Federal Perkins Loan Cancellation
Perkins loans were discontinued in 2017, but if you have a Perkins loan, you might be eligible for full or partial cancellation for working in certain healthcare fields:
- Full-time nurse or medical technician: Up to 100% canceled for five years of eligible service.
- Full-time qualified professional provider of early intervention services for the disabled: Up to 100% forgiven for five years of eligible service.
- Full-time speech language pathologist with a masters degree working in a Title I-eligible elementary or secondary school who began service on or after July 14, 2008. Up to 100% forgiven for five years of eligible service.
To apply, youll need to contact your loan servicer. If youre not sure who your servicer is, you can find that information on the My Federal Student Aid website.
Former Students Sue Shuttered Star Career Academy
BRICK A for-profit career academy in Brick took in tens of thousands of dollars in fees but delivered only “empty promises,” had students watch movies and television shows rather than prepare them for work, and failed to intervene when an instructor repeatedly sexually harassed them, former students allege in a lawsuit.
The lawsuit by five Jersey Shore women, filed in Superior Court in Camden County, claims the Star Career Academy and three staff members also misrepresented their earning potential and the curriculum they were supposed to receive, which was supposed to prepare students for jobs as surgical technicians.
Instead, “classes often consisted of watching movies and television shows such as ‘The Hunger Games’ or involved field trips to places that had nothing to do with the curriculum,” according to the lawsuit.
The Star Career Academy, which had a campus in Brick, closed suddenly in November. Its leadership blamed “the negative financial impact of a continued declining student population while operating in the challenging for-profit post-secondary school industry,” according to a statement posted to the academy’s website at the time of its closure.
The women said in the complaint that they were sexually harassed by their instructor, Vincent Guarnieri, who allegedly leered at their bodies during class, “inappropriately” touched and caressed them and made unwanted sexual advances and comments.
My College Closed After I Graduated Loan Forgiveness Options
When college students take out loans, they do so with the expectation that they will be able to find a job after graduation that will enable them to pay off their debt.
However, sometimes things dont go as planned. For students who attended Corinthian Colleges, this has been all too true.
After the college closed suddenly, leaving students stranded and without a degree, many have struggled to find work that pays enough to cover their loan payments. As a result, many have fallen behind on their debt, and their credit scores have suffered.
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How Applying Can Affect Your Loans
You can choose to put your loans in forbearance which will halt payments and collections as part of your claim. After you submit your application, the Education Department will send you a confirmation with more information about your forbearance via email. Although the process should be automatic, you should contact your student loan servicer to make sure they received your forbearance notification and are processing it appropriately.
A borrower defense claim can result in full loan forgiveness, partial loan forgiveness, or no loan forgiveness. The new rule sets a high bar for full loan forgiveness and leans more toward partial relief based on financial damages. Interest will accrue while the Education Department evaluates your application and you will be responsible for interest on any part of your loans that is not cancelled.
How Borrower Defense To Repayment Works
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Borrower defense to repayment gives loan forgiveness to student loan borrowers if they were defrauded by their schools. Borrowers can also get relief if their schools closed before they could complete a degree.
The education department has discharged more than $14 billion in debt among 1 million borrowers through approved borrower defense claims and closed school discharge, as of October 2022. A settlement that clinched final court approval on Nov. 16 will add an additional $7.5 billion and up to 264,000 additional borrowers to those totals if it survives expected legal appeals.
Borrowers whose claims were approved can expect:
Full discharge of federal student loans.
Reimbursement of any amount paid toward the loan according to regulations.
Requests to remove negative credit reporting with the credit bureaus.
Reinstatement of federal student aid eligibility for those who lost it.
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New To Star Lrp Service
Watch the webinar recording: STAR LRP – Welcome to Service. It provides a helpful overview of your service requirements and addresses many FAQs about the program, including:
- Primary requirements of the STAR LRP service contract
- How to receive credit for service and report vacations or sick leave
- Additional resources to help you complete your term of service successfully
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The academy, which has campuses in Brick, Clifton, Egg Harbor and Newark, in Philadelphia and in New York City, also operates the Culinary Academy of Long Island in Syosset, N.Y., and ServFast Computers in Toms River.
The closure “is the result of the negative financial impact of a continued declining student population while operating in the challenging for-profit post-secondary school industry,” the company said in a news release on its website. “Star Career Academy has done everything in its power to prevent closure after operating for 37 years and providing a supportive educational environment for thousands of students.”
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How Do You Qualify For Loan Forgiveness
When you take out a student loan, you have the option to repay that loan several different ways, which are called qualifying payment plans. To qualify for loan forgiveness, you must make sure the loan you take is a federal loan that qualifies for forgivenessand that the payment plan you choose qualifies for forgiveness after 120 payments.
You also must make on-time payments exactly as outlined in your qualifying repayment plan. Repeat: To qualify, its critical that you follow the repayment rules to the letter. This cant be said enough. If you dont, you could be ineligible for forgivenesseven if you think youre on track.
You also must follow other rules set by your loan forgiveness programincluding that you are employed in an approved public service or nonprofit healthcare job.
To qualify for federal loan forgiveness, you must have taken out a qualifying federal loan and a qualifying repayment plan.
According to Jodi Okun, founder of College Financial Aid Advisors, loan forgiveness rules can be tricky, and its important not to let the prospect of loan forgiveness drive your career choice. I discourage young people from choosing a field just so their loan gets forgiven, Okun says. Sometimes a students path changes. And sometimes the policies around forgiveness change.
The Path to Forgiveness
How To Get Loan Forgiveness
There are two main programs that help here:
Borrower Defense To Repayment provides for the cancellation of a borrowers federal student loans when the college violated federal or state laws or engaged in a substantial misrepresentation concerning the borrowers student loans or the educational services paid for using the student loans. If a borrower qualifies for the borrower defense to repayment discharge, the borrowers federal student loans will be cancelled and all previous payments refunded to the borrower.
Important Note For Timing On The Most Recent Settlement For Borrower Defense To Repayment: If the current settlement is approved, it will apply not just to borrowers who filed claims before June 22, but also to borrowers who file claims after June 22 but before the court approves the settlement. A hearing is scheduled for July 28. In particular, the settlement provides that these borrowers will have their applications processed within three years, and if they aren’t processed, their loans will automatically be forgiven in full.
Closed School Discharges: If a college closed while the student is enrolled or within 180 days of the students withdrawal, the student may be eligible for a closed school discharge of their federal student loans if they are unable to complete their education through a teach-out or by transferring credits to another school.
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Relief For Defrauded Borrowers
Those approved for borrower defense debt cancellation received good news on March 18, 2021, when the Department of Education announced it would rescind the previous administrations calculations for partial relief for federal student loan borrowers approved for borrower defense debt cancellation and instead grant full relief to those borrowers. The education department says this will cancel $1 billion in loan debt for 72,000 borrowers. Here’s the relief that’s happened since then:
June 16, 2021: $500 million in relief for 18,000 borrowers who previously attended ITT Technical Institute, a for-profit chain of schools shut down in 2016 following federal sanctions.
July 9, 2021: 1,800 new borrower defense claims were approved for borrowers who attended three schools: Westwood College, Marinello Schools of Beauty and the Court Reporting Institute. All borrowers approved received full loan discharge for a total of $55.6 million in cancellation. The education department said this was the first time since 2017 that borrower defense claims were approved for students attending schools besides Corinthian Colleges, ITT Technical Institute and American Career Institute.
Aug. 26, 2021: Another 115,000 students who attended ITT Tech would have their student loan debt discharged. The relief totals $1.1 billion.
Federal Loans That Qualify For Forgiveness
Loan forgiveness only applies to federal loans from the federal government that students or their parents receive by filling out the Free Application for Federal Student Aid private student loans do not qualify for forgiveness. There are several types of these loans, all of which fall under the William D. Ford Federal Direct Loan Program, the largest federal student loan program. With these loans, the U.S. Department of Education is your lender, but youll have a servicera company that the DOE assigns to handle the billing and services related to your loan. FedLoan Servicing, Navient, Great Lakes Educational Loan Services Inc., and Cornerstore are among the servicer names you may be familiar with. There are four types of Direct Loans in this program, and they all qualify for forgiveness:
Direct Subsidized LoansFor eligible undergraduate students who demonstrate financial need to help cover the costs of higher education at an accredited college or career school.
Direct Unsubsidized LoansFor eligible undergraduate, graduate and professional students regardless of income.
Direct PLUS LoansFor graduate and professional students and parents of dependent undergraduate students to help pay for education expenses not covered by other financial aid. Note: Parent PLUS loans must be consolidated to be eligible to qualify.
There are two federal loan programs that have been discontinued, but if you have these loans, you could still be eligible for forgiveness:
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Total Cancellation At Other For
The Sweet v Cardona case isn’t the only way ED has granted widespread debt relief for student loan borrowers.
In instances involving high-profile for-profit systems, the department has offered cancellation for all students of the school, regardless of whether they filed a borrower defense claim or not. As of September 2022, ED says it has now approved $14.5 billion in debt discharges for nearly 1.1 million borrowers through this process.
Most recently, ED agreed to discharge $1.5 billion in student loan debt for 79,000 borrowers who attended any Westwood College school between Jan. 1, 2002 and Nov. 17, 2015.
The department announced in June that it canceled $5.8 billion in federal student loan debt belonging to former Corinthian Colleges students. That cancellation applies to those enrolled in any Corinthian Colleges-owned school between 1995 and 2015.
ED discharged another $3.9 billion in loan debt for former ITT Technical Institute students in August. It applies to 208,000 students who used those loans to attend ITT between Jan. 1, 2005 and its closure in September 2016.
How Do You Apply For Borrower Defense
To apply for borrower defense, you’ll need your Federal Student Aid ID, school name and program of study, enrollment dates, and evidence to support why you believe you are eligible for borrower defense. You can apply online or by filling out a PDF and sending it in via email or standard mail. The application process will take roughly 30 minutes.
To get more information on the status of your application, you may call the Department of Education’s borrower defense hotline at 1-855-279-6207. You can speak with someone Monday through Friday from 8 a.m. to 8 p.m. ET.
There is a limited pool of borrowers who qualify for borrower defense, but it doesn’t hurt to apply and see whether you’re eligible if you believe your school defrauded you.
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Other Healthcare Student Loan Forgiveness Options
In addition to the PSLF program, a number of organizations offer loan repayment assistance in exchange for a two-year or more work commitment by healthcare workers in an underserved area or at a research facility. Your loans need to be federal student loans. Find out from the individual organization what kind of loan repayment schedule is required to qualify. Take a look at the various options below.
Federal student loan relief is available to nurses who work as clinicians at Nurse Corps sites. You must be accepted into this program, which provides loan repayment or a scholarship for two or more years of work at a location with a critical nurse shortage. If youre thinking about going into public health nursing, perhaps after working as a certified nursing assistant, take a look at the Nurse Corps Loan Repayment Program.
The federal government funds a cost-sharing grant program known as the State Loan Repayment Program in more than 30 states and territories. Those working as primary care providers in Health Professional Shortage Areas can get help with loan repayment. Many states require a two-year commitment, but it may vary by discipline. For example, it could be three years for a dentist or four years for a physician assistant. Check with your state to see what your options are.
Student Loan Forgiveness and Repayment Resources
Federal Student Aid Site
Who Gets Relief Under The Sweet V Cardona Settlement
On Nov. 16, a federal judge in California gave final approval on Sweet v. Cardona , a settlement of borrower defense claims that will provide up to 264,000 student loan borrowers with $7.5 billion in debt relief. The final settlement, which must still withstand expected appeals by the defense, will provide full relief including student loan forgiveness, payment refunds and credit repair worth $6 billion to 200,000 borrowers who filed before June 2022 and attended one of about 150 mostly for-profit schools involved in the case. The remaining 64,000 have pending claims against schools not on that list decisions on their cases will be streamlined.
Borrowers who attended one of the schools below and submitted a borrower defense application on or before June 22, 2022, are eligible for discharge under the Sweet v. Cardona settlement if they haven’t received a decision or received a denial. Those who submitted a borrower defense application after June 22 and before Nov. 16, 2022 will qualify as a “post-class applicant.”
Seventy-five percent of all class members will receive loan discharges or refunds by November 2023. The remaining 25% of class members will receive an individual borrower defense decision on a rolling basis, which could result in loan discharges or refunds.
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Federal Repayment Plans Eligible For Forgiveness
Once youve taken out a federal student loan, youll need to decide how you want to pay it back before forgiveness is even an option. Several repayment plans are available to choose from, depending on your financial situation. With these plans, your payment is set at an amount that should be affordable based on your income. The payment plan you choose will depend on how much you earn in relation to the amount of debt you have. Review the loan payment plans to decide which one best applies to your situation. You may also be assigned a payment plan, but according to the Federal Student Aid web site, you can change repayment plans at any time, for free.
The four repayment plans listed below are the only plans eligible for the main forgiveness program, Public Service Loan Forgiveness Program. Its critical to make sure youre in the right repayment program to be eligible for loan forgiveness. In addition to the PSLF program, there are several other loan forgiveness programs specifically for healthcare workers they are detailed below.
The following four repayment options, as described by Federal Student Aid, are available for all students regardless of whether they work in a healthcare field.
As with everything regarding your loan, its important to discuss all the details with your loan servicer so you are aware of your responsibilities.
Who its for: Direct Loan Program borrowers.
Eligible loans include:
Who its for: Direct Loan Program borrowers who:
Eligible loans include:
Intro To Loan Forgiveness
Whether youre thinking about entering the healthcare field or youve already graduated from your degree program, you may be wondering how youll handle student loan debt. If you have earned a scholarship, youre part of the way there. But many students dont know that there are different ways to pay off a loan or even that you may be able to reduce or eliminate what you have to pay back. This comprehensive guide breaks down the types of federal student loan repayment plans and how to qualify for loan forgiveness, with a special focus on healthcare professions.
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