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If you enrolled in a college, university, or career school based on misleading information from the school, or you were the victim of other types of misconduct by the institution, you can apply to the government to have your federal loans forgiven under a process known as Borrower Defense Loan Discharge.

If your borrower defense application is approved, a discharge means you will no longer have to repay your federal student loans. In some cases, you may also see reimbursement for federal loans you’ve paid up to now, including interest on the loans.

Understanding Borrower Defense to Repayment

The Borrower Defense to Repayment program has made a difference for a great many people. As of October 2024, the Department of Education (DOE) had forgiven $28.7 billion worth of debt for more than 1.6 million borrowers who were cheated by their schools, saw their institutions precipitously close, or were covered by related court settlements.

Borrower defense discharges apply only to federal student loans that are Direct Loans or can be consolidated into a Federal Direct Consolidation Loan, including Federal Family Education (FFEL) Program loans, Federal Perkins Loans, and Parent Loans for Undergraduate Students (PLUS).

Borrower defense discharges don’t apply to private student loans.

Definition and Purpose

Borrower defense loan discharge, which is sometimes shortened to “borrower defense” or “borrowers defense,” is a federal regulation that allows students who can demonstrate that they have been defrauded by their schools to get forgiveness of their debt.

According to the formal definition of borrower defense, people can apply who were “enrolled in a school or continued to attend a school based on misleading information from the school or other misconduct covered by the regulation, and suffered a detriment that is of a nature and degree warranting a full discharge of their applicable federal loans.”

Historical Context and Recent Developments

Borrower defense began in the 1970s. At that time, the federal government created an interagency committee to examine and address the growing problem of “educational abuses.” An amendment to the renewal of the Higher Education Act in 1993 codified borrower defense to repayment into the Act.

The law gives the Secretary of Education the power to determine when and under what circumstances valid defenses against repayment of federal student loans can be granted.

The Department of Education received a modest number of borrower defense claims in the 20th century. However, in the last 20 years, borrower defense has gained prominence. An official administrative process for borrower defense was created after the 2015 collapse of Corinthian Colleges, which affected tens of thousands of students.

The most famous borrower defense case is a class-action suit known as Sweet v. Cardona (formerly Sweet v. DeVos). On June 22, 2022, the Department of Education and the plaintiffs in the case agreed to a $6 billion settlement. Those payments are still being processed as of late 2024.

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Eligibility Criteria for Borrower Defense

There are six different grounds that may qualify an individual for a borrower defense discharge under the 2023 Borrower Defense Regulation, which sought to strengthen protections for borrowers. According to the Federal School Aid division of the DOE, the six criteria are:

1. Substantial Misrepresentation

A school makes a substantial misrepresentation when it lies to or misleads students about its educational services, financial charges, or the employability of its graduates, and that information is central to a student’s decision to enroll, stay enrolled, or take out loans.

2. Substantial Omission of Fact

A school makes a substantial omission when it suppresses, conceals, or omits important information that a reasonable person would have considered in deciding to enroll, stay enrolled, or take out loans.

3. Breach of Contract

A breach of contract has occurred when you have an agreement with your school and your school does not do what it promised to do in your agreement. The agreement must have been made in exchange for your decision to attend or continue attending, your decision to take out loans, or for funds disbursed in connection with a loan.

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4. Aggressive and Deceptive Recruitment

A school engages in aggressive and deceptive recruitment when it:

•   Demands or pressures you into making enrollment or loan-related decisions immediately

•   Takes unreasonable advantage of your lack of knowledge about, or experience with, postsecondary institutions, postsecondary programs, or financial aid

•   Discourages you from consulting with others before making an enrollment or loan-related decision

•   Obtains your contact information through websites or other means that falsely offer assistance to individuals seeking federal, state, or local benefits; falsely advertise employment opportunities; or present false rankings of the institution or its programs

5. Judgment

This means that a judgment has been issued against your school where a court has ruled that your school violated the law. This judgment must be based on your school’s act or omission relating to the making of a loan or on the provision of educational services for which the loan was provided. It’s important to be aware that a settlement is not a judgment.

6. Prior Secretarial Action

You may be approved for a borrower defense discharge based on a decision by the DOE to revoke your school’s provisional program participation agreement or deny its recertification to participate in the federal student aid programs, if that action is based on conduct that could give rise to a borrower defense.

Application Process

When you begin the application process, you’ll be asked to create a StudentAid.gov account so you can submit, review, and manage your borrower defense application online.

Alternatively, you can download a PDF version of the borrower defense application and submit your completed application by mail to the address listed on the application.

According to regulations, your application must meet the “materially complete” standard to be considered. Among the things you will need to provide are:

•   A description of what your school did or failed to do that is covered by the kinds of misconduct that qualifies for borrower defense discharge.

•   The names of the school or representative of the school that committed the misconduct and when the misconduct occurred.

•   How the misconduct impacted your decision to attend the school, to continue attending the school, or to take out the loan for which you are applying for a defense to repayment

•   A description of the harm you experienced because of the school’s misconduct.

Under the 2023 regulation, the Department of Education has three years to make a decision on your application after receiving it and determining that it is materially complete. However, the three-year period is paused if your application becomes part of a group application process at any time.

Potential Outcomes

A borrower defense claim can result in full loan forgiveness, partial loan forgiveness, or no loan forgiveness. A refund may include both principal and federal student loan interest. The remaining loan balance may also be discharged, meaning you won’t have to repay it.

However, your request for borrower defense may not be approved. If the evidence does not meet the DOE’s standard, your claim will be denied. You won’t receive a discharge of your federal student loans, and the forbearance or stopped collections period will end for all of your loans. You’ll be responsible for repaying these loans.

Alternatives to Borrower Defense

If you’re trying to get out of student loan debt, and you are denied borrower defense, you may qualify for a deferment or a forbearance. With both of these options, you can temporarily suspend your federal loan payments. However, there is a difference between the two options related to the interest on your loans. In deferment, interest doesn’t accrue on some types of Direct loans, while during a forbearance, interest accrues on all Direct loans.

If you are seeking student loan forgiveness through an income-driven repayment plan over a period of years, there are several programs that exist to help lower your monthly loan payments based on how much money you earn and your family size.

Another route to explore is refinancing your student loan to potentially obtain a lower interest rate or more favorable terms of repayment. When you refinance student loans, you replace your old loans with a new loan from a private lender. It’s important to know that if you refinance federal loans, they will no longer qualify for federal student loan forgiveness.

As you consider different methods to manage your student loan debt, a student loan payment calculator can help you determine what your loan payments might be in various scenarios.

The Takeaway

Borrower defense can be a path to federal loan forgiveness or even repayment for people who can prove misconduct on the part of their school. As of October 2024, the Department of Education had forgiven $28.7 billion for more than 1.6 million borrowers who suffered from misconduct by their schools, saw their institutions precipitously close, or were covered by related court settlements. The application requires proof of misconduct and the harm it caused you, and the Department of Education can take three years to decide whether to approve it.

If you don’t qualify for borrower defense to repayment, there are other options you can pursue for help repaying your student loan debt. These include deferment, forbearance, or student loan forgiveness, if you qualify.

Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.

FAQ

What types of school misconduct qualify for borrower defense to repayment?

The types of school misconduct that can lead to a successful case includes an institution lying to or misleading borrowers about its educational services, financial charges, or the employability of its graduates.

How long does the borrower defense to repayment process take?

The Department of Education (DOE) has three years in which to review an application for borrower defense. The DOE says, “We have three years to make a decision on your application once we determine that your application is materially complete. The three-year period is paused if your application becomes part of a group claim process.”

Can private student loans be discharged through borrower defense to repayment?

No, private student loans are not eligible for this program. Borrower defense to repayment is only applicable to federal student loans.

Photo credit: iStock/PeopleImages

SoFi Student Loan Refinance
SoFi Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org). SoFi Student Loan Refinance Loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Public Service Loan Forgiveness, Income-Based Repayment, Income-Contingent Repayment, PAYE or SAVE. Additional terms and conditions apply. Lowest rates reserved for the most creditworthy borrowers. For additional product-specific legal and licensing information, see SoFi.com/legal.

SOSLR-Q324-034

When you enroll in college, the last thing you expect is for your college to close. College closures are a real possibility, however — according to BestColleges.com, at least 72 public and nonprofit colleges have closed or merged since March 2020, with private nonprofit school closures impacting nearly 46,000 students.

If your college closes, there are steps you can take to transfer to another school or apply for a student loan discharge. Here’s what to do if your college closes and how to handle your student loans.

Understanding the Impact of College Closure

A college closure can affect your educational progress and your student loans. Here’s what to expect.

Immediate Effects on Your Education

If your college closes, you’ll no longer be making progress toward your degree. Classes may be canceled mid-semester, and you won’t earn the credits you were working toward. If you’re interested in continuing your education, you’ll have to see if your college has a “teach-out” agreement with another school, which is a contract that allows students to finish their program of study with the other school, or if you can transfer your credits to another institution.

Potential Consequences for Your Student Loans

If your college closes, do you still have to pay off your student loans? That depends.

You may be eligible for federal student loan discharge through the Closed School Discharge or Borrower Defense to Repayment program. However, if you accept a “teach-out” plan to complete your degree at another school, you won’t be able to discharge your student loan debt.

There’s also no guarantee that you’ll qualify for a Closed School Discharge or Borrower Defense, and the process may take a while. While you’re waiting, you’ll have to start paying back your student loans once the six-month grace period is over.

If you have private student loans, there is no universal closed school discharge for these loans. Contact your lender to see how they might be able to help you.

Steps to Take Immediately After College Closure

Having your school close unexpectedly can feel like a nightmare, but there are steps you can take to get back on track.

•   Gather your school records: Request your school records as soon as possible, especially if you’d like to transfer to another school. These include your transcript, a record of your credits and degree progress, financial aid information, and any other relevant communications you’ve received from your school.

•   Find out about “teach-out” options: Some colleges offer a “teach-out” option, which lets you immediately transfer to a different school and pick up where you left off. Make sure to research the new school before you accept this agreement, however, to ensure it has a good reputation and fits your academic and financial needs. Be wary of unaccredited programs, as they may not offer a high-quality education or strong student outcomes.

•   Research credit transfers to other schools: You can also explore alternative colleges for finishing up your degree. Consider prioritizing accredited programs, since accreditation suggests that a college meets high standards for quality and is eligible for federal financial aid. Find out if your credits will transfer to the new college so that you don’t have to start from scratch.

•   Contact your loan servicers: If you took out student loans, reach out to your loan servicers to notify them about the school closure and find out about next steps. You might find that your loans will enter repayment in six months unless you enrol at least half-time in another school.

•   Explore student loan discharge options: You may be eligible for a discharge of your federal student loans if your school closes and you don’t accept a “teach-out” transfer. As previously mentioned, private student loans don’t have as many options, but it’s worth contacting your lender to find out.

Recommended: Federal Student Loan Interest Rates Explained

Student Loan Discharge Options

Borrowers who experience a college closure may be eligible to have their federal student loans discharged through two programs:

•   Closed School Discharge: With this program, you may be able to have your federal student loans discharged if you were enrolled when (or withdrew shortly before) your college closed. New rules to streamline the discharge program were scheduled to go into effect in mid-2023, but due to legal challenges, the Department of Education will process closed school discharge applications under pre-2023 rules.

•   Borrower Defense to Repayment: This program offers federal student loan discharge to borrowers who were misled or defrauded by their schools. Qualifying borrowers could also get reimbursed for amounts they already paid toward the loan, and request a removal of negative marks from their credit report. Similar to the Closed School Discharge program, however, the latest borrower defense rules have been blocked by a court injunction. Borrowers can still apply online for Borrower Defense Discharge, but the Department of Education will use old rules to determine eligibility.

Eligibility Criteria for Loan Discharge

To be eligible for the Closed School Discharge program, you must meet the following requirements:

•   Your school closed while you were enrolled, on an approved leave of absence, or had withdrawn less than 180 days prior

•   You will not be accepting a teach-out agreement or transferring your credits to a new school

•   You did not already graduate or complete your program

For Borrower Defense to Repayment, you might qualify if you can prove one of the following about your college:

•   Substantial misrepresentation: Your school misled you about its educational services, costs, or another important factor.

•   Substantial omission of fact: Your school concealed important information that would have impacted your decision to enroll.

•   Breach of contract: Your school did not do what it promised to do in its agreement with you.

•   Aggressive and deceptive recruitment: The college pressured you to act immediately on an enrollment or student loan decision or engaged in other aggressive recruitment practices.

•   Judgment: A court ruled that your school violated the law.

•   Prior secretarial action: The Department of Education revoked a participation agreement or financial aid recertification with your school.

Application Process for Loan Discharge

If you qualify for Closed School Discharge, your loan holder should send you an application that you can submit to your loan servicer. Alternatively, you can contact your servicer directly about how to apply.

If your grace period ends and your application is still under review, it’s a good idea to start making student loan payments. Otherwise, you risk damaging your credit and racking up late fees.

For the Borrower Defense program, you can apply online on the Federal Student Aid website. The application takes about three hours to complete.

You’ll need to sign in with your FSA ID and provide your school name, program of study, and enrollment dates. You’ll also have to give documentation to support your application for Borrower Defense.

But be aware that the process to get a student loan discharge from Borrower Defense is lengthy. According to the Department of Education, it can take up to three years to process and make a decision on your application.

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Alternatives to Loan Discharge

Student loan discharge is not guaranteed, especially with the various legal challenges that have cropped up in recent years. Some alternatives to consider include:

•   Transfer to another school: You could accept a teach-out plan or transfer credits to another school of your choice to complete your program and earn your degree.

•   Pay back your student loans: Explore your options for repayment plans, such as the standard 10-year plan and income-driven repayment, along with these strategies for getting out of student loan debt.

•   Pursue loan forgiveness or repayment assistance: You may be eligible for student loan forgiveness or repayment assistance, depending on your profession and where you work.

•   Refinance student loans: Through student loan refinancing, you might qualify for a better interest rate or more favorable loan terms than you have now. Avoid refinancing federal student loans if you’re pursuing Closed School Discharge or another federal program, however, as doing so would make them ineligible for federal loan cancellation programs and other benefits.

Long-Term Considerations

Having your school close its doors is an extremely stressful situation, and it’s important to act quickly to obtain your transcript and other academic records. Once you’ve gotten your documents in order, though, take a deep breath and consider what comes next.

You can finish up your degree at another college and continue working toward your academic and professional goals. Rather than accepting a teach-out plan right away, do your own research on colleges and credit transfers to find the best place for you.

If you’d rather press pause on your education, or your credits won’t transfer, explore your options for federal student loan discharge. You’ll need to pay your student loans once your grace period ends, however, or you could end up with damage to your credit score. This student loan payment calculator can help you estimate your monthly and long-term costs.

The Takeaway

If your college closes while you’re enrolled, you may not have to pay your federal student loans thanks to the Closed School Discharge program. Alternatively, you can consider transferring your credits to a new school to finish up your education there.

If neither of these options is right for you, you can pursue loan forgiveness, repay your loans, or opt for student loan refinancing if you can qualify for favorable terms. Review all the alternatives to determine the best path forward for you, your education, and your financial situation.

Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.

FAQ

Can I transfer my credits to another institution if my college closes?

You may be able to transfer your credits to another institution if your college closes, but it depends on the requirements of the school and program. For instance, some colleges may only accept credits from accredited colleges. Check with your target school to see if the credits you’ve earned so far would be transferable.

Am I eligible for student loan discharge if my school closes?

You may be eligible for federal student loan discharge through the Closed School Discharge program if your school closes. To qualify for this program, your school must have closed while you were enrolled, on an approved leave of absence, or within 180 days after you withdrew.

How do I obtain my academic records from a closed college?

If your college closes, contact school administrators as soon as possible to obtain your academic records. If this isn’t possible, reach out to your state’s agency that oversees higher education for help locating your records. Some schools allow you to order transcripts through the National Student Clearinghouse, so that might be another option for you.

Photo credit: iStock/Unaihuiziphotography

SoFi Student Loan Refinance
SoFi Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org). SoFi Student Loan Refinance Loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Public Service Loan Forgiveness, Income-Based Repayment, Income-Contingent Repayment, PAYE or SAVE. Additional terms and conditions apply. Lowest rates reserved for the most creditworthy borrowers. For additional product-specific legal and licensing information, see SoFi.com/legal.

SOSLR-Q324-031

If you have a Perkins Student Loan you may be eligible for Perkins loan forgiveness. That means you could have your Perkins loan debt partially or fully canceled so that you no longer need to pay it.

Read on to find out how Perkins loan forgiveness works and whether you might qualify.

What Are Perkins Loans?

Student loan borrowers may have federal or private student loans, or a combination of both types. Perkins loans are low-interest subsidized federal loans for students with exceptional financial need.

The federal student loan interest rate on Perkins loans was a fixed 5%. The government covered the interest that accrued on these loans while students were in school.

Perkins Loans are no longer offered — the program ended in 2017. However, borrowers who have Perkins loans are still required to repay them. In certain situations, these borrowers might qualify for certain federal benefits like Perkins loan forgiveness or Perkins loan cancellation to help get out of student loan debt.

Perkins Loan Forgiveness Options

Borrowers may be eligible for Perkins student loan forgiveness if they work full-time in public service jobs such as education, military service, and law enforcement. Here are details about the different federal Perkins loan forgiveness options.

Teaching Service Cancellation

If you teach in a public or nonprofit school, you may be able to get Perkins loan cancellation. Perkins loan cancellation for teachers forgives up to 100% of your Perkins loans if you are a special education teacher, work in a low-income school district, or teach certain subjects, such as math, science, or a foreign language.

If you’re eligible, a percentage of your Perkins loan balance and the interest it accrues will be canceled annually over five years in the following increments: 15% for your first and second years of teaching, 20% for your third and fourth years of service, and 30% for your fifth year of teaching.

You may also qualify for Perkins loan cancellation if you’re a speech pathologist, a librarian, or work in an educational role in a Head Start program and you started working on or after August 14, 2008.

Public Service Cancellation

You may qualify for forgiveness of your Perkins loans if you work in certain nonprofit public service jobs and fields, such as:

•   Child or family services agency: Those employed in an educational job in a child or a family services agency may be eligible for complete loan cancellation after five years of service. Qualifying jobs include working at a prekindergarten or child-care program for students in low-income communities.

•   AmeriCorps VISTA or Peace Corps volunteer: Individuals who serve as VISTA or Peace Corps volunteers for four years may qualify for up to 70% Perkins loan cancellation.

Military Service Cancellation

Members of the military can potentially qualify for Perkins loan forgiveness. Military service members may be eligible for up to 50% loan cancellation for four years of service if their active service ended before August 14, 2008. Those whose active duty began on that date or later might qualify for up to 100% loan cancellation for five years of service.

Law Enforcement and Corrections Officer Cancellation

If you’re a law enforcement officer, correctional officer, or firefighter, you might qualify for up to 100% loan cancellation if you serve five years full-time at an eligible law enforcement agency or federal, state, or local firefighting agency. Firefighters must have started work on or after August 14, 2008.

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Eligibility Requirements for Forgiveness

The requirements to qualify for Perkins loan forgiveness can be fairly stringent. Generally, you must be employed full-time to be eligible for Perkins loan forgiveness. You’ll also need to meet the following requirements:

•   Elementary or secondary teacher: Teachers (including supervisors, administrators, researchers, and curriculum specialists) may qualify as long as they work full-time for a full academic year or two half-years at different schools within 12 consecutive months. They can also teach part-time at two or more schools. To be eligible, educators must work in a low-income district or service agency in a teacher shortage area.

•   Special education teacher: To qualify, these teachers need to work at a public or nonprofit elementary or secondary school in speech and language pathology or audiology, physical therapy, occupational therapy, psychological and counseling services, or recreational therapy.

•   Preschool or prekindergarten teacher: Eligible educators must work full-time in a prekindergarten or child-care program and they must have started on or after August 14, 2008.

•   Law enforcement, correctional officer, or first responder: These individuals must work five years in their respective fields. Firefighters need to have started on or after August 14, 2008.

•   Attorney: Lawyers who work full-time for five years for a federal public or community defender organization may qualify for Perkins loan forgiveness. They must have started on or after August 14, 2008.

•   Military: Members of the military may be eligible for up to 50% loan cancellation for four years of military service if their active service ended before August 14, 2008, or up to 100% loan cancellation for five years of service if their active service duty began on or after August 14, 2008.

•   Health care: If you’re a full-time nurse or medical technician, or work with people with disabilities, you may qualify for up to 100% Perkins loan cancellation.

Forgiveness Application Process

If you believe you qualify for forgiveness, you’ll need to apply for cancellation or discharge of your Perkins loans. To do this, contact the school that originally issued your Perkins loan or reach out to your loan servicer. They will provide the forms and instructions for the type of cancellation or student loan discharge you may be eligible for. Be aware that you will need to show proof that you work in a qualifying public service job.

Partial vs. Full Cancellation

Perkins loans may be forgiven up to 100% of the amount owed, or up to 70% or 50%. Generally speaking, those employed in certain public service occupations as noted above, who started working before August 14, 2008, may qualify for 50% forgiveness rather than up to 100%. Individuals who worked for four years as AmeriCorps VISTA or Peace Corps volunteers may be eligible for up to 70% Perkins loan cancellation. Check with your loan servicer about the specific details of your forgiveness situation.

If you are eligible for 100% forgiveness, your debt will be forgiven in the following increments over five years, as long as you remain employed in your qualifying job:

•   15% of the original loan amount for first and second years

•   20% of the original loan amount for third and fourth years

•   30% of the original loan amount for the fifth year.

Common Challenges in Obtaining Forgiveness

Obtaining forgiveness can be a demanding process. First, you must meet all the eligibility requirements to qualify. And being approved for forgiveness may take months. In the meantime, you will need to keep paying your Perkins loans to avoid missing payments. If you default on your loans, you may not be eligible for forgiveness.

Perkins Loan Discharge Options

If Perkins loan forgiveness isn’t an option for you, you might qualify for Perkins loan discharge in certain circumstances. These circumstances include:

•   Bankruptcy

•   Total and permanent disability

•   Death

•   Your school closed while you were getting your degree

If one of these situations applies to you, you may be eligible for total and immediate discharge of your Perkins loans. Contact your school’s financial aid office or your loan servicer for the forms and instructions to apply for discharge.

Alternatives If You Don’t Qualify for Forgiveness

If you are not eligible for Perkins loan forgiveness, there are other repayment options as well as forgiveness and assistance programs you can explore. Here are some alternatives to Perkins loan forgiveness.

Income-Driven Repayment Plans

Federal income-driven repayment (IDR) plans base your payments on your income and family size and often result in a lower monthly payment. On these plans, your loans may be forgiven after 20 or 25 years of qualifying payments.

While Perkins loans are not eligible for IDR plans, if you consolidate your Perkins loans with a Federal Direct Consolidation Loan, you can then enroll in an IDR plan.

Public Service Loan Forgiveness

Under this program, if you work full-time for a government or nonprofit organization, you may be eligible for forgiveness after 120 qualifying payments under a qualifying repayment plan, such as IDR.

Just as with IDR plans, Perkins loans are not eligible for Public Service Loan Forgiveness unless you consolidate them with a Federal Direct Consolidation Loan.

Student Loan Repayment Assistance Programs

Some states and various organizations offer student loan repayment assistance programs (LRAPs) for those who work in high-need occupations and shortage areas. Check with your state or any professional organizations you belong to to see what LRAPs they might have and if you may qualify.

Student Loan Refinancing

When you refinance student loans, you replace your old loans with a new private loan that ideally has lower rates and more favorable terms if you qualify for them. That could help make your payments more manageable. However, refinancing federal student loans means that you’ll lose access to federal benefits, so make sure you won’t need these programs before moving ahead.

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The Takeaway

Borrowers may qualify for Perkins loan forgiveness if they work full-time in certain public service jobs and meet other eligibility requirements. If approved, they may be able to have up to 100% of their Perkins loans forgiven.

If forgiveness isn’t an option for you, there are alternatives that could help you repay your Perkins loans, such as an income-driven repayment plan or a student loan repayment assistance program. Another method to consider is student loan refinancing, especially if you can qualify for a lower interest rate or more favorable terms. Explore all the options available to make an informed decision about the best choice for you.

Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.

FAQ

What are the eligibility requirements for Perkins loan forgiveness?

To be eligible for Perkins loan forgiveness, borrowers must work full-time in certain public service jobs such as teaching, military service, health care, and law enforcement, for five years, or in certain nonprofit jobs for four years. In addition, each occupation and field has specific requirements. Check with the school that issued your Perkins loan or your loan servicer for more information.

How long does it take to have Perkins loans forgiven?

In most cases, you’ll need to work full-time for five years in specific public service jobs before your Perkins loans are forgiven. Typically, the loans will be forgiven in the following increments: 15% of the original loan amount in the first and second years, 20% in the third and fourth years, and 30% in the fifth year.

Is Perkins loan forgiveness taxable?

Generally speaking, Perkins loan forgiveness is currently not taxable on a federal level. However, that may change. While forgiven student loan debt is typically considered taxable by the IRS, the American Rescue Plan of 2021 made forgiven debt temporarily exempt from federal income taxes. But this federal tax-exempt status only applies to loans forgiven between January 1, 2021 and December 31, 2025.

Photo credit: iStock/Milko

SoFi Student Loan Refinance
SoFi Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org). SoFi Student Loan Refinance Loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Public Service Loan Forgiveness, Income-Based Repayment, Income-Contingent Repayment, PAYE or SAVE. Additional terms and conditions apply. Lowest rates reserved for the most creditworthy borrowers. For additional product-specific legal and licensing information, see SoFi.com/legal.

SOSLR-Q324-030

If you’re an animal lover, a career as a veterinarian can be deeply rewarding. However, you may end up with significant student loan debt after earning your Doctor of Veterinary Medicine (DVM). According to the American Veterinary Medical Association (AVMA), veterinary school borrowers owe an average of $179,505 upon graduation.

Debt of this magnitude can take a long time to pay off, but there are programs to help make repayment more manageable. Here’s a closer look at the average vet school debt and costs, plus tips on how to manage your veterinary student loan debt.

Overview of Veterinary Education Costs

Veterinary school typically spans four years after an individual earns an undergraduate degree and costs an average of more than $200,000 for in-state residents and $275,000 for out-of-state students, according to the Veterinary Information Network Foundation.

The American Association of Veterinary Medical Colleges (AAVMA) found that resident four-year tuition ranges from $78,588 to $259,720. While these figures reflect tuition rates, there are additional costs involved with paying for vet school. These include room, board, transportation, books, and other living expenses.

Non-resident total cost can range anywhere from $235,345 to $480,571, according to the AAVMA.

Current Average Student Loan Debt for Veterinarians

Given the high cost of veterinary school tuition, it’s not surprising that vet school debt reaches well into six-figure territory.

National Average Student Debt Figures

The national average student debt among all veterinary school graduates is $147,258. Among veterinary school graduates who took out student loans, the average veterinary student debt is higher at $179,505.

For some of these graduates, student loan refinancing might be an option worth considering to help make repaying your vet school debt more manageable, especially if you can qualify for lower interest rates and better loan terms.

Comparison to Other Medical Professions

While the average veterinary student debt is high, it’s not the highest among medical professions. Here’s how veterinary debt compares to the average debt of a bachelor’s degree and other medical programs.

Recommended: Student Debt by Major

Factors Influencing Veterinary Student Loan Debt

The main factors influencing the average student debt for veterinarians are the high cost of veterinary school, the price of room and board, and in-state vs. out-of-state tuition rates.

Cost of Veterinary School

Four years of veterinary school can cost more than $200,000 for in-state residents and over $275,000 for out-of-state residents. The majority of veterinary students (about 82%) borrow student loans to cover costs.

Some factors that can influence how much you’ll pay to become a veterinarian include:

•   In-state vs. out-of-state tuition rates: Tuition rates are lower at public veterinary schools for in-state residents and higher for out-of-state residents. The highest costs are generally at private veterinary schools.

•   Cost of living in your location: Along with tuition and fees, you’ll have to factor in living expenses. These expenses could be a lot higher in an urban area than a rural one and can vary widely depending on where your school is located.

•   Room and board: Costs for housing and food are another major expense. You might save money by commuting or sharing an apartment with roommates, as well as by buying your own groceries over a university meal plan.

•   Grant and scholarship availability: Grants and scholarships can help defray the costs of veterinary school and don’t have to be repaid, but they can be competitive. Apply to as many opportunities as you can to try to access this gift aid for school. Don’t forget to submit the Free Application for Federal Student Aid (FAFSA), which gives you access to federal financial aid.

•   Personal savings: If you have savings you can put toward veterinary school, such as money in a 529 college savings plan, you may not have to borrow as much in student loans.

Trends in Veterinary Student Loan Debt

Although veterinary school debt is high, it’s lower than it was a few years ago. The average student debt for all graduates is down by more than 6% from 2020. Among student loan borrowers, it’s down 5% from 2020.

Debt-to-income (DTI) ratios have also improved somewhat, meaning that veterinary graduates are slightly better able now to pay off their student loans. The average debt-to-income ratio was 1.44 for 2022 graduates who started working full-time, a more manageable DTI than the 1.7 ratio among the 2021 cohort.

Impact of Student Loan Debt on Veterinarians

Although student loan debt can be a major financial burden for veterinarians, it’s not their top motivating factor when choosing an offer of employment. According to an AVMA survey, most new graduates (85%) said they chose the job they did for its mentorship opportunities.

After that, the top reasons for selecting an employment offer were location, people, and compensation.

Career Choices and Specializations

Veterinarians have good prospects for employment after graduation, with 95.7% receiving an offer for a job or position in advanced education after leaving school. Most graduates go into private practice, followed by internships and then public practice.

•   Private practice: 68.9%

•   Internships: 24.6%

•   Public practice: 2.4%

Among private practice veterinarians, most chose to work with companion animals (56%), followed by mixed animal practice (9%), food animal practice (2%), and equine practice (1%).
The average starting compensation was $124,295 among veterinary graduates who got a full-time job.

This is how much a veterinarian makes on average, broken down by job type:

•   Private practice: $125,416

•   Public practice: $87,417

•   Residencies: $46,186

•   Internships: $53,266

Some veterinarians also scored additional compensation in the form of signing bonuses and other benefits:

Strategies for Managing Veterinary Student Loan Debt

If you owe veterinary student loans, here are some techniques to make it easier to repay your debt.

•   Explore loan forgiveness and repayment assistance programs: You may qualify for student loan assistance from a federal or state program, depending on where you work. For instance, the Public Service Loan Forgiveness program is available to vets working at shelters, zoos, aquariums, as military vets, or in other public service jobs. The USDA’s Veterinary Medicine Loan Repayment Program offers up to $25,000 in student loan help each year for three years to vets working in shortage areas. This student loan forgiveness guide can help you discover other forgiveness opportunities that may be available to you.

Some states also have student loan repayment assistance programs (LRAPs) for veterinarians who work in a high-need area. Unlike federal programs, state LRAPs may offer assistance toward both federal and private student loans.

•   Compare repayment plan options: If you owe federal student loans, you have several repayment plans to choose from, including the standard 10-year plan, the extended 25-year plan, and income-driven repayment plans. Income-driven plans can be helpful if you need to adjust your monthly payments in accordance with your income. They can also end in loan forgiveness if you still owe a balance after 20 or 25 years.

•   Make extra loan payments to get out of debt faster: If you can afford it, making extra payments on your veterinary student loan debt can speed up repayment. It can also save you money on interest, which can be especially helpful now because federal student loan interest rates have increased over the past four years. The rates are higher for the 2024-2025 school year than they have been in previous years.

•   Look into student loan refinancing: Refinancing your student loans may help you get a better interest rate if you qualify, which could save you a significant amount of money on your loans. You’ll also get the chance to combine multiple loans into one loan and select new repayment terms. Keep in mind, though, that refinancing federal loans turns them private, meaning you’ll forfeit access to federal benefits and programs.

The Takeaway

Working as a veterinarian is an exciting career choice with solid employment prospects, but earning your degree comes with costly tuition and potentially high student loan debt. If you end up borrowing student loans, consider strategies for managing your debt, such as income-driven repayment, student loan assistance programs, or refinancing student loans for better rates or terms if you qualify for them.

Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.

FAQ

What is the current average student loan debt for veterinarians?

The current average student debt for veterinarians is $147,258 among all graduates and $179,505 among graduates who took out student loans.

How long does it typically take to repay student loans for veterinary school?

It can take a decade or longer to repay student loans for veterinary school. The standard repayment plan spans 10 years, and alternative repayment options may last 20 or 25 years. You can look into loan forgiveness programs and loan repayment programs for help repaying your loans if you’re eligible.

Are there loan forgiveness or repayment programs specifically for veterinarians?

There are loan repayment programs specifically for veterinarians. The USDA’s Veterinary Medicine Loan Repayment Program is a national program that offers up to $25,000 in student loan repayment each year to vets who work in a shortage area for at least three years. Some states also offer student loan repayment assistance programs to qualifying veterinarians. Check with your state to see what’s available.

Photo credit: iStock/Mr Vito

SoFi Student Loan Refinance
SoFi Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org). SoFi Student Loan Refinance Loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Public Service Loan Forgiveness, Income-Based Repayment, Income-Contingent Repayment, PAYE or SAVE. Additional terms and conditions apply. Lowest rates reserved for the most creditworthy borrowers. For additional product-specific legal and licensing information, see SoFi.com/legal.

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Perkins loans, which were offered through the Federal Perkins Loan Program, are low-interest subsidized federal student loans for students with high financial need.

The Perkins Loan Program was discontinued in 2017. While these loans are no longer offered, borrowers who have Perkins loans are still required to repay them. These borrowers may also qualify for certain federal benefits like Perkins loan forgiveness.

Read on to learn more about repaying Perkins loans, federal Perkins loan forgiveness, plus current financial aid options to help make college more affordable.

Overview of Federal Perkins Loans

Students may choose to take out federal or private student loans to help pay for college. A type of federal student loan, Perkins loans were unique in that they were issued by schools. Federal Perkins Loans were intended for students with exceptional financial need and had a fixed 5% interest rate. Perkins loans were also subsidized, which means the government covered the interest that accrued while a borrower was in school.

The Perkins loan program allowed students to borrow the following amounts:

•   $5,500 a year with a cumulative limit of $27,500 for undergraduates

•   $8,000 per year for graduate students with a lifetime maximum of $60,000, including undergraduate Perkins loan debt

Repayment of Federal Perkins Loans

Federal Perkins loan borrowers are required to repay their Perkins loans plus interest within 10 years. That’s how college financial aid works in this particular instance.

Perkins loan borrowers had a nine-month grace period after graduating, leaving school, or dropping below half-time status before they needed to start repayment. Schools typically require monthly, bimonthly, or quarterly payments on Perkins loans.

These loans offer forgiveness and cancellation programs. Borrowers may be eligible for Perkins loan forgiveness if they work full-time in public service. Forgiveness through public service is available to those who hold such jobs as:

•   Child or family services workers

•   Educators

•   Firefighters

•   Law enforcement officers

•   Nurses

•   Members of the U.S. armed services

For eligible public service workers, up to 100% of their Federal Perkins loans may be forgiven over a five-year period. For more information on forgiveness, check out this student loan forgiveness guide.

If forgiveness isn’t an option, borrowers might qualify for cancellation of their Perkins loans in certain circumstances, including:

•   Bankruptcy

•   Total and permanent disability

•   Death

•   If your school closed while you were getting your degree

If one of these situations applies to you, you may be eligible for total and immediate discharge of your Perkins loans.

To apply for Perkins loan cancellation or forgiveness, contact your school’s financial aid office. They should be able to give you the appropriate forms to complete. If the school transferred your loans to a loan servicer, you can reach out directly to the servicer.

If you are not eligible for forgiveness or cancellation, you may want to consider the option of student loan refinancing. When you refinance student loans, you replace your old loans with a new loan that ideally has lower rates and more favorable terms if you qualify for them.

Recommended: Student Loan Payment Calculator

Comparison with Other Federal Student Loans

Although Perkins loans are no longer available, there are several other types of federal loans that may help you cover the cost of college. Here’s how these loans compare to Perkins loans:

•   Direct Subsidized Loans: Undergraduate students with financial need may be eligible for Direct Subsidized Loans. The school determines how much they can borrow with these loans based on the student’s Free Application for Federal Student Aid (FAFSA). Like Perkins loans, the federal government subsidizes Direct Subsidized Loans by paying the interest on them while the borrower is in school and during the six-month grace period after graduation.

For the 2024-2025 school year, federal student loan interest rates are 6.53% for undergraduate students. That’s higher than the 5% interest rates on Perkins loans.

•   Direct Unsubsidized Loan: Undergraduate, graduate, and professional students are eligible for these loans, which are not based on financial need. Unlike Perkins loans, the interest on Direct Unsubsidized loans accrues while the borrower is in school and during the six-month grace period afterward. The borrower is responsible for paying that accrued interest.

•   Direct PLUS Loans: These loans are for parents who borrow money for dependent undergraduate students, and for eligible graduate and professional students. Unlike most federal loans, Direct PLUS loans require a credit check.

Current Status of the Federal Perkins Loan Program

The Federal Perkins Loan Program was discontinued in 2017 after Congress failed to renew it. Even though these loans are no longer available, borrowers who have Perkins loans must repay them. Alternatively, they can apply for forgiveness or cancellation of Perkins loans to help with getting out of student loan debt if they are eligible.

Alternatives for Students

Even though borrowers can no longer take out Perkins loans, there are a number of other financial aid options for college students. These include:

•   Federal Direct Loans: These loans offer helpful benefits for borrowers, including income-driven repayment and some forgiveness options. And as noted above, with Direct Subsidized Loans, the federal government pays the interest on the loans while the borrower is in school.

•   Scholarships: This type of aid is considered gift aid because it does not need to be repaid. Scholarships can come from a wide variety of sources, including your state, certain businesses, and national and local organizations. Explore the different scholarships available to see what you might be eligible for.

•   Grants: Many grants are need-based, and they typically do not need to be repaid. Grants may be available from the federal government or your state government.

•   Private student loans: These loans are offered through private lenders, including banks and online lenders. The repayment terms and benefits vary from lender to lender, and the interest rates on these loans may be fixed or variable.

A lender will typically do a credit check and review your financial history before approving you for a private loan, so it may be beneficial to have a student loan cosigner in order to qualify. It’s also important to be aware that private loans do not provide access to federal income-driven repayment plans and forgiveness programs.

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The Takeaway

Federal Perkins loans are no longer available, but borrowers who have these loans must still repay them. If you have a Perkins loan you’re working to pay off, you can look into Perkins loan forgiveness and cancellation to see if you might be eligible.

Another option to consider is refinancing your Perkins loan, especially if you can qualify for a lower interest rate or better terms. Refinancing these loans means you’ll no longer be eligible for federal Perkins loan forgiveness, however, so make sure you won’t need to take advantage of that program.

Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.

FAQ

Who is eligible for Federal Perkins Loans?

Federal Perkins loans are no longer available because the program was discontinued in 2017. However, there are other types of student loans you may be eligible for, including Federal Direct Subsidized and Unsubsidized Loans, as well as private student loans.

What is the interest rate on Federal Perkins Loans?

All Federal Perkins loans have a fixed interest rate of 5%. In addition, Perkins loans were subsidized, which means that the federal government paid the interest on the loans while borrowers were in school.

Are Federal Perkins Loans still available for new borrowers?

No, Federal Perkins Loans are no longer available. However, there are several other federal loan options for new borrowers, including Federal Direct Subsidized and Unsubsidized loans, that come with certain benefits such as access to federal programs such as income-driven repayment plans.

Photo credit: iStock/cagkansayin

SoFi Student Loan Refinance
SoFi Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org). SoFi Student Loan Refinance Loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Public Service Loan Forgiveness, Income-Based Repayment, Income-Contingent Repayment, PAYE or SAVE. Additional terms and conditions apply. Lowest rates reserved for the most creditworthy borrowers. For additional product-specific legal and licensing information, see SoFi.com/legal.

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