Frequently Asked Questions (FAQ)

General Eligibility & Status

What is the difference between "Forgiveness," "Cancellation," and "Discharge"?

These terms are often used interchangeably, but generally:

• Forgiveness: Typically tied to public service (PSLF) or income-driven repayment (IDR) plans.
• Cancellation: Often used for Teacher Loan Cancellation (TLC) or Perkins Loan cancellation programs based on specific employment.
• Discharge: Usually reserved for extreme circumstances like death, total and permanent disability (TPD), school closure, or borrower defense claims.

Can I qualify for PSLF if I only work part-time?

You must generally work full-time for a qualifying employer. However, if you are employed in more than one qualifying part-time job, you may be considered full-time if the total hours for all qualifying jobs equal or exceed 30 hours per week.

Consolidation & Qualifying Payments

Why do I need to consolidate my FFEL or Perkins Loans?

Only Federal Direct Loans are eligible for most major forgiveness programs (like PSLF and IDR forgiveness). Consolidating converts older loan types into a Direct Consolidation Loan, making them eligible for these programs. Note: Consolidation can sometimes reset the qualifying payment count, although temporary waivers have been available.

What counts as a "qualifying monthly payment" for PSLF?

A payment must be:

• Made on a Direct Loan.
• Made under a qualifying repayment plan (usually an IDR Plan).
• Made for the full amount due.
• Made while you are employed full-time by a qualifying employer.
• Payments do not have to be consecutive.

Special Discharge Circumstances

If my loan is discharged due to disability (TPD), will it be taxed?

Under current law (as of the date of this guide), TPD discharges are generally exempt from federal income tax. However, borrowers should always check with a tax professional as state tax laws may vary.

How long does the school closure discharge process take?

The processing time varies significantly depending on the volume of applications and the complexity of the case. It can take several months or longer. It's crucial to remain in contact with your loan servicer throughout the process.