Student loans forgiven

Want your student loans forgiven? Avoid these mistakes

Having college debt disappear is something many student loan holders can only dream of. But it’s possible for some of the 44 million people in the U.S. with education loans.

Through the Public Service Loan Forgiveness Program, people with federal student loans can get their loans erased tax-free if they first make loan payments for 10 years while working for the government or a nonprofit.

That’s the gist of it, at least. The program rules are more nuanced. Unaware of the complexities, many loan holders inadvertently make decisions that render them ineligible. Only a few hundred people are on track to get forgiveness this fall — the soonest borrowers can receive forgiveness through the program — according to data the U.S. Department of Education presented to financial aid professionals last year.

Borrowers can look out for these missteps to ensure they stay on track for loan forgiveness.

1 Having the wrong type of loans Borrowers’ loans must be in the federal Direct Loan Program to qualify, which is not the case for nearly 19 million people, or 44 percent of federal student loan borrowers, who have loans in other federal programs, according to 2017 Department of Education data. 120 qualifying monthly payments, meaning the payments were made after Oct. 1, 2007, and other requirements.

Only one qualifying payment counts per month, which means paying extra each billing cycle won't help borrowers achieve forgiveness faster.

3 Working for the wrong type of employer Federal direct loan holders who work full time for the government, a 501(c)(3) nonprofit or an organization providing a qualifying public service may be eligible for PSLF, regardless of their job title. For instance, a full-time janitor at a public school could qualify.

4 Falling for fraudulent promises

of forgiveness Dozens of companies use false claims to con borrowers, a NerdWallet investigation found. They promise to reduce or eliminate loans and charge high fees to enroll people in free federal programs. Beware of companies that collect high upfront fees or charge recurring monthly amounts, two signs that an offer is likely too good to be true.

5 The future of public service loan forgiveness

Education Secretary Betsy DeVos has proposed cutting PSLF, which started in 2007 during the Bush administration. Critics of the program argue it’s too expensive and disproportionately benefits graduate and professional school students, many of whom have six-figure debt loads.