Borrowers of student loans must meet particular eligibility requirements of the program. You must be a full-time employee at a federal, state, or local government agency or work full-time at a nonprofit organization to qualify. The program is intended to help those who choose a career in public service over a high-paying job right out of college.
As the Federal Student Aid website states, here are some of the career qualification requirements:
- Government organizations at any level (federal, state, local, or tribal)
- Not-for-profit organizations that are tax-exempt under Section 501(c)(3) of the Internal Revenue Code
- Other types of not-for-profit organizations that provide certain types of qualifying public services
In addition, only certain loan types are eligible:
- Federal Direct Subsidized Stafford/Direct Loans
- Federal Direct Unsubsidized Stafford/Direct Loans
- Federal Direct PLUS Loans
- Federal Direct Consolidations Loans
You must enroll in a qualifying plan, and after 10 years of on-time payments, the remaining balance of your loans is eligible for forgiveness. Currently, there is no limit on the amount that borrowers can discharge. If you also take advantage of certain qualifying repayment plans, such as income based repayment, you can reduce your monthly payment. This would also reduce the total amount you end up repaying over the 10-year plan.
This program started in 2007, so no one has actually had a loan forgiven yet. Since the program started, only around 300,000 people with student loans have completed all the steps to have their loans put into the loan forgiveness program and, according to one government report, about 4 million graduates could be eligible.
Since the program requires 10 years of on-time payments to qualify, it is critical to start as soon as possible.