Professional Education and Career Blog

Student Loan Forgiveness: Ways to Discharge Your Debt

Diploma on Money PileStudent loans may have been your ticket to getting a degree, but after the fact, you may realize that they weren’t quite the great deal they seemed at the time. Many people naively enter into student loan agreements that end up being a huge financial burden that could follow you for decades, unless you pay them off. But for some lucky folks, you may qualify for student loan forgiveness. Yes, in certain circumstances, all or part of a student loan can be canceled out.

What is Student Loan Forgiveness?

Some students find themselves with a huge debt that seems insurmountable to pay back, and unlike other types of loans, they can’t be discharged through bankruptcy. Student loan forgiveness is the process of having some or all of your debt forgiven, that is, it’s either paid from some other party or the original creditor reduces the balance owed. One significant advantage of student loan forgiveness is that the amount forgiven is not considered as taxable income, so you don’t end up with a big tax bill.

Here are some criteria that may qualify you to have your loan debts forgiven.

Volunteer Work

There are a number of volunteer work programs that will grant you money toward your student loans. This can be a great option for people looking for volunteering opportunities anyway, and they can reduce some of their debt work, to boot!

  • AmeriCorps: This organization has more than 75,000 volunteers doing service at nonprofits, schools, public agencies, and community and faith-based groups across the country. If you service for 12 months, they offer a grant of $4,725 that may be used against your student loan debt.
  • Volunteers in Service to America (VISTA). Related to AmeriCorps, VISTA targets the 46 million Americans that live in poverty, and works to lift them into better circumstances. If you volunteer for 1,700 hours, you can receive $4,725 towards your college debt.
  • Peace Corps. The Peace Corps is a well-known organization that promotes international world peace and friendship, across a wide variety of community service. Serving with the Peace Corps earns you an automatic deferment of Stafford, Perkins or Consolidation loans. Depending on your length of service, you can have part of Perkins Loans forgiven – 15% of the loan balance per year, up to a maximum of 70%.

Provide Child Care Services

If you can provide child care in an eligible facility that services a low-income community, you may qualify to have some or all of your undergraduate FFEL Program or Stafford Loan be forgiven. For more information, look into the Child Care Provider Loan Forgiveness Program.

Military Members

Each branch of the armed forces has a loan forgiveness program. More significant positions typically offer higher amounts of debt forgiveness. Contact armed forces recruiters for more information on these programs.

Working for a Non-Profit Organization

If you borrowed from the federal Direct Loan Program, you can qualify for Public Service Loan Forgiveness by working for some non-profit 501(c)(3) organizations. For more information on this program, see Public Service Loan Forgiveness Program from the Department of Education.

Flying MoneyTeaching in a School That Services Low-Income Students

Full-time teachers can qualify for complete cancellation of Perkins loans, and up to $17,550 for qualify Stafford loans. The most significant requirement is that the teaching occurs in underserved communities with low-income students. Here are some links to information about the programs:

Specialized Loan Forgiveness Programs

If you have completed a degree program in a particularly high-demand occupation (for example, medical care such as nursing), do a web search for loan forgiveness programs for your particular specialty. There are many Federal and State programs that target certain occupations, and they are changing all the time.