Frequently Asked Questions
Why do individuals need to apply for student loan forgiveness if approval is likely to be stalled?
Despite any hesitance or frustration with the process, applying for student loan forgiveness is necessary because it verifies the eligibility of borrowers and compliance with legal and procedural requirements. An approved borrower is then in line for student loan forgiveness.
How probable is it that my student loan forgiveness will be approved?
Approval depends on several factors including program requirements, eligibility criteria, and the availability of funds. Meeting deadlines and submitting the necessary documentation increases the likelihood of approval even if it does not guarantee it. Like with any application, optimism and persistence are important.
Are there any programs accessible to individuals who have faced difficulties in meeting their student loan payments since they resumed?
A borrower having trouble with making student loan payments has a few options. One option is applying for an income-driven repayment plan (IDR). An IDR plan is based on income. So, the less you make, the less your monthly payments. Application is necessary because IDR plans are not the default. Another option is applying for a fixed repayment plan if your total loan debt balance is low.
Deferment or forbearance are also options. According to Federal Student Aid, deferment is “a temporary postponement of payment on a loan that is allowed under certain conditions and during which interest doesn’t accrue on subsidized loans.” However, a borrower is responsible for paying off accrued interest if the loan is not subsidized (meaning interest is not paid by the federal government). Also, deferment prevents a borrower from making progress with their loan debt.
A borrower is eligible for forbearance if they are temporarily unable to make their student loan payments because of financial challenges, medical expenses, or employment changes. However, forbearance may only last for a year at a time, and a borrower is responsible for repaying any accrued interest.
Please consult with a loan officer when deciding the best option for your financial circumstances.
Besides the interest paid on student loan payments, which allows for a deduction of up to $2,500, is there a possibility that the entire payment could be tax deductible?
Currently, the student loan interest deduction allows borrowers to deduct up to $2,500 of the interest paid on student loans from their taxable income. The principal payments on student loans are not tax-deductible.
Is student loan forgiveness based on all loans taken out for all degrees (Bachelors, Masters, Doctorate)?
Each program sets its own criteria. Some programs, like the Public Service Loan Forgiveness (PSLF) program, offer forgiveness for loans taken out for any level of education. Other programs specify certain degree types or fields, and even limit eligibility to alumni of specific universities. For example, the Loan Repayment Assistance Program at the University of Colorado – Boulder stipulates that repayment assistance is only applicable to law school debt incurred by graduates of the University of Colorado Law School.
All applicants should review the criteria of each program to determine which loan
s qualify.
Note: According to our state policy data, most programs limit eligible student loan types to federal loans.
What happens if I miss a payment or two before my loans are forgiven?
There are several consequences for missing a payment, including increased interest and late fees. Missing payments could eventually lead to defaulting on loans, which would have long-term impacts. If you are already on a forgiveness track, missed or late payments could delay your progress since only timely payments are counted toward the required total payments. Also, many repayment assistance programs require borrowers to be in “good standing” with their payments.
Note: bankruptcy does not exempt borrowers from making student loan payments.
Is loan forgiveness limited to employment in the public sector? What areas are included in the public sector?
According to our findings, most state-level programs do require employment in the public sector. This generally includes positions with nonprofits, legal bodies, public education, and healthcare professions serving rural and underserved populations.
How do state-level student loan forgiveness programs differ from federal programs?
Geography and need separate state-level and federal programs. State-level student loan forgiveness programs typically prioritize the specific needs and workforce gaps within the state, like incentivizing professionals to work in high-need regions. These programs may have eligibility criteria and benefits tailored to state residents, state graduates, and/or particular professions. On the other hand, federal forgiveness programs usually have broader eligibility criteria that do not specify a state of residency. They include well-known programs such as the Public Service Loan Forgiveness (PSLF) and Teacher Loan Forgiveness, which are designed to encourage work in public service or education across any state.
How do I know if I qualify for student loan forgiveness? What types of loans are eligible for forgiveness?
According to our research, federal loans (subsidized and unsubsidized) qualify for loan forgiveness and loan repayment programs. Private loans may hinder eligibility. So, be sure to review the criteria specific to your program of interest.
How can I apply for an income-driven repayment plan?
Will I have to start over if I leave public service and return?
You do not have to start over if you leave public service and return. Your previous service will count towards your overall service. You can also work for more than one employer over the indicated span of time. However, if required by the program, student loan payments are only considered “qualifying” payments if you are employed within public service when the payments are made.
What is the difference between loan forgiveness, cancellation, and discharge?
All three mean a borrower will not have to pay off a portion, or all, of their student loan debt. However, they come from different circumstances.
Loan forgiveness refers to incentivizing certain types of employment or initiatives in exchange for the full or partial forgiveness of qualifying loans. An example could be being a primary care provider in a rural or underserved region. Loan cancellation is similar, but may be less broad. For example, loan cancellation may get as specific as only applying to teachers in low-income schools. Loan discharge removes a borrower’s responsibility to repay an amount of loan after incurring certain circumstances like death, disability, bankruptcy, fraud, or identity theft.
How does student loan debt impact marginalized communities?
Student loan debt has a compounding effect on borrowers from marginalized communities and their families. First, student loan debt increases the racial wealth gap. Borrowers from families that are financially well-off are able to rely on their family’s wealth to avoid accumulating large amounts of student loan debt or quickly repay their debt. Borrowers from marginalized communities must often rely on larger student loan amounts to afford school, which increases the difficulty to repay their student loans.
Second, state-level student loan forgiveness programs often specify professions that require advanced degrees. Sometimes eligibility criteria stipulate that applicants cannot earn more than a specified annual income. This can exclude, or discourage, borrowers from marginalized communities from applying to these programs because of a decreased likelihood of earning advanced degrees or the need to earn greater immediate income after graduation.
Third, carrying a debt burden, or considering the potential of student loan debt, can negatively impact the career and lifestyle choices of borrowers from marginalized communities. When loan forgiveness programs place restrictions on how much applicants can earn yearly or where they can work, borrowers from marginalized communities are forced to compromise their professional growth potential and financial independence. Borrowers from low-income households may need to prioritize higher-paying jobs over passion-driven or community-oriented roles, hindering social mobility and perpetuating cycles of poverty.
Fourth, the higher default rates among marginalized borrowers result in damaged credit scores, making it more difficult to access housing, credit, and other financial services, furthering economic disadvantages.
Are there forgiveness programs specifically for minoritized and marginalized groups?
Unfortunately, there are not many programs that explicitly aim to help minoritized and marginalized groups. According to our research, there are only 5 programs in 4 states that specifically address borrowers from minoritized and marginalized populations. There should be more student loan forgiveness programs that directly address the economic burden placed on minoritized and marginalized borrowers with higher levels of student loan debt. These programs are essential to promote educational and economic equity, and they ensure all borrowers receive a fair chance to thrive and pursue prosperity. Otherwise, students and graduates are penalized because of their identities and family history.
What are the most common pitfalls in applying for loan forgiveness?
Common pitfalls applicants experience include:
- Missing deadlines
- Ambiguity with eligibility criteria
- Unawareness of programs and resources
- Missed or late payments
The best way to ensure your eligibility for student loan forgiveness or repayment assistance is to stay on top of documentation and consistently follow up with contact persons with the specific program.
What steps are being taken to improve equity in student loan forgiveness?
Despite opposition, legislators and policy makers have made efforts to improve equity across the landscape of student loan debt. One step has been making income-driven repayment plans more accessible and effective, which could ensure that borrowers from disadvantaged backgrounds receive some necessary relief. Also, advocacy groups continue to raise awareness to help marginalized borrowers navigate student loan forgiveness. Our aim for this research is to continue raising awareness and inform policy makers of the racial and socioeconomic consequences of the current landscape of student loan debt.
Glossary of common terms
| Term |
Definition |
| Debt burden |
Total debt burden refers to the amount of money a borrower owes. A larger debt burden may negatively impact a borrower’s ability to financially support themselves and/or accumulate wealth. For student loans, debt burden varies greatly by race and ethnicity in the U.S. |
| LRAP |
Commonly used acronym for ‘loan repayment assistance program.’ |
| SLRP |
Commonly used acronym for ‘student loan repayment program.’ |
| LRP |
Commonly used acronym for ‘loan repayment program.’ |
| Forgiveness vs. Repayment Assistance |
Loan forgiveness refers to the cancellation of a borrower’s principal and interest. Repayment assistance, however, refers to programs that set realistic repayment goals for borrowers struggling to afford repayment. Many programs that offer repayment assistance are categorized under the umbrella term ‘loan forgiveness.’ |
| Income-driven repayment (IDR) |
These are plans that determine your required repayment amount based on your income and family size. Some income-driven programs reduce monthly payments to $0. (learn more about IDRs) |
| “Good-standing” |
A borrower in good standing is typically one who has paid their account in full, has not missed any payments, and/or has not submitted any payments behind schedule. |
| Federal loan vs. Private loan |
Definition |
| Deferment |
According to Federal Student Aid, deferment is “a temporary postponement of payment on a loan that is allowed under certain conditions and during which interest doesn’t accrue on subsidized loans.” However, a borrower is responsible for paying off accrued interest if the loan is not subsidized (interest paid by the federal government). Also, deferment prevents a borrower from making progress with their loan debt. |
| Forbearance |
A period of time when repayment is suspended due to financial hardships. Common hardships include unemployment or unanticipated medical expenses. |
| Loan default |
When an individual breaches their loan agreement by not making sufficient payments within a designated period. This impacts the borrower’s credit score, which may influence their ability to buy a car, invest in property, or be approved for a credit card. Borrowers are typically considered in default once they fail to make payments for 270 days. |
| Matching |
Employers offering a 401(k), 403(b), SIMPLE IRA or 457(b) retirement matching program may now match employees’ student loan repayments as retirement contributions. This provision was passed under the SECURE Act 2.0 in 2022. (learn more about IRA matching programs) |
| Primary care provider |
A physician (M.D. or D.O.), nurse practitioner, clinical nurse specialist or physician assistant who is allowed, under state law, to assist patients with a breadth of health services. (what is a primary care provider) |
| Rural and underserved |
Rural areas are defined by the U.S. Census Bureau and the Office of Management and Budget (OMB) based on the percent of the population living outside designated urban areas (UAs) or urban clusters (UCs). Underserved populations are those determined to not have access to adequate health resources by HRSA. (what qualifies as rural) |
| HPSA |
Health professional shortage areas (HPSA) defined by the Health Resources and Services Administration (HRSA). HSPAs may refer to primary care, dental care or mental health care. Measures may reference geographic areas, populations or facilities. (what is a HPSA?) |
| MUA/P |
Medically underserved areas/populations as defined by HRSA. MUAs refer to counties, tracts or civil divisions that lack access to care. MUPs refer to populations who face barriers to obtaining healthcare services (e.g. people experiencing homelessness, people who are low-income, etc.). (what is a MUA?) |
| Service obligation |
An agreement to fulfill expectations of working in service of a specific population and/or within a dedicated role. Service obligations vary by program. |
| State resident |
Requirements for establishing residency vary by state, but generally these requirements include taking steps to confirm that that the state is your ‘domicile’ or the place you envision as your home. This may include: registering to vote, obtaining a driver’s license, updating your address with the U.S. Postal Service, renting or owning property in your state of residence, or opening accounts at local banks. |
| Equity |
The state in which everyone has the opportunity to exercise their right to live a healthy, safe, fulfilling life. |
| Racial disparity |
Documented imbalances between the treatment of racial groups. This may refer to incongruence in areas such as economic trajectory, healthcare access or societal treatment. (learn more about racial disparities) |
Additional information
Learn more about the history of student loan forgiveness and repayment assistance programs in the U.S. on our history of student loans page. Explore our state policy database to learn more about active state-level policies database page. To explore additional resources for borrowers and researchers, follow this link to resources.
