How to get your student loans forgiven

Student loans give millions of students across the US the opportunity to go to a college or university and complete their higher education degrees every year. This can provide significant educational opportunities for people who otherwise may not have been able to take advantage of these opportunities.

While taking out student loans is a great choice – sometimes, the only choice – for those who don’t have the means to fund their degree upfront, repaying your student loans can become an enormous financial undertaking in your adult life. Considering the long-term payments of your state and federal student loans can have a significant impact on your postgraduate career and your financial success for decades of your life.

There are a few situations where you can be relieved of all or some of your student loan debt. For various circumstances, loans can be forgiven, canceled, or discharged. Usually, canceled or discharged loans are a result of specific circumstances or extreme situations, including bankruptcy, permanent school closure, or death. Seeing that these situations do not typically occur, you are less likely to experience your student loans being canceled or discharged. For federal student loan forgiveness, there are a few options to take advantage of depending on your career.

What types of student loans qualify for loan forgiveness?

The types of federal loans that quality for these forgiveness programs are Direct Loans and Federal Family Education Loans. There are four different types of Direct Loans available: Direct Subsidized Loans, Direct Unsubsidized Loans, Direct PLUS Loans and Direct Consolidation Loans. Direct Subsidized Loans are made eligible to undergraduate students who based on their financial need. Alternatively, Direct Unsubsidized Loans are offered to undergraduate, graduate, and professional students, and are not based on their financial need.

Direct PLUS Loans apply only to graduate or professional students, and parents of dependent undergraduate students. These loans cover educational expenses not already covered by financial aid. While Direct PLUS Loans are not based on financial need, a credit check is required to quality. Individuals applying for these loans with a bad credit history may need to meet additional requirements to qualify for this type of loan.

Direct Consolidation Loans give borrowers the opportunity to consolidate all eligible federal student loans into a single loan and determine a single loan servicer to manage them. A loan servicer is the company assigned to handling the billing and services related to your student loan payment through the U.S. Department of Education. To determine who your loan servicer is, contact the Federal Student Aid Information Center.

Separate from Direct Loans are Federal Family Education Loans (FFEL). With four types of FFEL options, this program follows a similar breakdown as those under the Direct Loans program. However, the FFEL program no longer provides loans to students as the program ended in 2010. Since then, students seeking federal loans must go through the Direct Loans program.

What programs provide student loan forgiveness?

There are two main programs people typically qualify for to get their federal loans forgiven: the Public Service Loan Forgiveness program, and the Teacher Loan Forgiveness program. Before you determine which program aligns with your postgraduate career, you must ensure you have the correct types of loans that qualify for these plans.

Public Service Loan Forgiveness

The Public Service Loan Forgiveness (PSLF) Program forgives the remaining balance of your Direct Loans after you have made 120 payments under a repayment plan while working full-time. This program applies to individuals employed by government and non-for-profit organizations. Some careers that quality for this program include doctors, lawyers, teachers, nurses, and positions in the military. To quality for the PSLF program, you must ensure you fulfill the payments of an income-driven loan repayment program, and you work for a qualifying employer. These qualifying employers include any level of state government (local, tribal, state, or federal) and nonprofit organizations that are tax-exempt under Section 501(c)(3) of the internal revenue code.

Teacher Loan Forgiveness

Different from the PSLF program, the Teacher Loan Forgiveness Program is available for both Direct Loans and Federal Family Education Loans (FFEL). To quality for this program, you must be a full-time teacher for five complete years consecutively in a low-income elementary or secondary school, or educational service agency. Through the Teacher Loan Forgiveness Program, you are eligible for loan forgiveness of up to $17,500 on either your Direct Loan or FFEL.

State Loan Forgiveness Programs

In addition to the two main federal loan forgiveness programs, there are also options available to forgive your state student loan balances as well. State student loan forgiveness programs vary widely by the state you live in, and typically have a career or income level requirement for eligibility. Check your state’s programs and eligibility requirements to determine how you may qualify for individual state loan forgiveness programs.

I think I quality for a loan forgiveness program. What’s next?

Once you’ve determined if you qualify for either of these loan forgiveness programs, you can begin the application process. To get started, it is recommended that you contact your loan servicer to ensure you meet the requirements of these programs.

Depending on the details of your loan forgiveness plan, you may still be required to pay a portion of your loans or reach a certain number of payments before you can cease making payments. While you are working with your loan servicer, be sure to establish what is expected of you after it has been determined that you qualify for a forgiveness payment.

In the event you are denied for a loan forgiveness plan, you will remain responsible for the full and complete repayment of your student loans. If this happens, you can discuss repayment plans and options with your loan servicer to ensure you pay off your student loans in a timely manner.

Paying off student loans can be a long process that requires years of financial planning and consideration. It’s important to understand what types of loans you have, and the different options available to you regarding loan forgiveness.

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