Student Loan Consolidation: Loan Forgiveness or Cancellation

Check your account

You can view most of your federal financial aid history, including Stafford loans, in the National Student Loan Clearinghouse System if you have a Personal Identification Number (PIN). If you don't have one, you can request one at the PIN site .

Consider Consolidation

Consolidating your PLUS Loans can help to ease the repayment of the loan. Consolidation can stretch the repayment term from 10 years to a maximum of 30 years, making the monthly impact on your cash flow much lower. Click here for Loan Consolidation .

Circumstances and Conditions for Loan Discharge

If you have taken out a loan to help pay for your education, all or part of it may be cancelled (forgiven) for several reasons. You may qualify for total or partial loan forgiveness if:

• You die or become totally and permanently disabled
• The school closed within 90 days of your enrollment and they were unable to finish their program of study
• The school did not properly qualify your status before they began studies
• You did not receive a refund that was due to you
• Your signature was forged
• The school did not properly evaluate your ability to benefit from the coursework before beginning studies
• The school does not make required return of loan funds to the lender
• Your loan is discharged due to bankruptcy. Cancellation is possible only if the bankruptcy court rules that repayment would cause undue hardship
• For child care providers, A.A. or B.A. in early childhood education required. Must have worked for two consecutive years in eligible child care facility serving low income community

Your loan cannot be discharged solely because you believe that the school you or your child attended did at least one of the following:

• Provided poor training, had unqualified instructors, or inadequate equipment
• Did not provide job placement or other services that it promised, or
• Engaged in fraudulent activities (other than falsely certifying the loan)
• If you believe you are eligible for loan forgiveness, contact the holder of your loan

Circumstances for Loan Forgiveness / Cancellation

Under certain circumstances, the federal government will cancel all or part of an educational loan. This practice is called Loan Forgiveness. To qualify, you must:

• Perform volunteer work
• Perform military service
• Teach or practice medicine in certain types of communities
• Meet other criteria specified by the forgiveness program

Volunteer Work

These volunteer organizations offer loan forgiveness:

AmeriCorps. Serve for 12 months and receive up to $7400 in stipends plus $4725 to be used towards your loan. Call 1-800-942-2677.

Peace Corps. Volunteers may apply for deferment of Stafford, Perkins and Consolidation loans and partial cancellation of Perkins Loans (15% for each year of service). Volunteers make a real difference in the lives of real people with two years of service in more than 70 developing countries. Contact the Peace Corps at 1111 20th St., NW, Washington, DC 20526 or call 1-800-424-8580 or 1-202-692-1845.

Volunteers in Service to America (VISTA). Volunteer with private, non-profit groups that help eradicate hunger, homelessness, poverty and illiteracy. Provide 1700 hours of service and receive $4725. Call 1-800-942-2677 or 1-202-606-5000.

Military

Students who are in the Army National Guard may be eligible for their Student Loan Repayment Program, which offers up to $10,000. For further detailed information, call toll-free 1-800-GO-GUARD.(The military and veterans' associations provide many scholarships and tuition assistance programs. Contact your recruiter for more details)

Teaching

Students who become full-time teachers in an elementary or secondary school that serves students from low-income families can have a portion of their Perkins Loan forgiven under The National Defense Education Act. This program forgives 15% of your loan for the first and second years of teaching service, 20% for the third and fourth, and 30% for the fifth. Contact your school district's administration to see which schools are eligible.

For Stafford Loan borrowers, forgiveness is available for up to $5,000 of the aggregate loan amount that is outstanding after completion of the fifth year of teaching. A borrower might qualify for loan forgiveness under the Direct and FFEL Consolidation Loan programs. If so, only the portion of the consolidation loan used to repay Direct Stafford Loans or FFEL Stafford Loans qualifies.

To print a copy of the Teacher Loan Forgiveness Application, Click here. Once you've completed the application, give it to the Chief Administrative Officer of your school to complete the certification section. When your application is finished, you can submit your lender or loan servicing agency for processing.

Legal and Medical Studies

Many law schools forgive the loans of students who serve in public interest or non-profit positions. Legal and Medical Students have opportunities to participate in loan forgiveness opportunities to participate in loan forgiveness through their potential employers. Contact the National Association for Public Interest Law (1666 Connecticut Ave., Suite 424, Washington, DC, 20009; 1-202-466-3686).

Similarly, groups like the National Health Service Corps offer forgiveness programs to physicians who agree to practice for a set number of years in areas that lack adequate medical care. If you're a California resident, contact the Office of Statewide Health Planning and Development (State Loan Repayment Program, Primary Care Resources and Community Development Division, 1600 Ninth St., Room 440, Sacramento, CA 95814; 1-916-654-1833), or a similar agency in your state.

Many hospitals and private healthcare facilities use loan forgiveness to recruit occupational and physical therapists. Contact the American Physical Therapy Association (1111 North Fairfax St., Alexandria, VA 22314-1488; 1-800-999-2782) or the American Occupational Therapy Association (P.O. Box 31220, 47200 Montgomery Lane, Bethesda, MD 20824-1220; 1-301-652-2682)

Other Paths to Forgiveness

Students who complete a bachelor's degree at Baker University's College of Arts and Sciences may be eligible for the school's loan forgiveness program. Contact Baker University, P.O. Box 65, Baldwin City, KS 66006-0065; 1-913-594-6451.

Students who majored in education and teach in Mississippi may be eligible for the William Winter Teacher Scholar Loan. This program forgives one year of your loan in exchange for one year of service (it forgives two years of your loan if you teach in a shortage area). Contact the Mississippi Office of State Student Financial Aid, 3825 Ridgewood Rd., Jackson, MS 39211-6453; 1-601-982-6663.

Students who receive the Michael Murphy Loan to study law enforcement, law, probation and parole, penology, or other related fields are eligible to work off one-fifth per year as a State Trooper (or related law enforcement official) in Alaska. Contact the Alaska State Troopers, Director's Office Scholarship Fund, 5700 East Tudor Rd., Anchorage, AK 99507; 1-907-269-5511.

Maryland state and local government employees who earn less than $40,000 gross annually may be eligible for a loan assistance/repayment program to study law, nursing, physical and occupational therapy, social work and education. Contact the Maryland State Scholarship Administration, 16 Francis St., Annapolis, MD 21401; 1-410-974-2971 x146.

Perkins loans can be cancelled for full-time service as a teacher in a designated elementary or secondary school serving students from low-income families, special education teacher (includes teaching children with disabilities in a public or other nonprofit elementary or secondary school), qualified professional provider of early intervention services for the disabled, teacher of math, science, foreign languages, bilingual education, or other fields designated as teacher shortage areas, employee of a public or non-profit child or family service agency providing services to high-risk children and their families from low-income communities, nurse or medical technician, law enforcement or corrections officer, staff member in the educational component of a Head Start Program, service as a Vista or Peace Corps Volunteer and service in the Armed Forces (up to 50% in areas of hostilities or imminent danger).

See also the US Department of Education's pages on Cancellation/Deferment Options for Teachers and Cancellation for Childcare Providers at www.ed.gov