Where To Find Student Loan Forgiveness Programs
All three student loan forgiveness programs are available through the U.S. Department of Education. Depending on which program you’re looking at, make sure to read more about Public Service Loan Forgiveness, income-driven repayment plans and Teacher Loan Forgiveness to find out if you qualify and whether it’s worth it for you.
Also, each program has fine print that could cause you to lose eligibility if you’re not careful. So read through the program’s terms to make sure you don’t get an unpleasant surprise when you’re expecting the cancellation.
Nurse Corps Loan Repayment Program
If you work in an underserved community, you might be eligible for the NURSE Corps Loan Repayment Program. You can get up to 60% of your student loans paid over two years of employment. If you work for a third year, you could qualify for forgiveness toward another 25%.
What are the requirements?
To qualify for the NURSE Corps Loan Repayment Program, you must be a registered nurse, nurse practitioner or nurse faculty member. Nurses must work in a critical shortage area and serve a high-need population. Nurse faculty members must be at an accredited school of nursing.
How do you apply?
Applications are accepted once a year, and guidelines are updated annually. Check the program requirements and guidelines ahead of time and make sure to turn in your application on time.
A Physicians Guide To Student Loan Forgiveness
Each year, thousands of physicians decide to pursue a loan forgiveness or assistance program to ease the burden of their student debt. While the appeal of these programs is obvious, many of the requirements, restrictions, and fine print are not nearly as transparent. For doctors who are counting on loan forgiveness, it can be devastating to learn that they have accidentally disqualified themself from eligibility, and instead must repay the full amount of their student debt. Before you decide to pursue a certain loan forgiveness program, read through our step-by-step guide to loan forgiveness for physicians.
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Forgiveness With Revised Pay As You Earn
Revised Pay As You Earn works much the same way as Pay As You Earn. Under this plan, your payments will be capped at 10% of your discretionary income. Undergraduate loans are forgiven after 20 years, while graduate school loans are forgiven after 25 years.
Unlike IBR and PAYE which require you to end up with a lower payment than on the standard plan, theres no such requirement for REPAYE; anyone with eligible loans can apply, even if they end up paying more with an income-based payment. As a result, you could end up with high monthly payments on REPAYE if you suddenly start making a lot more money.
Is There More Student Loan Forgiveness Coming
Part of President Joe Bidens campaign pitch was that he was going to offer some sort of forgiveness to student loan borrowers, but as of April 2021, Biden hasnt sorted that question out.
He told a February CNN Town Hall meeting that Im prepared to write off a $10,000 debt, but not $50,000, but has not followed up on that with any legislative proposal.
Instead, a month later, he asked Education Secretary Miguel Cardon to prepare a report that details a presidents authority to cancel $50,000 in student loan debt without approval from Congress.
According to student loan expert Mark Kantrowitz, the $10,000 cancellation would wipe out all student loan debt for about 14.5 million borrowers. The $50,000 cancellation would erase debt for about 36 million borrowers.
One thing to be aware of is that currently, whatever amount of loan is forgiven is counted as taxable income. That may change as new legislation comes out and possibly changes loan forgiveness programs.
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Federal Employee Student Loan Repayment Program
The Federal student loan repayment program permits agencies to repay Federally insured student loans as a recruitment or retention incentive for candidates or current employees of the agency.
This plan allows Federal agencies to make payments to the loan holder of up to a maximum of $10,000 for an employee in a calendar year and a total of not more than $60,000 for any one employee.
It’s important to note that an employee receiving this benefit must sign a service agreement to remain in the service of the paying agency for a period of at least 3 years.
An employee must reimburse the paying agency for all benefits received if he or she is separated voluntarily or separated involuntarily for misconduct, unacceptable performance, or a negative suitability determination under 5 CFR part 731. ;In addition, an employee must maintain an acceptable level of performance in order to continue to receive repayment benefits.
Furthermore, you must sign up for this program when you’re hired. You can’t go back to your HR department after you’re already employed and ask for it.
You can learn more about this program here.
How Does Student Loan Forgiveness Work
Lets talk about the difference between forgiveness, cancellation and discharge. They all essentially mean the same thing that you are no longer required to make payments on your student loan debt but refer to slightly different situations.
When your student debt has been forgiven or canceled, youre no longer required to make payments because your job has qualified you to have your debt forgiven certain teachers, for example, can qualify for forgiveness because their job provides a valuable public service.
When your student debt has been discharged, its due to other circumstances, such as a total and permanent disability, that prevent you from being able to repay the debt.
Whichever of these words is used, the result is the same: Youre free from the obligation to pay the remaining balance on your student loans.
Ridding themselves of monthly student loan payments is likely something every borrower would like to do, but who is eligible for this option?
For the most part, loan forgiveness or discharge is limited in scope and is only available to government or nonprofit employees or teachers who meet certain requirements and those who are experiencing certain types of hardship.
Even those who believe themselves to be eligible for these programs may have a hard time getting approved; for example, a very small percentage of those who applied for the Public Service Loan Forgiveness Program have been accepted.
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Student Loan Forgiveness For Nonprofit Workers
Student loan forgiveness for nonprofit employees falls under the umbrella of student loan forgiveness for public service. Many jobs fall into the public service category. Working for a nonprofit organization is one of them.
To qualify for forgiveness, you must work for a 501 institution or organization. Note that not all nonprofit organizations have a 501 designation. It is best to ask your employer about this before you sign your contract.
State Loan Forgiveness Programs
Many states create forgiveness programs to address regional health professional shortages.
For instance, doctors willing to work in certain communities in rural Arkansas could receive up to $80,000 in;loan repayment assistance;over four years. If a tropical climate sounds good to you, then you may be interested in Hawaii’s;loan repayment program, which is available to a variety of health professionals, including nurse-midwives and counselors.;In Pennsylvania, doctors can receive up to $100,000 of;loan repayment assistance;for two years in a health-professional shortage area.
Wherever you’re planning to practice, there’s a good chance your state has a program incentivitizing medical professionals to work in high need areas.;
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Pay More Than The Minimum
If you want to ditch your loans as fast as possible, consider paying more than the minimum each month. Youll need to notify your loan servicer and specify that you want your overpayment to go toward the principal of your loan balances and not toward your next payment, but youll save money over time as you pay less and less interest each month.
Osap And Student Debt Forgiveness Under The Bankruptcy & Insolvency Act
Government guaranteed student debt is eligible for discharge and forgiveness under the Bankruptcy & Insolvency Act under certain conditions.
Specifically, bankruptcy law states that:
If you have been out of school for more than seven years your student loans can be automatically included in a bankruptcy or consumer proposal.
What is the seven-year rule?
The import date to know is the date you ceased to become a student or end of study date. This is not the same as your loan year or the last year you took out your student loans. It is this date that the government will use to determine eligibility for the discharge of your student debt under the BIA. You can verify your end of study date by calling 1-888-815-4514 for Canada Student Loans or 1-807-343-7260 for Ontario Student Loans.
Financial hardship the 5 year rule
You can apply to the court to have your student debt discharged in a bankruptcy or proposal as early as five years after your end of study date if you can show that repaying your student loans will cause undue financial hardship.
You can be eligible under the hardship provision if you can show the court you acted in good faith in using and repaying those debts is causing, and will continue to cause severe financial difficulty.
There are many court cases discussing the considerations of good faith. Talk to your Licensed Insolvency Trustee if you think this is a viable option for you.
Newer student loans
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What Are My Responsibilities
Once you have been approved for the B.C. Loan Forgiveness Program, there are things you must do to maintain eligibility:
- One year after your program registration date , you must submit via StudentAid BC online account, mail or courier a signed letter from your employer documenting your hours of in-person service in an eligible occupation at a publicly-funded facility in British Columbia either in an eligible under served community or working with children. The letter must include the following:
- Letterhead and name of the facility where you are employed;
- Your name, occupation and community;
- Dated within 30 days of your 12 month anniversary date;
- Signature of your employer; and,
- The number of in-person service hours provided during the 12-month period prior to the anniversary date.
- Maintain your current mailing and email address information with StudentAid BC.
Note: If your verified in-person hours of service is less than 400 and greater than 99 hours, your benefits under the program for that year will be prorated as indicated below.
|Total Annual Hours of In-Person Service||Annual Percentage of BC Student Loan Debt Forgiveness|
|0 to 99|
Congress Promised Student Borrowers A Break Education Dept Rejected 99% Of Them
And then there are the loans themselves. When PSLF was created, the lion’s share of federal student loans were known as Federal Family Education Loans loans typically issued by banks but backed by the U.S. government. In 2010, FFEL was shuttered, and all new loans were made under the preexisting federal Direct Loan program. While Direct Loans qualify for the loan forgiveness program FFEL loans do not.
Many borrowers with FFEL loans spent years in public service, only to realize later that their payments did not count toward PSLF. Their only path to qualify was to consolidate their debts into Direct Loans. But that consolidation comes at a cost. Imagine a nurse works for three years and makes 36 loan payments before she realizes her FFEL loans don’t qualify. When she consolidates, her path to 120 payments doesn’t begin at 37. It begins at zero.
In a June posting, the Education Department’s Federal Student Aid office conceded that “over the years, PSLF has spawned much confusion and frustration. Millions of people are employed in public service, including teachers, firefighters, law enforcement, and some nonprofit workers, yet only about 5,500 borrowers have received PSLF discharges thus far, totaling $453 million.”
Now, the department plans to use its executive authority to help thousands of qualified public servants get back on the path to loan forgiveness.
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‘i Am Heartbroken’: Your Letters About Public Service Loan Forgiveness
The letter was led by the Student Borrower Protection Center and co-signed by the nation’s two largest teachers unions.
The Biden administration had already made clear its desire to overhaul PSLF, which was intended, in spirit, to encourage borrowers to work in public service.
“We’re going to fix Public Service Loan Forgiveness,” Cardona told NPR two days before he received that aforementioned letter. “That system is broken. We’re going to overhaul it and fix it and make it work for students.”
In July, the department posted a public request for information about the program. In about two months, the request has generated more than 48,000 comments.
“I spent years in the wrong payment plan for nothing,” wrote Scott Friedman of Los Angeles. “The whole thing is broken.”
Friedman echoes many of the comments when he writes, “It should be simple if you can show you worked in the public sector for 10 years that should be enough.”
“This program has been plagued with misleading, false information from the start,” from Arizona firefighter Russell Smith. “Not one of us in Public Service ‘expects’ this, yet it was offered as a government program and our government should do everything in their power to make it right.”
It now appears that’s what the U.S. Department of Education intends to do.
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Long Path To Eligibility
While the federal government and other entities provide student loan forgiveness programs. Its not a fast method.
Oftentimes, you will be required to render years of service to the organization and an equally long number of qualified payments to be eligible for student loan forgiveness. At the very least, youll need to work for the organization for a minimum of 10 years just to be eligible to apply for loan forgiveness.
In other programs, you need to pay up to 25 years worth of qualified payments as part of the requirements for eligibility.
Private Student Loan Forgiveness
When it comes to private student loans, it is hard to find an option to get forgiveness. Private lenders provide private loans. Private companies are interested in profitability which is why they do not bother themselves with forgiveness. Only a few lenders allow disability and death discharge. If you have private loans, you should contact your lender to learn about the options.;
There also exist programs that can be an alternative to forgiveness as they reduce the debt obligations. For instance, student loan refinancing is one of the best alternatives for private borrowers. This program can help you reduce interest rates and save money.;
Both federal and private loans are eligible Fast solution
Usually less effective than federal student aid programs
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Q Are Student Loan Burdens Economically Handicapping An Entire Generation
A. More adults between 18 and 35 are living at home, and fewer of them own homes than was the case for their counterparts a decade or two ago. But these trends are mostly due to these folks entering the work force during the Great Recession rather than due to their student loans. Federal Reserve researchers estimate that 20% of the decline in homeownership can be attributed to their increased student loan debt; the bulk of the decline reflects other factors.
Circumstances For Student Loan Discharge
- Permanent disability or death
- Unauthorized signature of the loan by the school without your knowledge
- False certification of student eligibility
- Unpaid refund, which is when you withdrew from school and it didnt return the required loan funds to your loan servicer
- School closure while you were enrolled
Discharging student loans through bankruptcy;is extremely rare. It is technically not impossible, but demonstrating undue hardship is very difficult. Read more about the differences between forgiveness and discharge.
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Borrower Defense To Repayment Charge
If your school misled you, engaged in misconduct or violated certain state laws, you may be eligible for federal student loan forgiveness.
If you are eligible, you may be able to have all or part of your federal Direct Loans forgiven, or you could be reimbursed for the money youve already paid toward your loans. In order to qualify for borrower defense, you can apply through the online application on the Federal Student Aid website. You may need to submit extra electronic documentation during the application process, so review the required documentation before applying.