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Student Loan Forgiveness

Student loans can be huge burden for college graduates or parents for repayment in a timely manner. Thus one of the greatest opportunities for students with loans is the “student loan forgiveness” programs. This type of forgiveness programs does help to eliminate or reduce some loan amount in return for choosing certain career, some type of service or voluntary work.

The student loan forgiveness programs can eliminate anywhere between a few thousand dollars to over 1, 00,000 $ worth of student loan depending on student loan. But the surprising fact is that many of such federal student loan forgiveness programs receive a few applications which indicate that most people are unaware of such type of loan forgiveness programs. Different types of student loans qualify for federal student loan forgiveness programs.

Student Loan Forgiveness Vs Loan Repayment

Student loan forgiveness programs are generally backed up by the Federal government and cover loans through federal student loan programs like the Stafford Loans or the Perkins Loans. When a student participates in these types of loans portions of the debt are literally removed from the lender’s books.

Student loan repayment programs which are more popular than forgiveness programs can be used to reduce any type of loan including private loans. Within these programs the borrower may receive additional funds to pay the loan or a payment is made to the lender directly by the employer.

Taxability in Student Loan Forgiveness Programs

The amount of money eliminated under federal student loan forgiveness programs may be considered taxable income. For example, if you have 10,000$ in loans forgiven, it may increase your taxable income by an equivalent amount the following year. While that does not sound good it should not deter you from getting advantage of these types of loan forgiveness programs, as the benefits far outright the cost.

To avoid taxation on student loan forgiveness, the loan should specifically include provisions allowing it to be forgiven. These provisions require working with certain professions for a specified amount of time. Moreover any loan repayment made under National Health Service Corps (NHSC) Repayment program or any other types of state program eligible for funds from the Public Health Services Act are considered as tax free.

Student Loan Forgiveness Programs for Medical and Legal Professionals

Medical and Legal professionals can have part of their loan forgiven if they work full/part time in specified schools or practice under specified jurisdictions. If anyone has a Perkins Loan he/she can have part of the loan forgiven by working in elementary, middle or junior high school. The lawyer who agrees to serve in the public sector or who represents non profit organizations can have a portion of the student loan debt forgiven by law school. In addition to this, the American Bar Association and the Equal Justice Works (formerly known as the National Association for Public Interest Law) maintain databases and information regarding student loan forgiveness programs.

Student Loan Forgiveness Programs for Public Service

People who are working as social workers or serving through AmeriCorps, the VISTA program, or the Peace Corps can have a part of the student loan debt forgiven as a benefit of the position or for exchange for some years of service. People who are interested should contact a human resources or an employee relations representative. A student loan can be a huge debt for college students. However there are these types of student loan forgiveness programs for those who are willing to make some sacrifices or spend some time on these forgiveness programs


Student Loan Forgiveness programs are often a boon for students who are on a financial crisis but it is good to know that there are certain drawbacks of federal student loan forgiveness programs. Do consider the factors before applying for student loan. Also consider the fact that the defaulted student loans are a cause for concern nowadays as they involve various important issues to be noticed. It is required to report forgiven loan as part of taxable income. So it is better to do the math and consult a tax adviser or a student loan adviser before joining such loan forgiveness programs.

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