What You Need to Know About Student Loan Forgiveness
September 18, 2019
Are you looking to expand your options for debt repayment? Are you interested in or presently working in the public sector? Luckily, these two variables are crucial deciding factors for your eligibility for a student loan forgiveness program.There’s a wide array of forgiveness programs and one of them might save you thousands of dollars on your repayments while also working a job that’s enriching the world around us.
What is student loan forgiveness?
Student Loan Forgiveness (SLF) is an umbrella concept to denote various programs that work with borrowers to pay off, forgive, cancel, or discharge their student loans through loan repayment and service jobs.
Back in 2007, the College Cost Reduction and Access Act was established to mitigate the growing cost of education on students from middle and lower-income financial backgrounds. As a part of this act, the Public Service Loan Forgiveness program was introduced to help graduating students entering the workforce and indebted, working, and graduated students make payments on their loans.
Student loan forgiveness programs often require borrowers to continue making payments on their loans for a duration specified by the forgiveness program. During this agreed upon period, the borrower is likely working in a public service job. Following this agreed upon period, some programs agree to either forgive, cancel, or discharge the borrower’s loan.
What types of forgiveness programs are out there?
Since SLF is predominantly based on federal debt, the exchange for loan forgiveness is dependent on the borrower’s ability to give back via public service.
This means, finding the right program is crucial for your application process so that you’re in a program that aligns with your personal and professional goals. Borrowers need to be sure they can and will carry out their end of the agreement for the promised duration in order to reap the benefits of forgiveness.
Programs that could work for you
Aside from Public Service Loan Forgiveness programs, borrowers could be eligible for SLF through:
- Teacher loan forgiveness – Qualifying teachers could be eligible if they have or will have taught five consecutive years full-time at qualifying institutions.
- State-sponsored repayment assistant – These programs are harder to find and require dissecting to catch caveats.
- Loan forgiveness for nurses – Several programs exist for nurses who work in different need-based communities. Awards vary based on the amount of time served, sign-on bonuses, part or full-time work, as well as whether or not the program is through the military.
- Military forgiveness – Much like nursing, several loan forgiveness programs are available for people serving in the military. Different deferment, interest capping, and repayment programs that consider whether servicemen and women are in active duty or deployment are available for workers.
- Income-driven repayment – This plan might be a good option for those who can make monthly payments but are seeking a reduction.
Things to keep in mind
SLF programs are often for borrowers with federal student loans. Those with private loans are not eligible for SLF but can seek out other methods to tackle their loans such as loan consolidation, arranging for lower interest rates or interest-only payments with their provider, and/or paying debt down more aggressively whenever possible.
Be wary, also, of private companies that claim to be associated with your loan provider. Student loan forgiveness scams are unfortunately prevalent and could create more difficulties for your loan payments.
Between finding the program you qualify for, figuring out how to apply for student loan forgiveness, and putting together a viable application, trying to get a reduction on your existing loans can be tough. Being diligent about collecting all these facts will alleviate these pressures. Even better, being granted forgiveness will save you thousands of dollars. All of this is to say, the time you spend researching could definitely be worth your efforts.
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