Let me guess how you ended up here: You typed “Is student loan forgiveness legit?” into the search bar.
Perhaps you’ve heard rumors about some magical government program that makes your student loans disappear — and you’re wondering if it’s too good to be true.
Here’s what you need to know.
Is student loan forgiveness legit?
The short answer? Yes. The long answer? It’s complicated.
It’s possible to get your student loans forgiven, but the process is lengthy and applies only under certain circumstances. Also, only federal loans can be forgiven; forgiveness for private student loans doesn’t exist.
First off, if you want to seek forgiveness for your federal loans, you might have to sign up for an income-driven repayment plan.
With these plans (the first three on the list below), you’ll pay a certain percentage of your income toward your student loans.
But keep the following in mind: Although your monthly payments might be lower than they would be on the 10-year Standard Repayment Plan, the term of your loan (the length of time you’ll be paying it back) might be much longer.
Here are five legitimate programs that could help you get your loans forgiven.
1. Income-Based Repayment (IBR)
- Maximum monthly payment: 15 percent of discretionary income
- Loans forgiven: after 25 years of consistent payments
- Eligible loans: Direct, Direct PLUS, Direct Consolidation, Federal Stafford, FFEL PLUS, and FFEL Consolidation
2. Pay As You Earn (PAYE)
- Maximum monthly payment: 10 percent of discretionary income
- Loans forgiven: after 20 years of consistent payments
- Eligible loans: Direct Stafford, Direct Grad PLUS, Direct Consolidation
3. Public Service Loan Forgiveness (PSLF)
- Maximum monthly payment: 15 percent of discretionary income
- Loans forgiven: after 10 years of consistent payments while working in a qualifying public service job
- Eligible loans: Direct Subsidized Stafford/Direct, Direct Unsubsidized Stafford/Direct, Direct PLUS, Direct Consolidation
4. Total and Permanent Disability Discharge (TPD)
- Loans forgiven: upon proof of total and permanent disability
- Eligible loans: Direct, FFEL, Federal Perkins
5. Perkins Loan cancellation
- Loans forgiven: upon proof of employment in a qualifying service career
- Eligible loans: Federal Perkins
You also might be eligible for loan cancellation if you die or go bankrupt or if your school closes or made fraudulent claims. You can read more about these student loan discharge programs here.
Lastly, you’ll find other programs for particular professions — especially those in public service. Here are comprehensive student loan forgiveness guides for:
- Military and law enforcement
- Doctors, nurses, and physician assistants
- Dentists
- Professors and teachers
- Lawyers
- Pharmacists
- Veterinarians
- Accountants
- Psychologists
4 things you need to know about student loan forgiveness
Is student loan forgiveness legit? Yes, with some caveats.
1. Not everyone is eligible
To be eligible for IBR, PAYE, or PSLF, your payments must be lower than they would be under the Standard Repayment Plan.
In other words, they’re meant for people who have a low income compared to their debt load. Not sure that’s you? This post provides several scenarios to help you determine if you’re eligible for student loan forgiveness.
Or you can give our income-based repayment calculator a try.
2. Forgiveness takes a long time
Depending on which program you pursue, your student loans might not be forgiven for a long time (decades, even) — during which you’ll end up paying more interest than you would under the Standard Repayment Plan.
And remember: When it comes time to finally get your loans forgiven, your remaining balance might not be all that impressive.
3. Your remaining loans might be taxed
In the eyes of the Internal Revenue Service, a forgiven student loan is taxable income — unless your student loan debt is forgiven through PSLF or teacher forgiveness programs.
So, if you eventually have $50,000 worth of loans forgiven, you’re going to be on the hook for paying federal (and possibly state) taxes on that amount.
4. It’s not always worth it
As noted above, you might pay significantly more interest in the long run if you pursue forgiveness through an income-based repayment plan. Make sure you run your numbers through our free income-based repayment calculator to see exactly how much.
Plus, since many student loan forgiveness programs require you to work in public service, you’ll likely earn a lower salary than you could in the private sector.
Watch out for these student loan forgiveness scams
Although the programs above are legit, student loan forgiveness scams do exist.
For example, certain companies might charge you to fill out government forms for your student loans. Don’t let them! Complete all the paperwork yourself using the tools on the Federal Student Aid website.
Even worse, other companies might call you and pretend they can forgive your student loans for a fee. Don’t buy into it. You never have to pay a fee to participate in a student loan forgiveness program.
Click here for a full list of student loan scams and advice on how to seek help if you’re a victim.
How to seek student loan forgiveness
If you’re struggling to repay your loans and think forgiveness is the right path for you, read through the options above. Then, check out these comprehensive guides to forgiveness and PSLF.
If none of the programs apply to your situation, consider deferment or forbearance or refinancing your loans through a private lender.
Whatever you do, don’t ignore your loans. That’s the one way to make sure they never disappear.
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