Loan Cancellation/Forgiveness/Discharge Conditions: Detailed Explanations
Child Care Provider Forgiveness
Certain child care providers who have outstanding federal student loans may be eligible to have their loans forgiven (in other words, you won't have to repay the amount). To be eligible for loan forgiveness, all of the following criteria must be met:
- You must be a new borrower as of Oct. 1, 1998 (i.e., have no outstanding balance on a Federal Family Education Loan (FFEL) Program or Federal Direct Program loan as of that date).
- You must have obtained an associate's or bachelor's degree in early childhood education from an institution of higher education. If you originally received a degree in another area of study, but later obtained a degree in early childhood education, forgiveness will be limited to eligible loans you obtained for a maximum of two of the academic years required to obtain the early childhood education degree.
- You must have worked full time as a child care provider in a facility that serves a low-income community for the two consecutive years preceding the year during which you requested loan forgiveness. At least 70 percent of the individuals that facility serves must be from families that earn less than 85 percent of the state median household income.
- You must not have received benefits for the same child care service under the National and Community Service Act of 1990 (AmeriCorps).
The program is offered on a first-come, first-served basis, subject to the availability of funds.
Forgiveness Amounts:
To be eligible for forgiveness, you must maintain full-time employment for successive, uninterrupted 12-month periods. A proportion of the balance of your FFEL Program or Federal Direct Loans (including interest that accrues) may be forgiven in the following increments:
- 20 percent after completing two consecutive years of qualifying employment
- 20 percent after completing the third consecutive year of qualifying employment
- 30 percent after completing the fourth consecutive year of qualifying employment
- 30 percent after completing the fifth consecutive year of qualifying employment
Closed School Cancellation
Your loan will be cancelled if you (or student for whom you borrowed a PLUS loan) received, on or after Jan. 1, 1986, a portion or the entire loan to attend a school that closed before you could complete your program of study. You must have been unable to complete the program because:
- the school closed while you were enrolled,
- the school closed while you were on an approved leave of absence or you withdrew within 90 days of the school closing, and
- you were unable to transfer credits or hours earned at the closed school.
Death Cancellation
Your loan will be cancelled if you (or the student for whom you borrowed a PLUS loan) die. A certified death certificate is required.
Disability Cancellation
Your loan will be cancelled if you become totally and permanently disabled. A medical doctor or doctor of osteopathy must certify that you are totally and permanently disabled. Permanent cancellation of your loan may require re-certification by your physician after three years.
Educational Component of Head Start Program Staffer Cancellation
Fifteen percent of your original principal loan amount - plus the interest that accrued during the year - will be cancelled for each complete school year when you are a full-time staff member, regularly employed in a full-time professional capacity to carry out the educational part of a Head Start program. The program must operate for a full academic year or its equivalent, and your salary may not be more than that of a comparable employee working in the local educational agency.
False Certification by School Cancellation
Your loan will be cancelled if the school falsely certified your eligibility for the loan. To qualify for a false certification loan cancellation, you (or the student for whom you received a PLUS loan) must have received funds for a loan disbursed, in whole or in part, on or after January 1, 1986, and::
- the school admitted you when you did not meet the requirements for admission on the basis of your ability to benefit from the education, or
- at the time the school certified the loan, you had a condition that prevented you from meeting the legal requirements for employment in your state of residence in the occupation for which the program was intended, or
- the school signed your name on the application and/or promissory note without your authorization, and you did not receive the benefit of the loan proceeds, or
- the school endorsed your name on the loan check or signed the authorization for electronic funds transfer or master check without your consent, and you did not receive the benefit of the proceeds.
False Certification due to Identify Theft Cancellation
Effective July 1, 2006, your loan may be cancelled if it was falsely certified as a result of a crime of identity theft. The actual discharge regulations are still being developed, but will be posted here when complete. In the interim, if you can provide the loan holder with reasonably persuasive evidence of identity theft, the holder may grant an administrative forbearance and guaranty agencies may suspend default collections on your account.
Law Enforcement or Corrections Officer Cancellation
Your loan will be cancelled if you serve full time as a qualifying law enforcement or corrections officer. To establish eligibility, the school must determine that your:
- employing agency is eligible; i.e., a local, state, or federal agency that is publicly funded and its activities pertain to crime prevention, control, or reduction or to the enforcement of the criminal law and
- position is essential to the agencies primary mission; i.e., you are a sworn officer or person whose principal responsibilities are unique to the criminal justice system.
Nurse or Medical Technician Cancellation
Your loan will be cancelled if you serve full time as a nurse or medical technician providing health care services.
Professional Provider of Early Intervention Services for the Disabled Cancellation
Your loan will be cancelled if you are a full-time, qualified professional provider of early intervention services in a public or other nonprofit program under public supervision. Early intervention services are defined as developmental services that:
- are provided at no cost except where federal or state law provides for a system of payments by families, including a schedule of sliding fees;
- are designed to meet the developmental needs of an infant or toddler with a disability in one or more of the following areas: physical development, cognitive development, communication development, social or emotional development, or adaptive development;
- meet the standards of the state in which they are provided;
- are provided by special educators; speech and language pathologists and audiologists; occupational therapists; physical therapists; psychologists; social workers; nurses; nutritionists; family therapists; orientation and mobility specialists; and pediatricians and other physicians;
- >to the maximum extent appropriate, are provided in natural environments, including the home and community settings in which children without disabilities participate; and
- are provided in conformity with an individualized family service plan adopted in accordance with Section 636 of the Individuals with Disabilities Education Act.
Public or Non-Profit Child or Family Services Agency Employee Cancellation
Your loan will be cancelled if you serve as a full-time employee of an eligible public or private nonprofit child or family service agency that is providing or supervising the provision of services to both high-risk children who are from low- income communities and the families of such children.
Loan Forgiveness for Public Sector Employees
A loan forgiveness program for public sector employees with Federal Direct Loan Progam loans. You may be eligible to have the interest and principal for your non-defaulted loans forgiven if you:
- made 120 monthly payments on the eligible loans after October 1, 2007 and
- are employed in a public-service job at the time of such forgiveness and have been employed in a public-service job during the 120-month period.
Spouses and Parents of September 11, 2001 Victims and Public Servants
Survivors of victims of the September 11, 2001 terrorist attacks may be eligible for discharge of their entire outstanding student loan balance. No refunds will be granted on payments made prior to discharge. Documentation of the victim?s presence at the September 11, 2001 terrorist attacks, public servant status, or death or permanent disability may be required.
Teacher Loan Forgiveness
Certain teachers who have outstanding Federal Stafford or Consolidation Loans may be eligible to have a portion of their loans forgiven (in other words, they won't have to repay that portion of the debt). There are two different teacher loan forgiveness maximums--$5,000 and $17,500--each with their own set of eligibility criteria (provided below).
To qualify for teacher loan forgiveness for Federal Stafford or Consolidation Loans of up to $5,000, teachers must meet all of the following criteria
- You must not have had an outstanding balance on a Federal Family Education Loan (FFEL) Program or Federal Direct Program loan as of October 1, 1998 or on the date you obtained a FFEL Program or Federal Direct Program loan after October 1, 1998.
- You must have taught full time at a designated school for five consecutive, complete academic years. At least one of the years of teaching service must be after the 1997-98 academic year.
- The loan for which you are requesting forgiveness must have been made before the end of your fifth year of qualifying teaching service.
- You must have performed your teaching service at an elementary or secondary school in a low-income school district that is listed in the Annual Directory of Designated Low-Income Schools for Teacher Cancellation Benefits.
- If you performed your teaching service in an elementary school, the chief administrative officer of the school where you performed the service must certify that you demonstrated knowledge and teaching skills in reading, writing, mathematics, and other areas of the elementary school curriculum.
- If you performed your teaching service in a secondary school, the chief administrative officer of the school where you performed the service must certify that you taught in a subject area that was relevant to your academic major.
- If your teaching service began on or after October 30, 2004, you must meet this additional criteria: The chief administrative officer of the school where you performed your service must certify that you meet the definition of "highly qualified" as defined in the No Child Left Behind Act of 2001.
To qualify for up to $17,500 in forgiveness for Federal Stafford or Consolidation Loans, you must meet all of the criteria above, as well as the following additional criteria:
- You must have been either (1) employed full time as a highly qualified mathematics or science teacher in an eligible secondary school, or (2) employed full time as a highly qualified special education teacher whose primary responsibility was to provide special education to children with disabilities in an eligible elementary or secondary school.
- The chief administrative officer of the school where you performed your service must certify that you meet the definition of "highly qualified" as defined in the No Child Left Behind Act of 2001.
To apply for teacher loan forgiveness or for more information about the program related to the Federal Family Education Loan Program or Federal Direct Loan Program, contact your loan holder.
Certain teachers who have outstanding Federal Perkins Loans may be eligible to have up to 100 percent of their loans cancelled (in other words, they won't have to repay their loan debt). To qualify for these provisions, you must serve full time in a public or non-profit elementary or secondary school system as a:
- teacher in a school serving students from low-income families;
- special education teacher, including teachers of infants, toddlers, children, or youth with disabilities; or
- teacher in the fields of mathematics, science, foreign languages, or bilingual education or in any other field of expertise that is determined by a state education agency to have a shortage of qualified teachers in that state.
Contact the school you attended to inquire about teacher loan forgiveness in the Federal Perkins Loan Program.
United States Armed Forces Cancellation
You are entitled to cancellation of up to 50 percent of your loan for full-time, active duty service in the U.S. Armed Forces in an area of hostilities or an area of imminent danger that qualifies for special pay under Section 310 of Title 37 of the U.S. Code. The cancellation rate for every complete year of qualifying service is 12.5 percent of the original principal loan amount, plus any interest that accrued during the year.
Unpaid Refund Cancellation
A portion of your loan (and applicable interest and fees) will be cancelled if:
- you (or the student for whom you borrowed a PLUS loan) received funds for a loan disbursed, in whole or in part, on or after Jan. 1, 1986,
- you withdrew from, were terminated from, or did not attend the school, and a refund of Title IV funds should have been made, and
- the refund was not made.
Note: You may not apply for this cancellation if you currently are attending the school. In addition, if the school currently is open, you may not apply for this type of cancellation unless you have first contacted the school and attempted to resolve the issue. If the issue is not resolved, you may then apply.
Vista or Peace Corps Volunteer Cancellation
Up to 70 percent of your loan will be cancelled if you serve as a Peace Corps or ACTION volunteer. Schools apply cancellation for volunteer service in the following increments:
- 15 percent of the original principal loan amount - plus any interest that accrued during the year - for each of the first and second 12-month periods of service; and
- 20 percent of the original principal loan amount - plus any interest that accrued during the year - for each of the third and fourth 12-month periods of service.