Student Loan Cancellation Programs Explained

Student loan cancellation programs exist to provide a way for a student borrower to have their loans cancelled, discharged or forgiven. These programs relate to a school no longer being open, accredited or a program being cancelled due to false certification or credentials.

Programs Available

There are approximately 23 student loan cancellation programs available. These programs cover the main federal student loan programs that are offered including Stafford, PLUS, Perkins and consolidation loans. Four of the programs forgive the loans of all federal student loan types. They are:

  • Closed School Cancellation
  • Death Cancellation
  • Disability Cancellation
  • Spouses and Parents of September 11, 2001 Victims and Public Servants Cancellation

Other Loan Cancellation Programs

Other loan cancellation programs include Firefighter and Law Enforcement or Corrections Officer Cancellation, Teacher Loan Forgiveness and Service in Areas of National Need Loan Forgiveness. Many of the loan cancellation programs apply specifically to borrowers of the Federal Perkins Student Loan, but can be applied to the Stafford, PLUS and Consolidation loan programs as well.

Firefighter and Law Enforcement or Corrections Officer Cancellation

The firefighter, law enforcement or corrections officer loan cancellation programs are designed to forgive borrowers of the Perkins Loan. This program is for individuals who serve full-time in these roles related to fire safety and crime control and prevention or who are in a support role that is essential or unique to law enforcement or fire safety.

The school determines eligibility for the program by determining that the agency is in fact engaged in law enforcement or fire safety and prevention activities and that the borrower is duly employed as a sworn officer or employee of the agency.

Teacher Loan Forgiveness

There are two distinct loan forgiveness programs for teachers with Stafford or Consolidation loans that permit them to have forgiven up to $5,000 or $17,500 in debt. The amount that is forgiven depends on where the teacher teaches and the types of students that are being taught. Generally teachers who are in low-income school districts or who deal with special needs students are eligible for this program.

The forgiveness programs require that application for loan forgiveness be made before the end of the 5th year of the loan’s repayment schedule and in some circumstances that the school in which the teacher is employed meets the requirements of the No Child Left Behind Act.

Service in Areas of National Need Loan Forgiveness

The Service in Areas of National Need loan forgiveness is a program designed to direct energies, efforts and talents toward those places in the country in need of assistance. This includes public sector employees such as police, fire, first responders, teachers, social workers, nurses and other professions that deal daily with the public. The amount of loan that can be forgiven is $2,000, not to exceed an aggregate amount of $10,000.

A student seeking loan cancellation should contact a lender and determine their eligibility for the program. All payments on the loan should be made when required until an official notification is received that indicates that loan forgiveness has been granted. Non-payment of a loan in anticipation of acceptance will result in a loan default that will impact the credit rating of the borrower.

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