How Can I Get My Student Loans Forgiven?


In our Ask an Advisor series, members of Grow’s Financial Advisor Panel answer your money questions. Today, CFP Shannah Compton Game tells us what it takes to get your student loans forgiven.

Q: I graduated from college several years ago, and still have a lot of student debt left to pay off. Am I eligible to get any of my loans forgiven?

Many people with big student loan bills wonder the same thing. Who wouldn’t love for a chunk of debt to disappear one day?

The future of student loan forgiveness is anyone’s guess right now: If approved, Education Secretary Betsy DeVos’s proposed budget would eventually eliminate the Public Service Loan Forgiveness (PSLF) program. We’ve also yet to see what happens when the first batch of eligible loans through PSLF, which were issued in October 2007, make it to the forgiveness stage. We’ll know more in October about the program’s successes and any issues.

But for now, there are several ways to qualify for student loan forgiveness.

Through the Public Service Loan Forgiveness program, full-time government employees, some nonprofit workers and those serving in AmeriCorps or the Peace Corps are eligible to have their Direct Loans forgiven after making 120 “qualifying” payments—that’s 10 year’s worth—under the following repayment plans: Income-Based Repayment (IBR), Pay As You Earn Repayment (PAYE), Revised Pay As You Earn Repayment (REPAYE), Income-Contingent (ICR) or Standard Repayment. You can get more info on all of them through the government’s student aid repayment plan guide.

You’ll also need to complete an Employment Certification form each year and anytime you switch jobs. Miss just one step here, and you’ll lose your eligibility.

There are also federal and state-specific forgiveness programs for teachers, doctors, nurses and lawyers. Each come with their own set of rules and restrictions, so make sure to do your homework.

Don’t qualify for any of the above? You can still get your loans forgiven if you’re on any of the income-driven repayment plans—though it’ll take 20 to 25 years. Since these plans cap your monthly payments at a small percentage of your income, this benefits those who have hefty balances and work in low-paying jobs. The catch? Currently, forgiven amounts can be taxed as ordinary income—which may result in a big tax bill down the road. Still, for many, a big tax bill is much more manageable than spending years continuing to pay off the loan balance.

Grow Financial Advisor Panel participants are responsible for the content expressed and do not necessarily represent the views or opinions of Acorns Grow, Inc., Acorns Securities, LLC or Acorns Advisers, LLC. Content is provided on an informational basis and should not be construed as investment advice. Individual circumstances will vary. Please consult a financial advisor before acting on any opinions expressed. Participation in the panel is voluntary. Editing of advisor responses is for brevity and clarity; no editorial privilege is exercised.