Loan Forgiveness

Under certain conditions, you may have all or part of your Stafford and Perkins Loans forgiven or cancelled. You do not have to repay the amounts that are forgiven. It is important to note that the IRS considers debts that are forgiven as income, and you may have to pay income taxes on the amounts, depending upon your total income in the year the debts are forgiven. Loan amounts are often cancelled gradually, which minimizes the impact of taxes. Forgiveness programs are still very worthwhile. If the conditions for forgiveness fit into your future plans, you can reduce your student loan debt considerably.

Stafford Loans

Federal Teacher Loan Forgiveness Program

For the federal program, you must have borrowed your first Stafford Loan on or after October 1, 1998. You must teach full time for five consecutive school years and you must teach in a school that qualifies as serving an economically disadvantaged population. There are additional requirements. To find out more, see studentaid.ed.gov/PORTALSWebApp/students/english/teachercancel.jsp?tab=repaying.

After completion of the fifth year of teaching, up to $5,000 of your outstanding Stafford Loan balance, subsidized and unsubsidized, will be forgiven, or paid, by the federal government. Payments already made cannot be returned, so you may contact the holder or servicer of your Stafford Loans for a form to postpone or have a forbearance of your loan payments as necessary. Your Stafford Loans are eligible for this benefit even if they have been included in a Consolidation Loan.

Federal Perkins Loans

If you receive a Perkins Loan from your school, you may be eligible for several possible loan forgiveness opportunities for your Perkins Loans. Teaching is a possibility, as are providing services for the disabled, providing services to high-risk children and their families in low-income communities, full-time practice as a nurse or medical technician, service as a full-time law enforcement officer, and more.

For more details, see the promissory note for your Perkins Loan and The Student Guide, which is on this website. Listen carefully and ask questions when your school provides counseling sessions regarding your Perkins Loans.