If you’re struggling to repay your student loans, you’re not alone. Currently almost 45 million U.S. borrowers owe more than $1.5 trillion in student loan debt. About one million borrowers default on their student loans every year. Fortunately, programs are available to help you manage your student loan payments and, in some cases, qualify for Sallie Mae complete forgiveness.
Sallie Mae Loans the Money
What Sallie Mae is and what role they play in granting and managing student loans can be confusing. A quick history should clear this up.
Sallie Mae, or the Student Loan Marketing Association, was founded in the early 70s as a federal government-sponsored organization. But it later became privatized. It’s currently a publicly traded company on the Nasdaq Stock Market.
It no longer answers to any government – federal, state or otherwise. As a private lender, borrowing from Sallie Mae is no different from borrowing from your bank, credit union or a car dealership.
Navient Services the Loan
Sallie Mae markets student loans, reviews loan applications and loans money. They have nothing to do with you after you’ve received your loan. As soon as they disperse funds, your loan is passed on to a company called Navient. From this point all of your dealings will be with Navient.
Totally separate from Sallie Mae, Navient is also a private company. They service student loans for Sallie Mae and other loaners. They handle collecting payments as well as granting deferments and forbearances.
Navient does not forgive student loans. You have to apply to the government agency that handles the type of forgiveness you’re after. However, oftentimes a Navient representative can point you in the right direction.
Learn the Language
If you want to learn about Sallie Mae loan forgiveness, you’ll have to do some research first. As you look into this, it’s helpful to know the language. Here are some common terms you’ll come across:
- Forgiveness or cancellation: You are not required to make any further payments on your student loans because of the type of work you do.
- Discharge: You don’t have to repay your loan due to death, disability, bankruptcy, incarceration or the school you received the loans for closes.
- Deferment or forbearance: You temporarily don’t have to make payments or you’re allowed to make lower than normal payments because you’re experiencing financial hardship, have returned to school or have been deployed by the military.
Sometimes these terms are used incorrectly or interchangeably, even by the pros. So always ask for clarification when speaking to a company or government representative about your loans.
Public Service Student Loan Forgiveness
Regardless of what kind of work you do, if your employer is a government or not-for-profit organization, you may qualify for forgiveness through the Public Service Loan Forgiveness Program.
Any kind of U.S. government will do – federal, state, local or tribal. Not-for-profit work has to be with an organization that is tax-exempt under the Internal Revenue Code’s Section 501(c)(3).
Either way you have to be working full-time and you have to have made 120 monthly payments to your student loans. That’s 10 years worth of payments. Full-time volunteer work with the Peace Corps or AmeriCorps should also qualify you for this program.
Student Loan Forgiveness for Teachers
Teachers can often qualify for student loan forgiveness under the PSLF program. You may also qualify under the Teacher Loan Forgiveness Program. You need to have taught full-time for five consecutive years in a low-income school or “educational service agency.” This program forgives up to $17,500.
But a word of warning, you’ll want to be fully caffeinated when you start looking into this program. It’s complex and full of fine print. For starters, the school or educational service agency you work for has to be listed in the U.S. Department of Education’s Teacher Cancellation Low-Income Directory, which is available online.
You have to be a “highly qualified teacher,” which means you have at least a bachelor’s degree and teaching certification from your state. Further, you can’t be in default on the loan that you’re trying to have forgiven, and the list goes on. A quick tip – some states have their own student loan forgiveness programs for teachers. Check out the online database at the American Federation of Teachers website.
Cancer Student Loan Deferment
The 2019 Department of Education Appropriations Act has a section that says your student loans can be deferred while you’re in cancer treatment and for six months afterward. However, there have been instances when student loan servicing companies (not Navient) have refused to grant cancer deferments.
If you run into trouble getting your student loan payments deferred due to a cancer diagnosis, contact the Consumer Financial Protection Bureau and your congressperson. One cancer patient had success after she contacted a CNBC reporter.
Disability Student Loan Forgiveness
Getting your student loans forgiven due to disability can be a fairly easy process if you’ve already been approved for full disability benefits by the Social Security Administration or the U.S. Department of Veterans Affairs.
You have to work with a company called Nelnet, which is – you guessed it – another publicly traded company contracted by the Department of Education. They have a program called Total and Permanent Disability. You can apply online at disabilitydischarge.com.
They will tell you that reviewing and responding to your application will take up to 120 days. However, it’s usually much quicker if you’ve already been officially declared disabled. While you’re in the application process they will notify the Department of Education to hold off any further collection efforts.
Discharge Due to Death
Your Sallie Mae student loans can also be discharged if you die or if the person who took out the loans for you, like a parent, dies. A copy of the death certificate has to be sent to Navient.
Student Loans and Bankruptcy
It’s very difficult to have student loans discharged in a bankruptcy, but it’s not impossible. You have to be able to show that making payments will create an undue hardship on you and any dependents.
Undue hardship is defined differently depending on the court. But one commonly used method is called the Brunner test. It requires you to prove the following:
- That you cannot maintain a minimal standard of living if you have to repay your student loans.
- That the circumstances in your life that created this situation will continue indefinitely.
- That you have made efforts to repay the loans.
Do yourself a favor and hire a bankruptcy lawyer who has experience getting student loan debt discharged. The only way you’ll know for sure if your student loans can be discharged through bankruptcy is to file and see what the court decides. But a good lawyer can make the best case for you.
Incarceration and Student Loan Forgiveness
There isn’t much current information available about Sallie Mae loan forgiveness if you’re in prison (the last unredacted version of the Department of Education’s "Private Collection Agencies Manual" was published in 2009). However, in general it appears that if you haven’t been making payments and the loans are in default, collection efforts will stop while you’re in prison for up to 10 years.
If you’re going to be locked up for more than 10 years, student loans are usually written off or discharged. Typically this means that you don’t have to repay them at all. However, when incarceration is involved there’s no guarantee. They could be reinstated after you’re released.
Oddly – to be filed under “no good deed goes unpunished” – if you’ve been making payments and are not in default, loan collectors will continue trying to collect. However, since chances are that you’re not earning much while in jail, you can apply for a forbearance or deferment.
Student Loans and Taxes
Various forms of educational debt relief may be available to you under the 2017 Tax Cuts and Jobs Act. However, none spell forgiveness. For example, the Act provides tax cuts for educational costs.
However, if you’ve applied for Sallie Mae complete forgiveness because you’re disabled, you’ll be happy to learn that under the Act the forgiven loan no longer counts as income.
Several other proposed changes to laws affecting student loans are in the works. For example, the cap for income-driven repayment plans may increase from 10 percent of discretionary income to 12.5 percent. So keep an eye on the news for updates on what passes and what doesn’t.
Contact Navient for Assistance
Now that you know the language and have an idea of what kind of forgiveness you might qualify for, it’s time to call Navient. You can reach them at 800-722-1300 to discuss your options.
- CNBC: Student Borrowers With Cancer Should be Able to Put Their Bills on Hold. This Woman Was Told She Couldn’t
- Federal Student Aid: Deferment and Forbearance
- Federal Student Aid: Forgiveness, Cancellation, and Discharge
- Federal Student Aid: Wondering Whether You Can Get Your Federal Student Loans Forgiven for Your Service as a Teacher?
- Forbes: Can Student Loans Now Be Discharged in Bankruptcy?
- Forbes: Student Loan Debt Statistics In 2019: A $1.5 Trillion Crisis
- Student Loan Borrowers Assistance: Bankruptcy
- Student Loan Borrowers Assistance: Incarceration
- Student Loan Hero: The Important Difference Between Sallie Mae and Navient
- CNBC: More Than 1 Million People Default on Their Student Loans Each Year
- Federal Student Aid. "Public Service Loan Forgiveness." Accessed Sept. 27, 2020.
- Americorps. "Forbearance and Forgiveness." Accessed Sept. 27, 2020.
- Federal Student Aid. "Wondering Whether You Can Get Your Federal Student Loans Forgiven for Your Service as a Teacher?" Accessed Sept. 27, 2020.
- U.S. Army. "Benefits." Accessed Sept. 27, 2020.
- Air Force. "JAG Financial Incentives Brochure." Accessed Sept. 27, 2020.
- National Institutes of Health. "Eligibility and Programs." Accessed Sept. 27, 2020.
- National Health Service Corps. "NHSC Loan Repayment Program: One Application, Three Programs." Accessed Sept. 27, 2020.
- Department of Justice. "Attorney Student Loan Repayment Program." Accessed Sept. 27, 2020.
- Federal Student Aid. "If Your Federal Student Loan Payments Are High Compared to Your Income, You May Want to Repay Your Loans Under an Income-Driven Repayment Plan." Accessed Sept. 27, 2020.
LeDona Withaar has over 20 years’ experience as a securities industry professional and finance manager. She was an auditor for the National Association of Securities Dealers, a compliance manager for UNX, Inc. and a securities compliance specialist at Capital Group. She has an MBA from Simmons College in Boston, Massachusetts and a BA from Mills College in Oakland, California. She has done volunteer work in corporate development for nonprofit organizations such as the Boston Symphony Orchestra. She currently owns and operates her own small business in addition to writing for business and financial publications such as Budgeting the Nest, Zacks and PocketSense.