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Repayment Information

stafford and direct loan forgiveness

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Please visit our Cancellation page for information about Campus-Based Loan forgiveness.

Public Service Loan Forgiveness

The recently enacted College Cost Reduction and Access Act (CCRAA) creates a new loan forgiveness option for Stafford Loan borrowers who hold public service jobs. Borrowers who meet requirements outlined in the law may be eligible to have a portion of their student loan debt forgiven. An overview of the guidelines follows.

The borrower must have been working in a public service profession for 10 years prior to applying for forgiveness. Service cannot have begun until after July 1, 2008, and must be consecutive. Borrowers must be making payments during the 10 years and may apply to cancel any federal student loan balances that remain after that period.

The loan being forgiven must be a Direct Loan. You may have loans from private lenders (Stafford) and also Direct loans. You must first consolidate both of these making all your loans Direct loans before you can begin counting your service period. If you already have a consolidation loan with another company, you can consolidate again into a Direct Loan in order to take advantage of this benefit. (This is the only time you may reconsolidate without adding new money.)

Further, your loan must be on:

  • Income-Contingent Repayment Plan; or
  • Income-Based Repayment (beginning July 1, 2009).

Loans eligible for this benefit include:

  • Stafford loans and Direct loans
  • Grad PLUS loans
  • Consolidation loans
  • Perkins Loans (only if consolidated with Direct)

Federal Teacher Loan Forgiveness Program

To encourage individuals to enter and remain in the teaching profession, the Teacher Loan Forgiveness Program grants loan forgiveness of up to $17,500 for teachers in certain specialties, and up to $5,000 for other teachers who teach for five years in low-income schools and meet other requirements.

Several different forgiveness benefits are available. Be sure to read carefully in order to determine your eligibility. Contact your Stafford lender/servicer to initiate the process of forbearance while you are working in an eligible field. Specific documentation may be required by the lender/servicer.