Getting Student Loans Cancelled

It is possible to get student loan debt cancelled. You read that right, some people can get student loan debt completely forgiven. Mostly the benefit is for teachers, so if that’s not you or someone you know, this program isn’t likely to help. (Unless you’re dead, which is another way. Really.)

Who’s Eligible

Teachers who have borrowed money directly from the government through the Perkins or Direct Loan programs and who teach in low-income schools and/or certain high-demand subjects are eligible for the program. The complete details are on the Department of Education student loan website, but here is the basic run-down.

DoE maintains a database (a surprisingly hard-to-find database) of low-income schools. If you teach full time at one of these schools, you may be eligible to apply to the program. States also submit their lists of subject shortage areas compiled here. If you teach one of these subjects in one of these states, you’re also eligible. The lists are surprisingly wide-ranging – math and science teachers are listed for many states.

How it works

The two loan programs have slightly different rules for applying.

For the Perkins loan, you request the forms directly from the college that holds your loan. You then provide documentation to show your qualifying status. It is a school decision as to whether someone qualifies for student loan cancellation. The decision cannot be appealed to the Department of Education.

Student loan cancellation through the Perkins program is on this schedule:

15% debt cancellation for years one and two of full-time teaching
20% debt cancellation for years three and four
30% debt cancellation for the final year

The Direct loan program is a bit different. You apply to the lender or servicing agency instead of the college you attended. The form you use is here. Your employing school certifies your status. Another key difference with the Direct loan program is you apply after you complete five years of teaching service. An important caveat, though, is that one of the teaching years must have been in the 1997-1998 school year. Most teachers can get $5,000 of student loan debt cancelled. Special Education teachers can get a whopping $17,500 forgiven.

There are lots of important details I’ve left out. You should consult the Department of Education student loan cancellation website for details before doing anything. For those who qualify, these are great programs.