How to Calculate Student Loan Forgiveness

Student loan forgiveness is a way to get all or part of your student loan taken care of without having to reduce your income. There are three ways to get a loan forgiven: first, serve the public in a position that applies a dollar amount to your student loan; second, serve the public in a position that forgives a percentage of your loan for every term of service; third, become disabled or unable to work. Knowing your total loan forgiveness can help you plan future payments.

Instructions

Percentage Reduction

1

Find the total forgiveness you can receive. If you've become disabled and have been approved by your lender, you may be eligible for 100 percent forgiveness. Peace Corps volunteers can reduce Perkins loans by 15 percent every year, up to 70 percent total.

2

Find your total loan amount. If you log in to your online loan management account, you should be able to access your total loan amount. If you have a Department of Education consolidated loan, for example, your total amount owed is on the main page.

3

Multiply your total loan amount by the decimal equivalent of the percentage you're going to be forgiven. If 15 percent of your loan will be forgiven, the decimal equivalent is 0.15. A $50,000 loan times 0.15 percent equals a $7,500 reduction.

4

Subtract the reduction amount from the total loan. A $50,000 loan with 15 percent forgiveness is reduced by $7,500. $50,000 minus $7,500 is $42,500. That means you have $42,500 left to pay on your loan.

Dollar Reduction

5

Find out how much you'll receive in loan forgiveness funds. An AmeriCorps volunteer receives $4,725 in loan forgiveness after one year of service, for example.

6

Find your total loan amount. If you log in to your online loan management account, you should be able to access your total loan amount. If you have a Department of Education consolidated loan, for example, your total amount owed is on the main page.

7

Subtract the amount of loan forgiveness you'll receive from the total amount of your loan. If you have a $20,000 loan and receive $4,725 in loan forgiveness, your new loan total will be $15,275. The amount left is the amount you still have to pay.