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If you’re like most college graduates of our generation, there’s a good chance you also took a significant student loan before stepping into higher education. For most, it’s the only way they can afford college. While it’s a ticket to higher education, paying it off can be a huge hurdle once you step into the real world.
Fortunately, there’s a loan forgiveness program.
What is Student Loan Forgiveness?
The US Department of Education runs several programs that allow people to have their debts forgiven. If you’re keen on considering them, you may be qualified for at least one of them and have some of your loans forgiven. However, you probably have guessed right now that qualifying for them must be quite a challenge, and you would be right.
To reiterate, loan forgiveness means that your debt or some of your debts are eliminated or outright canceled, relieving the borrower of no obligation to repay the loan. Although any student can apply for such programs, you should know that they only forgive federal-backed loans.
If you get your student loan from a private institution, those loans will not be canceled. It doesn’t include any loan products that you got from other lenders, like loans from CreditNinja.com, even if you used them for education, like buying books, school projects, etc.
Loan Forgiveness vs. Loan Discharge
If you’ve researched beforehand, you may have encountered the term loan discharge already. While some people use them interchangeably, they have different definitions and operations.
Loan forgiveness usually occurs when you’re no longer required to pay the loan because you’re in a certain government or nonprofit job. On the other hand, loan discharge occurs when the borrower declares bankruptcy, becomes permanently disabled, or dies. It can also happen if the educational institution where the borrower studies is guilty of fraud or misleading conduct.
How Do I Get My Loans Forgiven?
There are two basic steps that you can take to have your loans forgiven. First, you must consolidate all your student loans into one account. This is especially true if you have federal loans that aren’t direct loans.
Then, for the next step, you can look for the appropriate programs to help you eliminate your loans. That said, what programs can you go for?
Income-Driven Repayment Forgiveness
An income-driven Repayment plan, or simply IDR, is a good option if you think you can’t pay off your student loans under a standard ten-year repayment plan. With this approach, you can go for the IDR plan, which is based on your monthly repayment according to your family size and income. Depending on your financial situation, you can have your monthly repayment reduced significantly.
However, depending on your chosen plan, the repayment term will be lengthened to 20-25 years. That balance will be forgiven if you still have a balance even after the duration. However, do take note that the canceled loan may be taxable.
Public Service Loan Forgiveness
Under the Public Service Loan Forgiveness or PSLF, some borrowers can be forgiven after 120 months of monthly repayment. To qualify, you must work full-time at a nonprofit or government agency while making those monthly repayments.
If you already have an IDR plan, the repayment towards that plan can also qualify as payments for the PSLF plan. However, the loan amount that the PSLF covers will not be taxable as income.
Teacher Loan Forgiveness
With this plan, you can qualify for up to 17,500 dollars in loan forgiveness if you teach in a full-time position for five consecutive years in a low-income elementary, high school, or educational agency. However, it doesn’t end there. Only teachers of specific subjects can pay the full $17,500 forgiveness. Other subjects can have amounts as low as $5000. To apply, you must submit the Teacher Loan Forgiveness application to your loan servicer after five full years of service.
Perkins Loan Cancellation or Discharge
If you opted for a Perkins loan before 2018 and you’re now working in public service, you may be qualified to opt for partial or full loan forgiveness. Depending on your type of work, you could have all your student loan debts forgiven within just five years. Some of the eligible career paths are those in the military, nonprofit, law, healthcare, etc.
Final Words
Living with student loan debt is a challenge. It’s a heavy burden that you allow yourself to get the higher education that you always wanted. However, it doesn’t have to be this way. You can take some avenues to alleviate some of your student loans or even get rid of them outright. Looking into the options we discussed above, maybe you’ll find a way to get your financial situation in check.