Loan Forgiveness

Definition

Student loan forgiveness programs are used to attract former students to serve in certain jobs, or areas of the United States, that are experiencing a talent shortfall.  A loan forgiveness program will repay all, or a percentage, of a student's educational debt.

Explanation

Loan forgiveness occurs after the student has graduated from school and has started working.  This is in contrast to service payback programs, which pay for a student's expenses while they are still attending school.

Former students can qualify for discharge of up to 100% of their Federal Perkins Loans, if they're working full time in a public or not-for-profit elementary or secondary school.  Most loan forgiveness programs are aimed at encouraging teachers to work in low income areas or assist with the disabled.

Examples of these loan forgiveness programs include:

  • Teachers:  available to former students that agree to teach in certain low income neighborhoods.
  • Childcare Providers:  available to those former students that agree to work in child care facilities that demonstrate need.
  • Perkins Student Loans:  there are a number of programs that qualify for forgiveness, ranging from nursing to Peace Corps volunteers.

For more detailed information on these programs, see our article:  student loan forgiveness, as well as the Federal Student Aid website.

Related Terms

student loan, Perkins Loans, work study, grants, Direct Loans