Yes, federal student loans serviced by Nelnet, particularly Direct Loans, can be forgiven under various federal programs if you meet specific eligibility criteria. Nelnet is a loan servicer, meaning they manage your loan payments and provide customer service on behalf of the U.S. Department of Education; they do not determine the rules for forgiveness. Forgiveness programs are established by federal law and apply to eligible federal student loans, regardless of which servicer manages them.
Here are the primary ways federal student loans serviced by Nelnet may be forgiven:
Public Service Loan Forgiveness (PSLF)
The Public Service Loan Forgiveness (PSLF) program is designed to forgive the remaining balance on Direct Loans for borrowers who work in public service.
Eligibility Requirements:
- Loan Type: You must have Direct Loans. If you have other types of federal loans (like FFEL Program loans or Perkins Loans), you may need to consolidate them into a Direct Consolidation Loan to qualify.
- Employment: You must be employed full-time by a qualifying public service employer. This includes:
- Government organizations (federal, state, local, or tribal).
- Not-for-profit organizations that are tax-exempt under Section 501(c)(3) of the Internal Revenue Code.
- Other not-for-profit organizations that provide specific public services (e.g., public education, public health, law enforcement).
- Payments: You must make 120 qualifying monthly payments while employed full-time by a qualifying public service employer. These payments must be made under a qualifying repayment plan (typically an income-driven repayment plan).
How It Works:
After meeting these criteria, the remaining balance of your Direct Loans is forgiven tax-free. You will need to submit an application to receive forgiveness. You can track your eligibility and payments by submitting the PSLF Form annually or whenever you change employers.
Income-Driven Repayment (IDR) Plan Forgiveness
Federal student loans, including those serviced by Nelnet, can be forgiven after a certain number of years under an Income-Driven Repayment (IDR) plan. IDR plans base your monthly payment amount on your income and family size.
Types of IDR Plans:
- SAVE Plan (Saving on a Valuable Education Plan): The newest IDR plan, offering lower payments for many borrowers.
- Pay As You Earn (PAYE) Repayment Plan
- Income-Based Repayment (IBR) Plan
- Income-Contingent Repayment (ICR) Plan
Eligibility and Forgiveness Timeline:
- Loan Type: Generally applies to Direct Loans and some FFEL Program loans.
- Payment Period: If you have loans from only undergraduate study, your remaining balance will be forgiven after 20 years of qualifying payments. If you have any loans from graduate or professional study, your remaining balance will be forgiven after 25 years of qualifying payments. (The SAVE Plan offers earlier forgiveness for some lower original loan balances).
- Taxability: Historically, IDR forgiveness has been considered taxable income by the IRS, though this rule is currently suspended until 2026.
Total and Permanent Disability (TPD) Discharge
If you are unable to engage in any substantial gainful activity due to a physical or mental impairment, you may be eligible for a Total and Permanent Disability (TPD) Discharge.
How to Qualify:
You can demonstrate TPD in one of three ways:
- Department of Veterans Affairs (VA) Determination: A VA determination that you are unemployable due to a service-connected disability.
- Social Security Administration (SSA) Notice: An SSA notice of award for Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI) benefits stating that your next scheduled disability review will be 5 to 7 years or more from the date of your most recent SSA disability determination.
- Physician's Certification: A certification from a licensed medical doctor that you are unable to engage in any substantial gainful activity due to a medically determinable physical or mental impairment that can be expected to result in death, has lasted for a continuous period of not less than 60 months, or can be expected to last for a continuous period of not less than 60 months.
Other Discharge Programs
Beyond PSLF, IDR, and TPD, there are other specific circumstances under which federal student loans can be discharged:
- Borrower Defense to Repayment: If your school engaged in misconduct, such as misrepresenting its services or employment prospects.
- Closed School Discharge: If your school closed while you were enrolled or shortly after you withdrew, and you were unable to complete your program.
- Death Discharge: Federal student loans are discharged if the borrower dies.
- False Certification Discharge: If your school falsely certified your eligibility to receive a loan.
Summary of Federal Loan Forgiveness Programs
| Program Type | Eligibility Criteria | Loan Types Covered | Forgiveness Timeline | Taxable? (Federal) |
|---|---|---|---|---|
| Public Service Loan Forgiveness | 120 qualifying payments, full-time employment with a qualifying public service employer | Direct Loans (others may need consolidation) | After 10 years (120 payments) | No (currently & always) |
| Income-Driven Repayment Forgiveness | 20-25 years of payments under an IDR plan | Direct Loans, some FFEL Program loans | After 20 or 25 years | Yes (currently suspended) |
| Total & Permanent Disability Discharge | Unable to engage in substantial gainful activity due to a medical condition | Most federal loans | Immediate (after approval) | No |
| Borrower Defense to Repayment | School misconduct (e.g., fraud, misrepresentation) | Direct Loans, some FFEL Program loans | Varies, based on claim | No |
| Closed School Discharge | School closed while you were enrolled or shortly after withdrawal | Direct Loans, FFEL Program loans, Perkins Loans | Immediate (after approval) | No |
Private Student Loans
It is important to note that private student loans, even if serviced by Nelnet, generally do not qualify for federal forgiveness programs like PSLF or IDR forgiveness. Private loan forgiveness is rare and typically only occurs in cases of severe disability or death, as determined by the lender's policies.
If you have federal student loans serviced by Nelnet, it's recommended to explore the official Federal Student Aid website (studentaid.gov) for the most up-to-date and comprehensive information on all forgiveness and discharge options.
