The Department of Education offers a variety of loan forgiveness programs that eligible borrowers may apply for. These programs may change and update often, so it is best to review studentaid.gov for the most up-to-date information regarding loan forgiveness programs.
What federal loan forgiveness programs are currently being offered?
- Public Student Loan Forgiveness (PSLF) – for borrowers who work in public service in federal, state, tribal, or local government, or for a nonprofit organization.
- Teacher Loan Forgiveness – for full time teachers who have taught for five complete and consecutive academic years in a low-income school or educational service agency.
- Total and Permanent Disability Discharge – for borrowers who qualify with supporting documentation; applies to federal loan programs only.
What are my options for federal loan repayment?
- Loan Simulator – is a great resource for you to enter your loan information to decide which repayment option would be best for you!
- Federal Loan Repayment Options:
- Standard
- Graduated
- Extended
- SAVE (formerly REPAYE)
- PAYE
- Income Based Repayment
- Income Contingent Repayment
- Income Sensitive Repayment
What happens if I can’t make my loan payments?
- Contact your federal loan servicer! They do not know about your updated circumstances and are there to help. If you are unsure of who your loan servicer is, you can find this information by logging into your gov account and reviewing your dashboard information or by calling the Federal Student Aid Information Center at 1-800-433-3243.
- Your federal loan servicer can talk with you about your options including deferment and forbearance options which can temporarily suspend your federal student loan payments as well as discuss other repayment options that may better suit your financial situation.
- Deferment vs Forbearance
- Deferment: Interest does not accrue on some types of federal student loans
- Forbearance: Interest accrues on all types of federal student loans
- Do not just stop paying on your federal student loans as this can have consequences including but not limited to:
- Reducing your credit score by showing missed payments
- Impacting future borrowing ability (including when you go to buy a car or a house, apply for a credit card, utilities, insurance, renting an apartment, etc ); if approved, you will likely have a higher interest rate due to your lower credit score.
- Federal government can garnish your wages, tax refunds, and other government payments
- Delinquency vs Default
- Delinquency: When your federal student loan payment is not paid in full on the day that it is due
- After 90 days your federal loan servicer will report your delinquency to the three major national credit bureaus (“consumer reporting agencies”).
- You are at risk of going into default which has additional consequences, see below.
- Default: When your federal student loan payment has not been made for more than 270 days under the Federal Direct Loan Program and do not have an approved deferment or forbearance through your federal loan servicer.
- Entire loan balance plus interest will become due immediately
- No longer eligible for deferment or forbearance options
- No longer eligible to choose a repayment plan
- Can not borrow any additional federal student loans
- Tax refunds and federal benefit payments can be withheld
- Wages can be garnished
- May have to go to court and then pay court costs.
- Delinquency: When your federal student loan payment is not paid in full on the day that it is due