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How do individuals become eligible for student loan forgiveness?


You become free of any obligation to repay student loans made under various programs sponsored by the federal government – whether the loans are made by the Department of Education, private lenders or educational institutions – if you die or are permanently disabled. If you’re looking for a less extreme way out, fortunately there are several possibilities. Student loans can be discharged if you file for bankruptcy, but that is an extreme way out in its own way and best avoided if at all possible. In any case, debtors must convince a bankruptcy judge that repaying the loans will leave them unable to cover basic living expenses and that this situation will continue through a substantial portion of the scheduled repayment period. They must also show that they have made a good-faith effort to keep up payments.

Certain loans may be forgiven in the event of various types of fraud committed by the school that the borrower attended. Then there is a group of circumstances in which borrowers may be eligible for what amounts to a good karma discount. Based on your user name, one of them may apply to you. Teachers generally can have up to $17,500 in debt – either on Direct Loans made by the federal government or Federal Family Education Loans made by private lenders – wiped off if they work full time in a low-income elementary or secondary school or an educational service agency for five years in a row. Teachers with Perkins Loans, which are made by educational institutions, may be eligible to have greater amounts forgiven.

Employees in certain other types of public-service job can have the balance of Direct Loans made in the last six years forgiven once they have made 10 years’ worth of payments. Borrowers in the Perkins program likewise can have a portion of their debt forgiven by performing any of a diverse range of activities, including volunteering for the Peace Corps or similar organizations, serving in war zones for the military or working as a nurse, medical technician, police or corrections officer or family-services practitioner.

-Conrad de Aenlle