LOAN FORG I V ENE SS
Beginning in the late 1950s, the federal government began a policy of cancelling (forgiving) federal student loans
with the enactment of the National Defense Education Act of 1958. In the ensuing 50 years, numerous federal loan
repayment and forgiveness programs have become law. The information contained below is not intended to be
comprehensive, but it presents most of the loan forgiveness programs affecting the largest numbers of students.
All of the loan forgiveness programs have some things in common:
• Only federal loans (FFEL & direct subsidized & unsubsidized, undergraduate & gradPLUS loans, Perkins)
are eligible for federal forgiveness programs. Private educational loans are not included.
• Federal loan forgiveness is only available to students, once they have graduated, and any post-graduation
grace periods have been completed.
• None of the federal loan forgiveness programs are automatic. The eligible borrower must complete and
submit all required forms and documents for the forgiveness process to begin.
Once loans are forgiven, the borrower is required to report the cancelled loans as ordinary income in the
calculation of federal tax liability for the year in which the loans are forgiven.
Performing volunteer work, military work, teaching or practicing medicine may provide the necessary
requirements for several federal loan forgiveness programs.
Here are Internet links to many of the forgiveness programs:
TEACHING EMPLOYMENT BY NON-PROFIT