How Likely Is It That Student Loans Will Be Forgiven
Student loans are a huge burden for many Americans, especially in the current economy. The cost of attending college has increased significantly over the past few decades, and with it, so has the amount of debt most students have to take on. In fact, student loan debt is now the second-largest form of debt in the United States—and rising.
In this article, we’ll take a look at how likely it is that you’re going to be able to get your student loans forgiven—and what you can do if that’s what you want.
What Is Student Loan Forgiveness?
Student loan forgiveness is when your student loans are completely removed from your balance sheet during repayment. This means that instead of paying off the entire balance of your loan (which can be very high), those payments will stop once there’s been enough paid toward it to cover what you owe.
There are several ways in which student loans can be forgiven: through bankruptcy or death, for example. But most people who get their loans forgiven do so through one of two programs: Public Service Loan Forgiveness (PSLF) or Income-Based Repayment (IBR).
How Likely Is It That Student Loans Will Be Forgiven
The odds you’ll get student loan forgiveness through existing forgiveness programs are generally poor since the vast majority of borrowers fail to meet one or more of the federal government’s requirements for eligibility.
But the odds of getting some kind of forgiveness through broad cancellation action are increasingly better.
As of April 2022, President Joe Biden has indicated that his administration is looking into some amount of debt reduction via executive order. Answers to the questions “how much?” or “when?” remain uncertain.
Right now, borrowers seeking to discharge their debt will have to rely on the programs that already exist, such as Public Service Loan Forgiveness, income driven repayment forgiveness or borrower defense to repayment.
One thing to keep in mind: Only the owner of your debt (the federal government or your private lender) can forgive your debt. That means no other organization can forgive your debt — no matter how legit they might seem.
Since the start of Biden’s term, the Department of Education estimates that more than $18.5 billion in loans have been canceled for more than 725,000 borrowers.
Among the current federal student loan forgiveness programs, here’s what the approval stats look like (data for some programs are limited):
Public Service Loan Forgiveness stats
Federal student loan borrowers working in public service can get their loans forgiven tax-free after 10 years’ worth of payments made while working full time for qualifying employers. Borrowers must have direct loans and be enrolled in an income-driven repayment plan to qualify. It’s a notoriously difficult process with lots of red tape and a high rejection rate.
Under Temporary Expanded Public Service Loan Forgiveness, or TEPSLF, borrowers who made payments on a graduated, extended, consolidation standard or consolidation graduated repayment plan can apply for loan forgiveness, even though payments made on those plans don’t usually qualify. There is only one application for PSLF and TEPSLF.
A limited waiver for PSLF is also available for borrowers whose payments previously didn’t qualify for PSLF. Under the waiver, more loan types and repayment plans are temporarily eligible for PSLF . Borrowers must consolidate their loans into a direct loan and submit a PSLF form before Oct. 31, 2022. Millions of borrowers are also expected to benefit from one-time fixes to income-driven repayment that would retroactively count additional months toward PSLF.
Here’s how many borrowers have seen their debts discharged through PSLF:
1.34% of all PSLF and TEPSLF applications have been approved, according to February 2022 data from the Department of Education.
Among all 1,084,792 combined applications for PSLF and TEPSLF submitted since November 9, 2020, only 14,566 (11,100 for PSLF and 3,466 for TEPSLF) have been deemed eligible for forgiveness.
As of March 31, Department of Education data show 100,846 borrowers received PSLF discharges under the PSLF waiver, as well as traditional PSLF and TEPSLF. The total balance discharged is $7.15 billion.
The average balance of borrowers whose loans were discharged under PSLF was $97,289 and $43,925 for borrowers under TEPSLF. The average balance discharged for borrowers under PSLF, when you include the waiver, is $70,883.
Why are so many PSLF applications rejected?
The most common reasons for rejected PSLF applications include:
The borrower’s eligible loans had not been in repayment for at least 120 months.
The borrower had been in repayment long enough but did not have enough time at an eligible employer.
The borrower had been in repayment long enough at an eligible employer, but fewer than 120 payments met standards (qualified payment plan, on time and for the full amount).
The figures that include the majority of those rejected include borrowers who have been in repayment for at least 120 months due to having loans from the Federal Family Education Loan Program, according to the department. When these borrowers consolidated FFELP loans into direct loans, they “were made to start over on a brand-new clock,” meaning they didn’t get any credit for previous loan payments made during qualifying employment.
Income-driven repayment forgiveness stats
Income-driven repayment plans set borrowers’ payments at a portion of their income and extend their repayment period to 20 or 25 years. At the end of repayment, the remainder of their balance is forgiven.
As of June 1, 2021 only 157 of potentially millions of borrowers have received debt cancellation through income-driven repayment forgiveness, according to a March 2022 report by the Government Accountability Office.
The first income-driven repayment plan — income-contingent repayment — was made available to borrowers as of 1995 and extended repayment to 25 years. That means the first cohort of borrowers enrolled in this plan should have first received cancellation in 2020.
Forgiveness rates are low due to a few factors including borrowers not having the right type of loans or borrowers not consolidating into the direct loan program. In addition, the education department says borrowers were often steered into forbearance programs instead of income-driven repayment where they could have been making progress toward forgiveness.
Income-driven repayment forgiveness stats
Income-driven repayment plans set borrowers’ payments at a portion of their income and extend their repayment period to 20 or 25 years. At the end of repayment, the remainder of their balance is forgiven.
As of June 1, 2021 only 157 of potentially millions of borrowers have received debt cancellation through income-driven repayment forgiveness, according to a March 2022 report by the Government Accountability Office.
The first income-driven repayment plan — income-contingent repayment — was made available to borrowers as of 1995 and extended repayment to 25 years. That means the first cohort of borrowers enrolled in this plan should have first received cancellation in 2020.
Forgiveness rates are low due to a few factors including borrowers not having the right type of loans or borrowers not consolidating into the direct loan program. In addition, the education department says borrowers were often steered into forbearance programs instead of income-driven repayment where they could have been making progress toward forgiveness.
However, it’s important to note that most borrowers were ineligible to enroll in most income-driven plans until Revised Pay As-You-Earn (REPAYE) became available to all borrowers regardless of income in 2015. The first cohort of REPAYE borrowers will start seeing their debt forgiven in 2035.
As part of the American Rescue Plan Act signed by Biden in March 2021, all student loan debt forgiven from December 2020 through Dec. 31, 2025, will be considered tax-free. Usually any amount of debt forgiven through income-driven repayment would be taxed as income.
In April 2022, the education department announced a new one-time review to address shortcomings in the income-driven repayment forgiveness program. The department estimates the newest one-time review should result in:
Immediate debt cancellation for at least 40,000 borrowers under the Public Service Loan Forgiveness program.
Thousands of borrowers with older loans will receive income-driven repayment forgiveness.
More than 3.6 million borrowers will move at least three years closer to income-driven repayment forgiveness.
will student loans be forgiven
If you repay your loans under a repayment plan based on your income, any remaining balance on your student loans will be forgiven after you make a certain number of payments over a certain period of time. Learn more about IDR plans and how to apply.
If you are employed by a U.S. federal, state, local, or tribal government or not-for-profit organization, you might be eligible for the Public Service Loan Forgiveness Program. Keep reading to see whether you might qualify.
To ensure you’re on the right track, you should submit a Public Service Loan Forgiveness (PSLF) & Temporary Expanded PSLF (TEPSLF) Certification & Application (PSLF Form) annually or when you change employers. We’ll use the information you provide on the form to let you know if you are making qualifying PSLF payments. This will help you determine if you’re on the right track as early as possible.
*This provision will be waived through October 31, 2022 as part of the limited PSLF waiver. Learn more.
Suspended Payments Count Toward PSLF and TEPSLF During the COVID-19 Administrative Forbearance
If you have a Direct Loan and work full-time for a qualifying employer during the payment suspension (administrative forbearance), then you will receive credit toward PSLF or TEPSLF for the period of suspension as though you made on-time monthly payments in the correct amount while on a qualifying repayment plan.
To see these qualifying payments reflected in your account, you must submit a PSLF form certifying your employment for the same period of time as the suspension. Your count of qualifying payments toward PSLF is officially updated only when you update your employment certifications.
Digital signatures from you or your employer must be hand-drawn (from a signature pad, mouse, finger, or by taking a picture of a signature drawn on a piece of paper that you then scan and embed on the signature line of the PSLF form) to be accepted. Typed signatures, even if made to mimic a hand-drawn signature, or security certificate-based signatures are not accepted.
Note: In-grace, in-school, and certain deferment, forbearance, and bankruptcy statuses are not eligible for credit toward PSLF.
Have questions? Find out what loans qualify and get additional information about student loan flexibilities due to the COVID-19 emergency.
Qualifying Employer
Qualifying employment for the PSLF Program isn’t about the specific job that you do for your employer. Instead, it’s about who your employer is. Employment with the following types of organizations qualifies for PSLF:
- Government organizations at any level (U.S. federal, state, local, or tribal) – this includes the U.S. military
- Not-for-profit organizations that are tax-exempt under Section 501(c)(3) of the Internal Revenue Code
Serving as a full-time AmeriCorps or Peace Corps volunteer also counts as qualifying employment for the PSLF Program.
The following types of employers don’t qualify for PSLF:
- Labor unions
- Partisan political organizations
- For-profit organizations, including for-profit government contractors
Contractors: You must be directly employed by a qualifying employer for your employment to count toward PSLF. If you’re employed by an organization that is doing work under a contract with a qualifying employer, it is your employer’s status—not the status of the organization that your employer has a contract with—that determines whether your employment qualifies for PSLF. For example, if you’re employed by a for-profit contractor that is doing work for a qualifying employer, your employment does not count toward PSLF.
Other types of not-for-profit organizations: If you work for a not-for-profit organization that is not tax-exempt under Section 501(c)(3) of the Internal Revenue Code, it can still be considered a qualifying employer if it provides certain types of qualifying public services.
Full-time Employment
For PSLF, you’re generally considered to work full-time if you meet your employer’s definition of full-time or work at least 30 hours per week, whichever is greater.
If you are employed in more than one qualifying part-time job at the same time, you will be considered full-time if you work a combined average of at least 30 hours per week with your employers.
If you are employed by a not-for-profit organization, time spent on religious instruction, worship services, or any form of proselytizing as a part of your job responsibilities may be counted toward meeting the full-time employment requirement.
Eligible Loans
Any loan received under the William D. Ford Federal Direct Loan (Direct Loan) Program qualifies for PSLF.
Loans from these federal student loan programs don’t qualify for PSLF: the Federal Family Education Loan (FFEL) Program and the Federal Perkins Loan (Perkins Loan) Program. However, they may become eligible if you consolidate them into a Direct Consolidation Loan.
Student loans from private lenders do not qualify for PSLF.
Under normal PSLF Program rules, if you consolidate your loans, only qualifying payments that you make on the new Direct Consolidation Loan can be counted toward the 120 payments required for PSLF. Any payments you made on the loans before you consolidated them don’t count. However, if you consolidate these loans into a Direct Loan before October 31, 2022, you may be able to receive qualifying credit for payments made on those loans through the limited PSLF waiver.
student loan forgiveness
In certain situations, you can have your federal student loans forgiven, canceled, or discharged. Learn more about the types of forgiveness and whether you qualify due to your job or other circumstances.
Types of Forgiveness, Cancellation, and Discharge
The summaries below offer a quick view of the types of forgiveness, cancellation, and discharge available for the different types of federal student loans.
The PSLF Program forgives the remaining balance on your Direct Loans after you have made 120 qualifying monthly payments under a qualifying repayment plan while working full-time for a qualifying employer.
PSLF Resources
- Public Service Loan Forgiveness (PSLF) Help Tool
- Public Service Loan Forgiveness (PSLF) & Temporary Expanded PSLF (TEPSLF) Certification & Application
- Limited PSLF Waiver Information
- Public Service Loan Forgiveness Program FAQ
- Submit a Public Service Loan Forgiveness Reconsideration Request
Qualifying for PSLF
To qualify for PSLF, you must
- be employed by a U.S. federal, state, local, or tribal government or not-for-profit organization (federal service includes U.S. military service);
- work full-time for that agency or organization;
- have Direct Loans (or consolidate other federal student loans into a Direct Loan);
- repay your loans under an income-driven repayment plan*; and
- make 120 qualifying payments.
To ensure you’re on the right track, you should submit a Public Service Loan Forgiveness (PSLF) & Temporary Expanded PSLF (TEPSLF) Certification & Application (PSLF Form) annually or when you change employers. We’ll use the information you provide on the form to let you know if you are making qualifying PSLF payments. This will help you determine if you’re on the right track as early as possible.
*This provision will be waived through October 31, 2022 as part of the limited PSLF waiver.
Suspended Payments Count Toward PSLF and TEPSLF During the COVID-19 Administrative Forbearance
If you have a Direct Loan and work full-time for a qualifying employer during the payment suspension (administrative forbearance), then you will receive credit toward PSLF or TEPSLF for the period of suspension as though you made on-time monthly payments in the correct amount while on a qualifying repayment plan.
To see these qualifying payments reflected in your account, you must submit a PSLF form certifying your employment for the same period of time as the suspension. Your count of qualifying payments toward PSLF is officially updated only when you update your employment certifications.
Digital signatures from you or your employer must be hand-drawn (from a signature pad, mouse, finger, or by taking a picture of a signature drawn on a piece of paper that you then scan and embed on the signature line of the PSLF form) to be accepted. Typed signatures, even if made to mimic a hand-drawn signature, or security certificate-based signatures are not accepted.
Note: In-grace, in-school, and certain deferment, forbearance, and bankruptcy statuses are not eligible for credit toward PSLF.
Have questions? Find out what loans qualify and get additional information about student loan flexibilities due to the COVID-19 emergency.
Qualifying Employer
Qualifying employment for the PSLF Program isn’t about the specific job that you do for your employer. Instead, it’s about who your employer is. Employment with the following types of organizations qualifies for PSLF:
- Government organizations at any level (U.S. federal, state, local, or tribal) – this includes the U.S. military
- Not-for-profit organizations that are tax-exempt under Section 501(c)(3) of the Internal Revenue Code
Serving as a full-time AmeriCorps or Peace Corps volunteer also counts as qualifying employment for the PSLF Program.
The following types of employers don’t qualify for PSLF:
- Labor unions
- Partisan political organizations
- For-profit organizations, including for-profit government contractors
Contractors: You must be directly employed by a qualifying employer for your employment to count toward PSLF. If you’re employed by an organization that is doing work under a contract with a qualifying employer, it is your employer’s status—not the status of the organization that your employer has a contract with—that determines whether your employment qualifies for PSLF. For example, if you’re employed by a for-profit contractor that is doing work for a qualifying employer, your employment does not count toward PSLF.
Other types of not-for-profit organizations: If you work for a not-for-profit organization that is not tax-exempt under Section 501(c)(3) of the Internal Revenue Code, it can still be considered a qualifying employer if it provides certain types of qualifying public services.
Full-time Employment
For PSLF, you’re generally considered to work full-time if you meet your employer’s definition of full-time or work at least 30 hours per week, whichever is greater.
If you are employed in more than one qualifying part-time job at the same time, you will be considered full-time if you work a combined average of at least 30 hours per week with your employers.
If you are employed by a not-for-profit organization, time spent on religious instruction, worship services, or any form of proselytizing as a part of your job responsibilities may be counted toward meeting the full-time employment requirement.
Eligible Loans
Any loan received under the William D. Ford Federal Direct Loan (Direct Loan) Program qualifies for PSLF.
Loans from these federal student loan programs don’t qualify for PSLF: the Federal Family Education Loan (FFEL) Program and the Federal Perkins Loan (Perkins Loan) Program. However, they may become eligible if you consolidate them into a Direct Consolidation Loan.
Student loans from private lenders do not qualify for PSLF.
Under normal PSLF Program rules, if you consolidate your loans, only qualifying payments that you make on the new Direct Consolidation Loan can be counted toward the 120 payments required for PSLF. Any payments you made on the loans before you consolidated them don’t count. However, if you consolidate these loans into a Direct Loan before October 31, 2022, you may be able to receive qualifying credit for payments made on those loans through the limited PSLF waiver.
Qualifying Payments
A qualifying monthly payment is a payment that you make
- after Oct. 1, 2007;
- under a qualifying repayment plan;
- for the full amount due as shown on your bill;
- no later than 15 days after your due date; and
- while you are employed full-time by a qualifying employer.
Most of the PSLF qualifying payment rules have been suspended through October 31, 2022. Under this temporary waiver, you may get credit for payments you’ve made on loans that would not normally qualify for PSLF. These payments will count even if you didn’t pay the full amount or on-time. However, only payments made after Oct. 1, 2007 can count as qualifying payments. For more information, visit the limited PSLF waiver page.
You can make qualifying monthly payments only during periods when you’re required to make a payment. Therefore, you can’t make a qualifying monthly payment while your loans are in
- an in-school status,
- the grace period,
- a deferment, or
- a forbearance.
If you want to make qualifying payments, but you’re in a deferment or forbearance, contact your federal student loan servicer to waive the deferment or forbearance. However, you can still receive credit toward PSLF during the COVID-19 payment pause.
Your 120 qualifying monthly payments don’t need to be consecutive. For example, if you have a period of employment with a nonqualifying employer, you will not lose credit for prior qualifying payments you made.
The best way to ensure that you are making on-time, complete payments is to sign up for automatic debit with your loan servicer.