Posted by The process of student loan forgiveness can be a daunting task. But don’t worry. We’re here to help. In this article, we’ll look at what qualifies for loan forgiveness and how to tell if you’re eligible.
What is Student Loan Forgiveness?
If you have federal student loans, there are times when you can get them canceled. For example, if you work in a public service job, you may qualify for the Public Service Loan Forgiveness Program.
Other loan forgiveness programs include the Teacher Loan Forgiveness Program and the Perkins Loan Cancellation and Discharge program. To learn more about these and other programs, visit the U.S. Department of Education’s website.
Who is eligible for Student Loan Forgiveness?
The Student Loan Forgiveness Program is a government program that helps people who qualify get rid of their student loan debt. To qualify, borrowers must:
- Make 120 qualifying monthly payments
- Have a qualifying repayment plan
- Be employed full-time by a qualifying employer
- Not be in student loan default
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- How to Check the Status of Student Loan Forgiveness
Eligibility for Parent Borrowers
Like student loans, a parent PLUS Loan can be canceled if the borrower dies, becomes totally and permanently disabled (but not the student for whom the Loan was taken out), or files for bankruptcy. Your parent PLUS Loan may also be discharged upon the demise of the child for whom it was borrowed.
- In addition, a parent PLUS Loan may be discharged in whole or in part under any of the following conditions:
- The student you gave the money to couldn’t finish his or her program because the school had closed.
- The school erroneously certified your eligibility to receive the Loan.
- Your eligibility for the Loan was fraudulently confirmed due to identity theft.
- The student dropped out of school, but the school had to give you back your loan money because of the laws and rules in place.
You can learn more from the video below:
What are the types of Student Loan Forgiveness?
The federal government offers several student loan forgiveness programs, each with its own specific requirements. Some programs are available to all borrowers, while others are targeted to specific groups such as students, teachers, lawyers, or doctors.
#1. Public Service Loan Forgiveness
After 120 monthly payments, under the Public Service Loan Forgiveness (PSLF) program, some federal loan borrowers can have their loans forgiven. To qualify, you must work full-time for a qualified nonprofit or government agency and make 120 monthly qualifying payments. Payments made under an IDR plan qualify for the PSLF as qualifying payments.
The forgiven loan balance through PSLF is not considered taxable income. Use the PSLF Help Tool to find out if your job and loans qualify for loan forgiveness.
#2. Teacher Loan Forgiveness
Through the Teacher Loan Forgiveness Program, you can get up to $17,500 in loan forgiveness if you teach full-time for five full academic years in a low-income elementary school, middle school, or educational agency.
Eligible borrowers have the following loan types:
- Federal direct unsubsidized
- Federal direct subsidized
Only math and science teachers are eligible for the entire loan forgiveness amount of $17,500. Teachers of other subjects may qualify for a $5,000 tuition waiver.
How to know if your student loan was forgiven
Consolidating all your student loans into a single debt and then filing a special application: Federal Student Aid’s Public Service Loan Forgiveness (PSLF) & Temporarily Expanded PSLF (TEPSLF) Certification & Application, are the two fundamental steps to getting your student loans forgiven.
Student loan interest is dischargeable if the Loan itself is discharged. Typically, it is then added to the loan principal and any fees. In general, however, loan interest cannot be waived independently. If you obtain a forbearance on your Loan, you will not be required to pay interest, though it will typically continue to accrue.
Refinancing is your best option if you want to pay less in student loan interest. Aside from that, some lenders offer an Automated Clearing House (ACH) discount if you make monthly payments automatically.
How to get your Student Loan forgiven
Consolidating all your student loans into a single debt and filing a particular application: Federal Student Aid’s Public Service Loan Forgiveness (PSLF) & Temporarily Expanded PSLF (TEPSLF) Certification & Application, are the two fundamental steps to getting your student loans forgiven.
The Consequences of Forgiveness of Student Loans
Below are the consequences of forgiveness of student loans in form of pros and cons…
Pros
- Relieves burdensome debt
- Promotes community service
- Increases disposable income/spending
Cons
- Years are required to qualify
- Possible rise in taxable income
- Can accelerate interest accrual (income-driven repayment plans)
Conclusion
We hope this article has helped you understand the basics of student loans and what it takes to be eligible for forgiveness. Understanding the details behind loan forgiveness can help you make informed decisions and even save you money.
