11 Conditions Where You Don't Have to Repay Federal Student Loans

Know Your Options When It Is Time to Repay Student Loans

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Trying to pay for college can be a delicate balancing act. You want to maximize the amount of financial aid and minimize the amount of student loans you use to cover your costs.

When used wisely, student loans can provide a tremendous boost to your financial outlook. After graduation, when these loans become due, some graduates have a difficult time securing a job that pays enough to cover their student loan payments. This can put a strain on their budget and their long-term credit outlook.

Note

To provide student loan borrowers economic relief during the Covid pandemic, payments on federal student loans owned by the U.S. Department of Education have been suspended several times, with the latest suspension extending the relief through Dec. 31, 2022.

Fortunately, in some circumstances, you don't have to repay your federal student loans, either for a specified time or permanently. Here are 11 possibilities that might apply to your financial situation.

Note

On Aug. 24, 2022, President Joe Biden announced via Twitter the cancellation of $10,000 of federal student loan debt for eligible borrowers, and $20,000 for federal Pell Grant recipients. Biden also extended the pause on payments and interest on federal student loans to Dec. 31, 2022.

1. Income-Driven Repayment Forgiveness

Under income-driven repayment plans, loans are forgiven if you pay a certain percentage of your monthly income (up to 10%) each month for 20 or 25 years. Under a new type of plan proposed by the Biden administration, that amount of time would be cut in half for certain borrowers.

Note

On Aug. 24, 2022, President Joe Biden’s administration proposed a new plan for federal student loan repayment for undergraduate loans. The plan would cap monthly payments at 5% of your monthly income. After 10 years, whatever remaining balance you have would be eliminated if the original loan balance was $12,000 or less.

2. Loan Deferment

A deferment is a period during which repayment of the principal and interest of your loan is temporarily delayed. Although interest does continue to accrue, the federal government may pay the interest depending on the type of loan you have. You may be eligible for a deferment if you:

  • Are being treated for cancer
  • Are experiencing an economic hardship
  • Are attending graduate school
  • Are enrolled at an eligible school at least half-time
  • Join the Peace Corps
  • Serve in the military
  • Are unemployed

3. Loan Forbearance

You may be able to stop making payments or reduce your monthly payment for up to 12 months; however, interest will continue to accrue on both your subsidized and unsubsidized loans. You may qualify for a forbearance due to:

  • Financial hardship
  • Participation in a medical or dental internship or residency
  • Enrollment in certain public service programs
  • Excessive student loan burden (20% or more of your total monthly gross income)

4. Closed School Loan Discharge

You may be eligible for a discharge of your federal student loan if your school closes while you’re enrolled or soon after you withdraw. Your school had to close while you were enrolled, while you were on leave, or within 120 or 180 days of your withdrawal, depending on when your loans were disbursed.

5. Public Service

You may be able to receive loan forgiveness under the Public Service Loan Forgiveness (PSLF) program if you are employed full-time by a government or not-for-profit organization. This program forgives the remaining balance on your Federal Direct Student Loans after making 120 qualifying monthly payments under a qualifying repayment plan.

The Federal Student Aid website recommends that you submit a public service loan forgiveness certification and application form each year or when you change employers to make sure your payments are being counted toward your eligibility.

If you think you may be eligible for one of these options, contact your loan servicer to determine the steps you need to take. Keep in mind that these options officially apply only to federal student loans. If you have a private student loan, check with your loan servicer to determine if they have similar programs available.

PSLF Expanded Eligibility

On October 6, 2021, the Department of Education announced expanded eligibility for the PSLF program. Those with loans made from the Federal Family Education Loan (FFEL) Program and/or Perkins Loan Program previously did not qualify for forgiveness. New eligibility rules will provide a waiver for these borrowers.

The new rules also waive restrictions on the type of repayment plan and the requirement that payments were made in the full amount and on time. Those who made more than 120 qualifying payments may have those additional payments refunded.

For military service members and federal employees, the program will automatically provide credit toward PSLF using federal data matches. It will also review past denied PSLF applications. This will give borrowers the opportunity to have their PSLF determinations reconsidered in light of the new changes.

Get more information on the PSLF waiver.

6. Teacher Loan Forgiveness

If you teach full-time for five complete and consecutive academic years in certain elementary and secondary schools or educational service agencies that serve low-income families and meet other qualifications, you may be eligible for forgiveness. This forgiveness could be up to a combined total of $17,500 on your federal Direct Subsidized and Unsubsidized Loans and your Subsidized and Unsubsidized Federal Stafford Loans.

Note

All forgiven student loan debt will be tax-free through the end of 2025 thanks to the American Rescue Plan Act of 2021.

7. Other Cancellation for Teachers

You might be eligible for loan cancellation for full-time teaching at a low-income school or for teaching in certain subject areas. If you qualify, you can have 15% of your loan canceled per year during your first and second years, 20% canceled per year during your third and fourth years, and 30% canceled your fifth year of teaching. You can also qualify for deferment through these qualifying teaching services.

8. State-Sponsored Student Loan Forgiveness Programs

Many states offer loan forgiveness programs for teachers, especially if you teach in a high-need area. The American Federation of Teachers has a searchable database you can use to find state and local forgiveness programs for which you might qualify.

9. Disability

Certain physical and mental impairments can qualify you for a total and permanent disability discharge of your federal student loans. You need to provide documentation of your disability from the Department of Veterans Affairs, the Social Security Administration, or a physician.

10. Borrower Defense

Borrowers may be eligible for forgiveness of their federal student loans if a school misled them or engaged in other misconduct in violation of certain laws. This may apply to borrowers who attended Corinthian Colleges—Everest, Heald, and WyoTech. Under the current rules, you can apply for borrower defense even if your loans are in default. You have to prove that the school was deliberately deceptive and that you experienced financial harm.

11. Death

Federal student loans can be discharged if the borrower of a federal student loan dies. Private student loans may not offer the same protection.

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Sources
The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. Twitter. “@POTUS, Aug. 24, 2022 at 11:32 a.m.

  2. Department of Education. “Biden-Harris Administration Announces Final Student Loan Pause Extension Through December 31 and Targeted Debt Cancellation To Smooth Transition to Repayment.”

  3. Federal Student Aid. "Student Loan Deferment Allows You to Temporarily Stop Making Payments."

  4. Federal Student Aid. "Student Loan Forbearance Allows You to Temporarily Stop Making Payments."

  5. Federal Student Aid. "Closed School Discharge."

  6. Federal Student Aid. "Public Service Loan Forgiveness (PSLF)."

  7. Federal Student Aid. "Public Service Loan Forgiveness Limited Waiver Opportunity."

  8. U.S. Department of Education. "U.S. Department of Education Announces Transformational Changes to the Public Service Loan Forgiveness Program, Will Put Over 550,000 Public Service Workers Closer to Loan Forgiveness."

  9. Federal Student Aid. "Wondering Whether You Can Get Your Federal Student Loans Forgiven for Your Service as a Teacher?"

  10. Congress.gov. "The American Rescue Plan Act of 2021," Page 182.

  11. Federal Student Aid. "You May Be Eligible to Have All or a Portion of Your Federal Perkins Loan Canceled (Based on Your Employment or Volunteer Service) or Discharged (Under Certain Conditions)."

  12. Federal Student Aid. "If You’re Totally and Permanently Disabled, You May Qualify for a Discharge of Your Federal Student Loans and/or Teacher Education Assistance for College and Higher Education (TEACH) Grant Service Obligation."

  13. Federal Student Aid. "Borrower Defense."

  14. Federal Student Aid. "If Your Loan Servicer Receives Acceptable Documentation of Your Death, Your Federal Student Loans Will Be Discharged."

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