There are two ways to look at student loans: they can be an excellent investment in your future, or they can be an enormous burden if they are not well planned or misused. To learn if you qualify for loan forgiveness, you must first hold a student loan or be considering receiving one.
To be eligible, you must volunteer, serve in the military, practice medicine in a particular area, or meet other requirements.
Student loan forgiveness programs might be overwhelming because of the sheer number of options that are out there. This guide will show you the various forgiveness programs you can qualify for.
What Are Student Loan Forgiveness Programs?
The primary borrower and, in some situations, the cosigner of private student loans are both eligible for some or all of their debt to be forgiven via loan forgiveness.
To be eligible for loan forgiveness, you must meet the following criteria: the type of loan (private or federal), employer, career, repayment plan, and personal or financial condition.
Student loan forgiveness may also be available in certain situations, like attending a fraudulent for-profit institution.
After several years of repayment, loan forgiveness programs may reduce or even eliminate your debt.
Most state-based and federal forgiveness programs are designed to benefit borrowers who have worked in the public sector for a particular time.
4 Student Loan Forgiveness Programs That Can Erase Your Debt
Public Service Loan Forgiveness (PSLF)
Students who agree to serve in public service for a minimum of ten years may be eligible for PSLF. Employed with a U.S. government agency or non-profit organization is required to participate in the program.
You are under no obligation to work for the same company twice during this time.
You must complete a 120-month IDR plan with on-time payments to be eligible. And your monthly payments must be from a Direct Consolidation Loan or Direct Loans.
The remaining loan balance will be forgiven after 120 qualifying payments if you complete all of the program’s requirements.
Teacher Loan Forgiveness
As a teacher in a low-income secondary school, elementary, or educational agency, you may be eligible for loan forgiveness of up to $17,500 under the Teacher Loan Forgiveness Program.
The following types of loans are eligible:
- Direct subsidized loans
- Direct unsubsidized loans
This $17,500 forgiveness is only available to teachers of select academic areas, such as science or mathematics. Other teachers may be eligible for $5,000 of loan forgiveness.
If you want to apply, submit the Teacher Loan Forgiveness Application to your loan servicer after serving for five years.
Income-Driven Repayment Plans
The IDR plan is a viable option if you can’t afford your monthly payments under a 10-year regular repayment plan. This method involves enrolling in an IDR plan, which calculates your monthly payment based on your discretionary income and family size. Depending on your circumstances, you may be eligible for a substantially lower monthly payment than you currently have.
Depending on your chosen plan, your repayment period could be 20 or 25 years. The remaining debt is forgiven if you have a balance when your repayment period ends. However, the amount canceled may be taxable as income.
You must qualify for one of the below IDR plans and have debt after you make the payments for the entire repayment term to be eligible for the IDR plan:
- IBR plan
- ICR plan
You can apply online or by calling your loan servicer.
Other Options For Student Loan Forgiveness Programs
A student loan forgiveness program isn’t open to everyone who needs it. Other options for handling your debt may be available if you can’t make your current loan payments because of your ineligibility.
When a medical emergency or financial hardship occurs, you can ask your loan servicer for a deferment or forbearance from them. You can delay your payments for some time, allowing you to avoid falling behind on your obligations.
For further information, contact your federal loan servicer.
If everything discussed doesn’t work for you, consider refinancing. Refinancing allows you to choose a new period for repayment and a new monthly payment amount, often ranging from five to twenty years.
You may be able to save money on your loans by getting a lower interest rate. In addition, refinancing numerous loans into one can make repayment easier because they can all be combined into one loan.
Refinancing federal loans into private loans is something to consider when looking into student debt refinancing possibilities.