Student Loan Forgiveness

Student Loan Forgiveness

Student loan forgiveness is a program through which you are able to have part or all of your student loan forgiven, i.e., you are exempted from paying a part or the whole of your loan. Student loan forgiveness programs usually come from the federal government and are designed to benefit borrowers with qualifying criteria.

Student Loan Forgiveness

What Is Student Loan Forgiveness?

Student loan forgiveness is the cancellation by a borrower of paying some or all of their federal student loan debt. Forgiveness usually depends on the profession or payment history for a set amount of time. It differs from deferment or forbearance, where payments are paused but not forgiven.

Also Read: Personal Loans for Students.

Student Loan Forgiveness Programs

1. Public Service Loan Forgiveness (PSLF)

This advantage is for those borrowers with full-time public service jobs at qualifying employers, such as the government and some nonprofit organizations. You should have made 120 qualifying monthly payments under a qualifying repayment plan while working for a qualifying employer.

2. Teacher Loan Forgiveness

Full-time teaching staff working at low-income schools for five consecutive years can qualify to have up to $17,500 wiped out of their Direct Subsidized and Unsubsidized Loans.

3. Income-Driven Repayment (IDR)

Forgiveness With income-driven repayment plans, your payment amount is determined by your income and family size. The balance of the loan can be forgiven after 20 or 25 years of qualifying payments.

4. Other Programs

There are other forgiveness programs for unique situations, such as disability discharge or closed school discharge. These are not as popular, but still offer assistance to eligible borrowers.

Reference: Student Aid Gov.

Who Qualifies for Student Loan Forgiveness?

To qualify for forgiveness, cancellation, or discharge, you usually must:

1. Have federal student loans

2. Qualify based on work or repayment plan

3. Be up to date on loans

4. Apply and fill out forms when required. Private loans are not covered under these federal forgiveness programs.

Things to consider

1. Forgiveness is not instantaneous or effortless. For example, PSLF involves 10 years of payments.
2. You’ll have to monitor yearly paperwork to record eligibility.
3. Some forgiveness will be classified as taxable income depending on the program and the type of loan.

Loan forgiveness is a great way to pay off or reduce your debt, but it’s not guaranteed. You must satisfy special requirements and usually follow strict guidelines. Check the requirements and keep an eye on your payments and work record before applying. In case you are uncertain about what program you qualify for, you may want to check with your loan servicer or student loan counselor for guidance.

Frequently Asked Questions (FAQs)