (minimum $5,000) are eligible for refinancing. If you are refinancing greater than $300,000 in student loan debt, Lender may refinance the loans into 2 or more new loans.
ELIGIBILITY & ELIGIBLE LOANS
Borrower, and Co-signer if applicable, must be a U.S. Citizen or Permanent Resident with a valid I-551 card (which must show a minimum of 10 years between “Resident Since” date and “Card Expires” date or has no expiration date); state that they are of at least borrowing age in the state of residence at the time of application; and meet Lender underwriting criteria (including, for example, employment, debt-to-income, disposable income, and credit history requirements).
Graduates may refinance any unsubsidized or subsidized Federal or private student loan that was used exclusively for qualified higher education expenses (as defined in 26 USC Section 221) at an accredited U.S. undergraduate or graduate school. Any federal loans refinanced with Lender are private loans and do not have the same repayment options that federal loan program offers such as Income Based Repayment or Income Contingent Repayment.
All loans must be in grace or repayment status and cannot be in default. Borrower must have graduated or be enrolled in good standing in the final term preceding graduation from an accredited Title IV U.S. school and must be employed, or have an eligible offer of employment. Parents looking to refinance loans taken out on behalf of a child should refer to https://www.laurelroad.com/refinance-student-loans/refinance-parent-plus-loans/ for applicable terms and conditions.
For Associates Degrees: Only associates degrees earned in one of the following are eligible for refinancing: Cardiovascular Technologist (CVT); Dental Hygiene; Diagnostic Medical Sonography; EMT/Paramedics; Nuclear Technician; Nursing; Occupational Therapy Assistant; Pharmacy Technician; Physical Therapy Assistant; Radiation Therapy; Radiologic/MRI Technologist; Respiratory Therapy; or Surgical Technologist. To refinance an Associates degree, a borrower must also either be currently enrolled and in the final term of an associate degree program at a Title IV eligible school with an offer of employment in the same field in which they will receive an eligible associate degree OR have graduated from a school that is Title IV eligible with an eligible associate and have been employed, for a minimum of 12 months, in the same field of study of the associate degree earned.
The interest rate you are offered will depend on your credit profile, income, and total debt payments as well as your choice of fixed or variable and choice of term. For applicants who are currently medical or dental residents, your rate offer may also vary depending on whether you have secured employment for after residency.
The repayment of any refinanced student loan will commence (1) immediately after disbursement by us, or (2) after any grace or in-school deferment period, existing prior to refinancing and/or consolidation with us, has expired.
POSTPONING OR REDUCING PAYMENTS
After loan disbursement, if a borrower documents a qualifying economic hardship, we may agree in our discretion to allow for full or partial forbearance of payments for one or more 3-month time periods (not to exceed 12 months in the aggregate during the term of your loan), provided that we receive acceptable documentation (including updating documentation) of the nature and expected duration of the borrower’s economic hardship.
We may agree under certain circumstances to allow a borrower to make $100/month payments for a period of time immediately after loan disbursement if the borrower is employed full-time as an intern, resident, or similar postgraduate trainee at the time of loan disbursement. These payments may not be enough to cover all of the interest that accrues on the loan. Unpaid accrued interest will be added to your loan and monthly payments of principal and interest will begin when the post-graduate training program ends.
We may agree under certain circumstances to allow postponement (deferral) of monthly payments of principal and interest for a period of time immediately following loan disbursement (not to exceed 6 months after the borrower’s graduation with an eligible degree), if the borrower is an eligible student in the borrower’s final term at the time of loan disbursement or graduated less than 6 months before loan disbursement, and has accepted an offer of (or has already begun) full-time employment.
If Lender agrees (in its sole discretion) to postpone or reduce any monthly payment(s) for a period of time, interest on the loan will continue to accrue for each day principal is owed. Although the borrower might not be required to make payments during such a period, the borrower may continue to make payments during such a period. Making payments, or paying some of the interest, will reduce the total amount that will be required to be paid over the life of the loan. Interest not paid during any period when Lender has agreed to postpone or reduce any monthly payment will be added to the principal balance through capitalization (compounding) at the end of such a period, one month before the borrower is required to resume making regular monthly payments.
KEYBANK NATIONAL ASSOCIATION RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.
This information is current as of November 8, 2019 and is subject to change.
4 Important Disclosures for Splash Financial.
Splash Financial Disclosures
Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet applicable underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates are reserved for the highest qualified borrowers.
5 Important Disclosures for CommonBond.
Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown. All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 1.9299999999999997% effective October 10, 2019.
6 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments. The lowest advertised variable APR is only available for loan terms of 5 years and is reserved for applicants with FICO scores of at least 810.
As of 11/07/2019 student loan refinancing rates range from 1.90% to 8.65% Variable APR with AutoPay and 3.49% to 7.75% Fixed APR with AutoPay.
7 Important Disclosures for College Ave.
College Ave Disclosures
College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
1College Ave Refi Education loans are not currently available to residents of Maine.
2All rates shown include autopay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. Variable rates may increase after consummation.
3$5,000 is the minimum requirement to refinance. The maximum loan amount is $300,000 for those with medical, dental, pharmacy or veterinary doctorate degrees, and $150,000 for all other undergraduate or graduate degrees.
4This informational repayment example uses typical loan terms for a refi borrower with a Full Principal & Interest Repayment and a 10-year repayment term, has a $40,000 loan and a 5.5% Annual Percentage Rate (“APR”): 120 monthly payments of $434.11 while in the repayment period, for a total amount of payments of $52,092.61. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.
Information advertised valid as of 09/23/2019. Variable interest rates may increase after consummation.
|1.81% – 6.49%1||Undergrad & Graduate|
|2.31% – 7.36%2||Undergrad & Graduate|
|1.99% – 6.65%3||Undergrad & Graduate|
|2.43% – 7.60%4||Undergrad & Graduate|
|2.02% – 6.30%5||Undergrad & Graduate|
|1.90% – 8.65%6||Undergrad & Graduate|
|2.74% – 6.24%7||Undergrad & Graduate|