Repayment Plan Based Student Loan Forgiveness
These student loan forgiveness plans are tied to your student loan repayment plan. If you’re on one of these qualifying repayment plans, you’ll be eligible for student loan forgiveness at the end of your repayment term.
It’s important to note that these income-driven repayment plan options due have some criteria that must be met to be eligible. If you have no remaining balance at the end of the loan term, you get no student loan forgiveness.
It’s also important to note that the student loan forgiveness on these plans is considered taxable income. Learn more about taxes and student loan forgiveness here.
You can apply for these repayment plans with student loan forgiveness by calling your lender or going online to StudentLoans.gov.
Income-Based Repayment (IBR)
The Income Based Repayment Plan (IBR) is one of the most common repayment plans borrowers switch to if they are having financial hardship. If you have loans from before July 1, 2014, you payment will not be higher than 15% of your discretionary income. On this plan, you will make payments for 25 years, and at that point, your loans will be forgiven.
If you are a borrower with loans after July 1, 2014, your loan will not exceed 10% of your discretionary income, and the loan will be forgiven after just 20 years.
Pay As You Earn (PAYE)
The Pay As You Earn Repayment Plan (PAYE) is very similar to the IBR Plan. With PAYE, you will not pay more than 10% of your discretionary income, and your loan will also be forgiven after 20 years.
The key difference is that only certain loans going back to 2007 qualify for this plan.
Revised Pay As You Earn (RePAYE)
RePAYE is a modified version of PAYE that has become available to borrowers after December 17, 2015. Unlike PAYE, which was available for loans taken out after 2007, RePAYE is open to all Direct Loan Borrowers, regardless of when the loan was taken out.
The repayment plan still caps your payment at 10% of your discretionary income, and the loan will be forgiven after 20 years.
You can learn more about RePAYE and the interest subsidy here.
Income Contingent Repayment (ICR)
The Income Contingent Repayment Plan (ICR) is a little different than IBR or PAYE. There are no initial income requirements for ICR, and any eligible buyer may make payments under this plan. Under this plan, your payments will be the lesser of the following:
- 20% of your discretionary income
- What you would pay on a repayment plan with a fixed payment over the course of 12 years, adjusted according to your income
With the ICR plan, your loans will be forgiven at the end of 25 years.
Career-Based Student Loan Forgiveness Options
Depending on what type of career path you choose, you could qualify for various different student loan forgiveness options.
The most popular option is Public Service Loan Forgiveness. The reason is that this plan offers the biggest amount of forgiveness in the shortest period of time – tax free. It’s also open to a lot of different jobs under the umbrella of “public service”.
However, it’s not the only career-based option.
Public Service Loan Forgiveness (PSLF)
Public Service Loan Forgiveness Program will grant student loan forgiveness on qualifying loans after 120 payments (10 years).
The great thing about public service is that the definition is very broad. Qualifying employment is any employment with a federal, state, or local government agency, entity, or organization or a not-for-profit organization that has been designated as tax-exempt by the Internal Revenue Service (IRS) under Section 501(c)(3) of the Internal Revenue Code (IRC). The type or nature of employment with the organization does not matter for PSLF purposes.
If you want step-by-step help filing for Public Service Loan Forgiveness, check out our short 15 minute course below: PSLF Training Program.
Or, check out our guide: The Ultimate Guide To Public Service Loan Forgiveness (PSLF).
Attorney Student Loan Forgiveness Program
This program is for attorneys who work for the U.S. Department of Justice. The Department anticipates selecting new attorneys each year for participation on a competitive basis and renewing current beneficiaries during existing service obligations, subject to availability of funds. ASLRP benefits are paid directly to the loan holder, not to the individual attorney. Initial acceptance of ASLRP funding triggers a three-year service obligation to Justice.
You can learn more about this program here.
Faculty Loan Repayment Program
The Faculty Loan Repayment Program from the Health Resource and Services Administration (HRSA) helps recruit and retain health professions faculty members by encouraging students to pursue faculty roles in their respective health care fields. This is vital for preparing and supporting the next generation of educators.
You can receive up to $40,000 in student loan repayment, along with extra money to help offset the tax burden of the program.
You can learn more about this program here.
Federal Employee Student Loan Repayment Program
The Federal student loan repayment program permits agencies to repay Federally insured student loans as a recruitment or retention incentive for candidates or current employees of the agency.
This plan allows Federal agencies to make payments to the loan holder of up to a maximum of $10,000 for an employee in a calendar year and a total of not more than $60,000 for any one employee.
It’s important to note that an employee receiving this benefit must sign a service agreement to remain in the service of the paying agency for a period of at least 3 years.
An employee must reimburse the paying agency for all benefits received if he or she is separated voluntarily or separated involuntarily for misconduct, unacceptable performance, or a negative suitability determination under 5 CFR part 731. In addition, an employee must maintain an acceptable level of performance in order to continue to receive repayment benefits.
Furthermore, you must sign up for this program when you’re hired. You can’t go back to your HR department after you’re already employed and ask for it.
You can learn more about this program here.
Indian Health Services Loan Repayment Program
The Indian Health Service (IHS) Loan Repayment Program awards up to $20,000 per year for the repayment of your qualified student loans in exchange for an initial two-year service obligation to practice full time at an Indian health program site.
You can learn more about this program here.
John R. Justice Student Loan Repayment Program
The John R. Justice Student Loan Repayment Program (JRJ) provides loan repayment assistance for state public defenders and state prosecutors who agree to remain employed as public defenders and prosecutors for at least three years.
This program provides repayment benefits up to $10,000 in any calendar year or an aggregate total of $60,000 per attorney.
You can learn more about this program here.
National Health Service Corps
The National Health Service Corps (NHSC) offers tax-free loan repayment assistance to support qualified health care providers who choose to take their skills where they’re most needed.
Licensed health care providers may earn up to $50,000 toward student loans in exchange for a two-year commitment at an NHSC-approved site through the NHSC Loan Repayment Program (NHSC LRP).
Accepted participants may serve as primary care medical, dental, or mental/behavioral health clinicians and can choose to serve longer for additional loan repayment support.
Priority consideration is given to eligible applicants whose NHSC-approved site has a HPSA score of 26 to 14, in descending order. Eligible applicants may receive up to $50,000 in loan repayment for an initial service commitment until funding is exhausted.
You can learn more about this program here.
National Institutes of Health (NIH) Loan Forgiveness
The five NIH extramural Loan Repayment Programs (LRPs) include the Clinical Research LRP, Pediatric Research LRP, Contraception & Infertility Research LRP, Health Disparities Research LRP, and Clinical Research LRP for Individuals from Disadvantaged Backgrounds
In return for loan repayments, LRP awardees are legally bound to a service obligation to conduct qualifying research supported by a domestic nonprofit or U.S. government (Federal, state, or local) entity for 50 percent of their time (at least 20 hours per week based on a 40-hour week) for two years. NIH makes quarterly loan repayments concurrent with the awardees’ satisfaction of their service obligation.
Payment projections are based on eligible educational debt at the start date of the LRP contract. The NIH will repay 25 percent of the eligible education debt, up to a maximum of $35,000 per year.