You are not alone if you are having difficulty making student loan payments. Higher education can be prohibitively expensive, and many American students graduate with substantial debt. Federal loans have a variety of repayment plans designed to make payments more affordable – many of which are income-based. Loan forgiveness is an even better option. While strict requirements must be met, if you qualify for a loan forgiveness programme, you may not have to repay some – or even any – of your student loans.
Method 1: Making a Public Service Commitment
1. Consolidate your debts by converting them to Direct Loans. The public service loan forgiveness programme (PSLF) only applies to Direct Loans or Direct Consolidation loans that you had when you started working for the government. If you’re thinking about applying for this programme, make sure that as many of your student loans as possible are Direct Loans.
The federal government is the lender in the case of Direct Loans. If you have loans from Sallie Mae, Navient, or another lender, you must first transfer them to the Department of Education (DOE) as Direct Loans.
Studentloans.gov has an application for a Direct Consolidation Loan. Fill out the form and submit it online. You can also print it and mail it in if you prefer.
The PSLF cannot be used to repay Perkins or Parent PLUS loans. You may, however, be able to consolidate some of these loans into a Direct Consolidation Loan, making them eligible for forgiveness.
2. Serve in a full-time position with a government agency. People who work for a public service agency or organisation for at least ten years are eligible for loan forgiveness under the PSLF. Teaching, social work, disability assistance, emergency management, and military service are all examples of public service careers.  If you work full-time for a government agency or a 501(c)(3) nonprofit, you are likely eligible for the PSLF programme.
Other employers, such as emergency management, law enforcement, public libraries, public health, or public education, may be eligible if their primary purpose is public service.
If you’re unsure whether your employer qualifies, visit https://studentaid.ed.gov/sa/sites/default/files/public-service-employment-certification-form.pdf. Fill out Section 3, which asks a few simple questions to see if your company is eligible for the programme.
3. Maintain consistent student loan payments while working. To be eligible for this programme, you must make at least 120 regular monthly payments on your student loans. The federal government will forgive the balance of your Direct Loans after 120 monthly payments.
The PSLF programme employs income-based repayment plans. If you sign up for one of these plans, your monthly payments will be lower and possibly even zero.
In some cases, an income-driven repayment plan may result in a $0 monthly payment. Those months are still counted toward the total of 120 months required to qualify for forgiveness.
4. Each year, fill out and return a PSLF Employment Certification Form. Fill out the first three sections of this form. Then deliver the form to your boss. They will verify the accuracy of the information you provided.
A PSLF Employment Certification Form can be downloaded at https://studentaid.ed.gov/sa/sites/default/files/public-service-employment-certification-form.pdf.
Sign and mail your form to the US Department of Education, FedLoan Servicing, P.O. Box 69184, Harrisburg, PA 17106-9184. This address is also printed on the form.
5. Keep records of your employment for a period of 120 months. To be eligible for student loan forgiveness, you must work full-time for 10 years, or 120 months, at a qualified public service agency or organisation. Pay stubs confirm the number of hours and duration of your work.
The 120 months of work do not have to be consecutive. For example, you could work for a government agency for three years, then for a private corporation for two years, and then for a different government agency for seven years. If you made regular student loan payments for the entire ten years, you would still be eligible for student loan forgiveness.
The PSLF programme began in 2007. You cannot count any time you worked for a government agency or organisation prior to 2007 toward your 120-month requirement.
6. Submit a PSLF Forgiveness Application. You may be eligible to have the balance of your federal student loans forgiven if you have made 120 months of payments. Complete the application and submit it to your employer for certification.
The application form can be found at https://studentaid.ed.gov/sa/sites/default/files/public-service-application-for-forgiveness.pdf.
When you have completed your application, sign it and mail it to the US Department of Education, FedLoan Servicing, P.O. Box 69184, Harrisburg, PA 17106-9184.
7. Wait for a PSLF servicer to respond. When your application has been received, you will be notified. If your application is complete and doesn’t require much follow-up, you should hear back within a few months.
You are not required to make loan payments while you are awaiting a response from the PSLF servicer. If you do, make sure you check the box in Section 2 of the application form.
If your application is accepted, the loan balance plus interest accrued since the date of your first qualifying payment will be forgiven.
If your application is denied, there is no way to appeal. However, you will receive a notification outlining the reasons for the denial. If your application was denied in error, you may reapply with updated information. Otherwise, you must resume loan payments.
Method 2: Instruction in a Public School
1. Comply with the fundamental eligibility requirements. You must be a “highly qualified” teacher to be eligible for the maximum benefits under the Teacher Loan Forgiveness Program. In most cases, this means you have at least a bachelor’s degree and full state certification or licensure.
To be considered “highly qualified,” you must also pass a rigorous academic subject test in the subjects you teach if you are new to the profession.
If you are a teacher but are not deemed “highly qualified,” you may still be able to have some of your student loans forgiven. However, you can only be forgiven up to $5,000.
Highly qualified special education teachers, as well as secondary level math and science teachers, are eligible for loan and interest forgiveness of up to $17,500.
2. Teach at a qualifying school for 5 years in a row. Qualified schools are generally elementary schools, secondary schools, or other educational service providers that serve low-income students. You are not required to attend the same school for all five years. However, all of the schools where you teach must be qualified, and there must be no gaps in your employment.
The directory of qualifying schools can be found at https://studentloans.gov/myDirectLoan/tcli.action.
Additional forgiveness options: If you are a teacher, you may be able to have your student loans forgiven through the PSLF programme. You cannot, however, use the same period of service. To receive the full benefit of both programmes, you must teach at a qualifying school for 15 years, at least 5 of which must be consecutive.
3. Make monthly payments on your student loans. You must make all monthly payments on time during your five years of teaching (within 15 days of the due date). Income-driven repayment plans, in conjunction with the Teacher Loan Forgiveness Program, can be used to reduce your monthly payments.
If you’re on an income-driven repayment plan, even if your payment is zero, it still counts toward your required monthly payments.
4. After 5 years, submit your Teacher Loan Forgiveness Application. Download an application and fill out the borrower sections once you’ve completed 5 years of teaching at a qualified school. The application should then be presented to your chief administrative officer, who will review it and certify the information.
The application can be found at https://ifap.ed.gov/dpcletters/attachments/GEN1419AttachTeacherLoanForgivenessApp.pdf. Your loan servicer’s website may also have application forms.
5. Fill out and return your Teacher Loan Forgiveness Application to your loan servicer. Unless you’ve consolidated your loans with the federal government through the Direct Consolidation Loan programme, your application is routed to the company where you make your monthly student loan payments. For more information on where to send your form, visit your loan servicer’s website or call their customer service number.
After you submit your application, your loans will be placed in forbearance. Unless you notify your loan servicer, you will not be required to make any additional monthly payments on your student loans.
If you choose forbearance, interest will continue to accrue and be added to your principal. If your balance exceeds the amount that will be forgiven, contact your loan servicer and inform them that you wish to continue making payments.
Method 3: Making Use of an Income-Driven Repayment Plan
1. Choose the repayment plan that best fits your financial situation. The Department of Education (DOE) offers a variety of income-driven repayment plans. Your monthly payment with these plans is determined by your income and expenses. Each repayment plan is only available for certain loan types.
You must provide information about the size of your family and your income. The DOE bases its calculations on the average expenses for a family of your size in your area. Your payments are never more than 10-15% of your discretionary income (money not spent on bills such as housing, utilities, or food).
You can use the DOE’s Repayment Estimator to calculate your monthly payments with each of the plans and decide which one to use. To use it, go to https://studentloans.gov/myDirectLoan/repaymentEstimator.action.
2. Consolidate your loans to make payments easier. Income-driven repayment plans are only available for Direct Loans. You will make a single payment for all of your loans if you consolidate them with a Direct Consolidation Loan.
Some federal student loans, such as subsidised federal Stafford loans and PLUS loans made to parents, are only eligible for income-driven repayment if combined with other loans.
3. Submit a Request for an Income-Driven Repayment Plan. You can apply for financial aid online at the Federal Student Aid website. Personal information such as your permanent address and phone number are required by the application. You must also provide financial details, such as your adjusted gross income.
The DOE calculates your adjusted gross income by contacting the IRS. You will be able to self-certify your income if you have no income or did not file taxes.
The application must be completed entirely online in a single session. The majority of applicants can finish the application in 10 minutes or less.
4. Every year, you should update your income and family size. Every year, you must provide information about your family size and annual income to all income-driven repayment plans. Based on this information, your monthly payment will be recalculated.
For example, if you recently married, your spouse’s income would be included in your income.
Log in to your studentloans.gov account and complete your application to re-certify your income and family size.
5. Make monthly payments for a period of 20 or 25 years. In general, if you have undergraduate education loans, your repayment period is 20 years. If you have graduate or professional school loans, the repayment period is 25 years. Any remaining balance on your student loans under the income-driven repayment plan will be forgiven at the end of the repayment period.
Periods when your required monthly payment is $0 still count towards the total repayment period as regular, on-time payments.
If you have a relatively high income in comparison to your total debt, you may be able to pay off your loans before the end of the repayment period. If this occurs, you are not eligible for forgiveness.
Combine programmes to get the most out of them! If you work under the PSLF programme and have an income-driven repayment plan, you may be able to have the remaining balance and interest forgiven after ten years rather than twenty or twenty-five.
Creative Commons License