Sometimes forgiveness can come easy. A friend stepped on your toe by accident and immediately apologizes – you’ve forgiven them before they can even speak. Other things aren’t as easily forgiven. Student loan forgiveness, for example, is as coveted as it is difficult to be eligible for.
What is student loan forgiveness?
The total student loan debt in the U.S. is $1.48 trillion. That number is spread out among 44 million borrowers. As you can imagine, that’s 44 million people who wish their debt could be erased. That’s essentially what happens when your student loans are forgiven.
Whether or not you qualify for student loan forgiveness depends on a number of factors including your occupation, where you work and which loan repayment plan you chose upon graduation.
Here’s how you might be eligible.
If you work in public service, your chance of having your student loans forgiven is much higher than most other’s.
To qualify for the Public Service Loan Forgiveness program, for example, you must be a full-time employee at a federal, state or local government agency, or another organization with a 501(c)(3) designation. After making on-time monthly payments for 10 years, you could qualify for all of your remaining loans to be forgiven.
Public service workers with Federal Perkins Loans are not eligible for PSLF, but can have their loans “cancelled,” which means the same thing as forgiven. See your loan servicer or your school’s student loan office for more information.
The Teacher Loan Forgiveness program is another example. To qualify, you must have a state certification or teaching license and work in a low-income school for at least five consecutive years. The amount of debt forgiven depends on what subject and grade level you teach. To see if you qualify, check for your school on the Teacher Cancellation Low Income Directory.
There are also several options specifically for nurses and doctors. For example, under the NURSE Corps Loan Repayment Program, registered nurses, nurse practitioners and nurse faculty members who work in underserved communities can get up to 85 percent of their loans paid after two to three years of employment.
Some states offer student loan forgiveness and repayment assistance programs as an incentive to attract more workers to certain areas.
In Massachusetts, health professionals who work at public or nonprofit healthcare organizations in federally designated Health Professional Shortage Areas can apply to the Massachusetts Student Loan Repayment Program. Though not the same as loan forgiveness, under this program, those qualified can receive up to $50,000 over two years of full-time service.
In New York, licensed social workers and district attorneys may be eligible for the New York State Licensed Social Worker and District Attorney and Indigent Legal Services Attorney Loan Forgiveness programs, respectively. Both programs reward applicants with either a maximum dollar amount or the applicant’s actual eligible student loan indebtedness. Applicants receive whichever amount is less.
To see if there are any loan forgiveness or repayment assistance programs in your state, check this directory of programs from Student Loan Hero.
Your repayment plan
Upon graduation, student borrowers must enroll in a student loan repayment plan. If the borrower doesn’t choose a different plan, the loan servicer will automatically place the borrower on the standard repayment plan, which charges a monthly payment based on whatever amount it would take to pay off all loans in 10 years. The other options include the extended plan, graduated plan, income-sensitive plan and income-driven plans.
If the borrower chooses an income-driven plan, their loans may be forgiven under certain circumstances, which differ depending on the type of plan.
Under the Income-Based Repayment plan, a borrower’s remaining balance is forgiven after making consistent payments for 20 or 25 years. Like other income-driven payment plans, borrowers choose IBR when they expect their income to be relatively low compared to their debt.
Parents helping their children pay for school using Parent PLUS loans may want to consider the income-contingent repayment plan. It also forgives loans after 25 years of consistent payments, but is different in that it’s the only income-driven plan available to borrowers with Parent PLUS loans.
If you’re currently enrolled in the Standard Repayment Plan and wish that you’d enrolled in an income-driven plan instead, don’t fret. You can switch repayment plans at any time at studentloans.gov. Use the Department of Education’s repayment estimator to see which income-driven plan would be best for you – it will also tell you your projected loan forgiveness, if any.
As with any federal matter, the student loan program, especially in terms of forgiveness, is subject to change. Keep up with the current status of the program at the U.S. Department of Education’s website.
Are you still paying off student loans for yourself or your child? Do you think you’re eligible for loan forgiveness? Share your thoughts in the comments below!
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