The federal government has programs provided for in the U.S. Code that will forgive student debt, in whole or in part, under certain specific circumstances. Individuals who engage in public service, including military service or programs such as AmeriCorps or the Peace Corps, are eligible for loan forgiveness. The federal government loan forgiveness program forgives debt after 10 years of public service. Any remaining principle and interest are often forgiven under the terms of this program after 120 payments have been made. There is also a loan forgiveness program for teachers and those who become doctors or lawyers in the public service sector.
It is legal for both public and private loan providers to postpone loan payments in specific circumstances. According to the AAMC, loans issued by certain providers such as the federal government automatically defer repayment until six months after a student’s date of graduation; however, other loan providers start issuing invoices for payment immediately. Additionally, loans can be deferred or placed in forbearance in the event of extraordinary circumstances in which an individual is not able to make payments. These temporary solutions are much better for an individual’s credit than if the loan was to go into default. During forbearance your loan provider simply allows you to stop making payments for a set amount of time. During this time, the amount of your loan grows, as interest nor principle is being paid. During deferment, your loan provider gives you permission to stop paying for your loan, and the government pays your interest for a set amount of time.
Some employers, including some branches of the federal government, pay back student debt for their employees as a retention or recruitment incentive. U.S. law, 5 USC 5379, specifically allows agencies of the government to set up student loan repayment programs for employees, and many businesses in the private sector have followed suit. In the federal government, the agency is not allowed to pay more than $60,000 toward an employee’s student loans.