Student Loan Forgiveness Timing and Amount Varies By Program

The most common types of student loan forgiveness and their timing:

  • Income Driven Repayment Plans under the Ford Direct Loan Program: 20-25 year Forgiveness
  • Teacher Loan Forgiveness and Perkins Loan Cancellation Program for Teachers: 1-5 Year Forgiveness
  • Public Service Loan Forgiveness: 10 Year Forgiveness
  • Total Permanent Disability Discharge: Immediate Discharge

This chart shows more detail:

ProgramTimingAmount ForgivenTaxableQualification Summary
Total and Permanent Disability DischargeImmediate100YesPermanently Disabled
Perkins Loan Cancellation for Teachers1-5 yearsUp to 100% of Perkins LoansNoFor Teachers at Qualifying Low Income Schools
Teacher Loan Forgiveness5 years$5,000 or $17,500NoFor Teachers at Qualifying Low Income Schools
Public Service Loan Forgiveness10 years100%NoGovernmental and Non-profit Employees
Income Driven Re-Payment Forgiveness20-25 years100%YesAnyone in the Income Driven Re-Payment Programs

Summaries of the Individual Programs

William D. Ford Direct Loan Program (often called Obama Student Loan Forgiveness by the media)

The most broadly applicable student loan forgiveness program is the forgiveness under the William D. Ford Federal Direct Program also known popularly and in the media as the Obama Student Loan Forgiveness program, every direct loan in this program has forgiveness attached at the end of the term (this is mostly likely 20 to 25 years depending on which program you are eligible for). At the end of your consolidated loans term, any unpaid balance will be forgiven by the Department of Education. There are a variety of repayment options in the direct loan program, and provisions which allow for early forgiveness or principal reduction on your consolidated loan.

Student Loan Forgiveness Under Direct Loan Program:

  • Must be in the Direct Loan Program
  • Takes 20-25 years depending on the borrower’s program (10 years for Public Service Loan Forgiveness)
  • Forgiveness is taxable

Teacher Loan Forgiveness

The Teacher Loan Forgiveness program is probably the most beneficial of all the loan forgiveness plans available as teachers not only qualify for early forgiveness but principal reduction as well. Teachers can be eligible for $5,000 to $17,500 in principal reduction on their loans under certain circumstances in the Teacher Loan Forgiveness program. The idea behind this principal reduction was to encourage young graduates to enter into a career of teaching, and also to continue that career. Teachers also qualify for complete loan forgiveness after 10 years of repaying their loans. For more information go to our Teacher Loan Forgiveness page.

Teacher Loan Forgiveness Summary:

  • Designed for Teachers in Low Income (Title I) Schools
  • Two Programs: Teacher Loan Forgiveness and Perkins Loan Forgiveness
  • Both are 5-year requirements
  • Depending on program can have $5,000, $17,500 or 100% of your Perkins Loans Forgiven
  • Forgiveness is not taxable

Public Service Loan Forgiveness

You may qualify for public service loan forgiveness if you work full-time in a public service job. After making 120 payments under certain repayment plans while working full-time in a public service position, the balance of your Federal Student Loan would be completely forgiven. For more information go to our Public Service Loan Forgiveness page.

Public Service Loan Forgiveness Summary:

  • Full forgiveness of Federal Student Loans after 10 years (120 qualified payments)
  • Government or Non-profit employment 501(c)(3)
  • Must be in the direct loan program making income-based payments
  • Forgiveness is non-taxable
  • Consider consolidating your loans to ensure you are making qualified payments

Total and Permanent Disability Discharge

A borrower may qualify for Total and Permanent Disability Discharge on their Federal Student Loans if they are unable to engage in any substantial gainful activity because of a physical or mental impairment. For more information go to our Total and Permanent Disability Discharge page.

Total and Permanent Disability Discharge Summary:

  • Must be permanently disabled
  • Acceptable proof: SSDI or SSA award (with 5-7 year review), doctor certification, VA documentation
  • Cannot take out student loans again after utilizing this program
  • Forgiveness is taxable because this is a cancellation of debt (insolvency exemption may help some borrowers)
  • Borrowers may want to consider income base repayments instead (many will qualify for $0.00 payments)