Legit Ways To Get Rid Of Student Loan Debt Fast
By Sarah SharkeyUpdated August 1, 2020
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Dealing with your student loans can seem like an overwhelming task. The sheer volume of student loan debt that we are dealing with is astronomical. According to CNBC, over 44 million Americans hold roughly $1.5 trillion of student loan debt. The average graduate holds around $37,000 in student loan debt.
You might think that your loans are going to be attached to your financial future like a lead weight, but that does not have to be the case. You have the option to be proactive and work to get rid of that crushing debt fast.
Lets be honest, everyone would like to see their student loans just disappear like a dark horse into the night. Unfortunately, that wont happen unless you make an effort to get rid of them. It could be a difficult journey, but we have some ideas to help you get rid of your student loan debt fast!
In This Article
Who You Need To Repay
You may have loans or lines of credit that you need to repay to the government and/or your financial institution.
In some provinces and territories, Canada Student Loans are issued separately by the federal and provincial or territorial governments. This means that you could have more than one loan to pay back.
Verify your contracts to determine where your debt comes from and where you need to repay it.
Consolidating Your Student Loans To Reduce Student Loan Payments And Interest
A Direct Consolidation Loan allows you to combine one or more of your federal student loans into a single loan with one monthly payment. This kind of loan can be helpful if you want to reduce your interest rate, you don’t qualify for another payment plan program, you qualify for another payment program but still can’t afford the payments, or you want to get out of default.
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These Programs Can Help You Wipe Out Student Debt
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How can people get rid of their student loan debtand, specifically, when is loan forgiveness an option? We don’t need another statistic to tell us how deep in student loan debt U.S. college graduates are. Total debt and average debt figures don’t mean much, except to say that if the sums you owe keep you up at night, you’re in good company. What really matters is finding a solution.
Potential Pitfalls Of Forgiveness
The IRS likes to tax things, and forgiven debt is no exception. Public service loan forgiveness is not taxable. But any balance wiped out through an income-driven repayment plan can be counted as income and taxed. It’s important to prepare for this eventual tax bill. Consider setting aside money in a dedicated savings account.
Note that the American Rescue Plan , passed by Congress and signed by President Biden in March 2021, includes a provision that student loan forgiveness issued between Jan. 1, 2021, and Dec. 31, 2025, will not be taxable to the recipient.
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Canceling Student Loans To Get Rid Of Student Loans
In some situations, you can get rid of your student loans altogether, which is referred to as student loan “forgiveness,” “cancellation,” or “discharge.” You must meet very specific criteria. Sometimes, you can cancel part of the loan, but not the entire loan.
What’s the Difference Between Loan Forgiveness, Cancellation, and Discharge?
If your federal student loans are forgiven, canceled, or discharged, you don’t have to pay them. People often use the terms “loan forgiveness,” “loan cancellation,” and “loan discharge” interchangeably, but the federal government uses these descriptions in specific ways. “Forgiveness” or “cancellation” refers to situations when borrowers don’t have to make loan payments because of their occupation. A “discharge” happens when the borrower doesn’t have to make payments due to other circumstances, like a total and permanent disability or school closure.
The circumstances in which you might be able to cancel your student loan include:
What To Expect In 2021 For Borrowers Defense
We have discussed the changes proposed for the PSLF previously. Another area that the Biden administration focuses on is the Borrowers Defense. This program seems fair and useful for the borrowers.
However, during the Trump administration, the program lost its attractiveness. The Education Department expressed its dissatisfaction with this opportunity because they thought it was a free money option for the student borrowers. Hence, the application review process was delayed.
Even after the court ruled resuming the process, the Education Department rejected many applications. Currently, the Biden Administration proposes reviving the process. We hope that more people will be able to get full or partial forgiveness under this fair program soon.;
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Getting A Forbearance To Temporarily Stop Paying Off Student Loan Debt
With loan forbearance, your loan holder gives you permission to stop making payments for a set amount of time or permits you to temporarily make reduced payments. Common reasons supporting a forbearance include poor health, unforeseen personal problems, your inability to pay the loan within ten years , or monthly loan payments that are more than 20% of your income.
+ Student Loan Forgiveness Programs That Discharge Loans
Jun 16, 2021 Public Service Loan Forgiveness. Public Service Loan Forgiveness is available to government and qualifying nonprofit employees with federal;Bidens Student Loan · Teachers · What Are the Odds Ill Get
Available for Direct Loans, FFEL Program loans, and Perkins Loans. In some cases, you can have your federal student loan discharged after declaring bankruptcy.
May 28, 2021 Instead of ignoring your debt, learn legitimate ways for getting out of student debt without paying the entire balance yourself.
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Private Student Loan Debt Forgiveness Options
Private loans, from a bank, parent or other financial institution, are repaid directly to your lender. They might include a student line of credit, student credit card or overdraft. Any term revisions must be negotiated with your student loan provider.
Private student loans are just like any other unsecured debt. There are no special rules or study period limitations to qualify for of loan forgiveness.; Any credit card debts, lines of credit or bank loans you used to fund the tuition fees and other costs of your education can be discharged in a bankruptcy or proposal with no limitations or waiting period. Read our article for more on repaying private student debt.
What Is Student Loan Forgiveness
Student loan forgiveness means you are no longer required to make payments on the loans you used to pay for college. Its an incentive program for those who took out more money than they can afford to repay.
Piling up student debt isnt exactly a sin. If it were, 45 million people should head to the nearest confession booth. They have a combined $1.7 trillion in sins, er, debt.
It cant be confessed away, but it can be forgiven. Sort of.
Forgiveness means all or part of your student loan is wiped away. Poof! But the federal government doesnt just wave a magic wand over everyones debt. You must qualify for forgiveness, and thats a challenge because, in most cases, one of the requirements is 10 years of steady, on-time payments.
Private student loan forgiveness is even more difficult. The only way that happens is if you sustain total and permanent disability, or you die.
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Pay Interest During School
Pay the interest while in school to keep your loan amount from growing. Most student loans use the simple daily interest formula, meaning the interest on your loan is being calculated on your principal balance and not on any unpaid outstanding interest. Once your loan enters repayment, any outstanding interest is capitalized which mean your principal balance will increase. Your new, higher, outstanding principal balance will now be used to calculate your interest charges on your loan.
Enroll At A Less Expensive School
Enroll at a less expensive college. Many students choose to complete their first two years of college at community college, and live at home to keep the costs down. Here are some other aspects to consider when looking to minimize your student loan debt.
- Enroll at an in-state public college. Students who receive a Bachelors degree from an in-state public college graduate with about 20 percent less debt than students who graduate from a private non-profit college. The rate of return on a college investment is also highest at in-state public colleges, due to the lower cost. Most public colleges offer a high quality education at bargain prices.
- Enroll at a college with a “no loans” financial aid policy. There are about six dozen elite colleges with generous financial aid packages that replace loans with grants. While students can still borrow for the familys share of college costs, the average student loan debt at graduation is much lower at these schools.
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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.
Pay More Than The Minimum
Whenever possible, pay more than the minimum each month, but do it with care. Some lenders may apply any extra money toward your next month’s payment or spread it around among all your loans, which won’t have the impact you want it to. Send your extra payment with instructions to your lender telling it that you want any extra funds applied to the principal balance on your loan with the highest interest rate first. Follow up with your loan servicer later to ensure that it applied your payment correctly.
You might have to make some budget changes to free up some extra cash. You could also use year-end bonuses, tax refunds, and other windfalls, though you can’t count on these to help you out every month.
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Can I Count On My Student Loans Being Forgiven
Although the odds of student loan borrowers getting their balances reduced or eliminated have never been greater, “until legislation is signed into law, you can’t count on anything,” Kantrowitz said.
Currently, there are pending reports from the U.S. Department of Education and the Justice Department on whether the president has the legal authority to implement loan forgiveness through executive action, Kantrowitz said. It’s still unclear when the findings will be published.
In the meantime, he added, “borrowers should not take any precipitous action in anticipation of loan forgiveness.”
Target High Interest Loans For Repayment
Target the highest-rate loans for quicker repayment. There are no prepayment penalties on federal and private student loans. So, after making all of the required payments, make an extra payment and ask the lender to apply it as a payment to principal on the loan with the highest interest rate, not to a future loan payment.
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Student Loan Forgiveness Is Not The Same As Forbearance
Forgiveness eliminates your debt; forbearance postpones your payments. If you’re having trouble making student loan payments, you can ask your lender for forbearance. Your lender may not give you a forbearance if you don’t meet eligibility requirements, such as being unemployed or having major medical expenses.
Interest on your loan will still accrue, and you can pay that interest during the forbearance period if you want. If you don’t pay it, the accrued interest will be added to your principal balance once your forbearance period is up. Your new monthly payment will be slightly higher as a result, and you’ll pay more interest in the long run.
The only relationship between forbearance and forgiveness is that when you’re in forbearance, since you’re not making payments, you’re not making progress toward the payment requirements of a forgiveness program you might be participating in.
Student Loan Forgiveness: Which Loans Are Eligible
Only direct loans made by the federal government are eligible for forgiveness. Stafford loans, which were replaced by direct loans in 2010, are also eligible. If you have other federal loans, you may be able to consolidate them;into one direct consolidation loan that would make you eligible. Non-federal loans do not qualify for forgiveness.
In addition, borrowers with federal student loans who attended for-profit colleges and seek loan forgiveness because their school defrauded them or broke specific laws were recently dealt with a setback. On May 29, 2020, former President Trump vetoed a bipartisan resolution that overturned new regulations that make it much more difficult to access loan forgiveness. The new, more onerous regulations went into effect on July 1, 2020.
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Biden Left Student Debt Relief Out Of His Budget Heres What
Aug 5, 2021 If you have tens of thousands or more in federal student loan debt and other financial holes to filllike paying off higher-interest credit;
Making it easier to repay your student loans. Whether youre getting ready to pay back loans for college or for your graduate degree, these tips can make it;
The Claim: The Biden Administration Has Decided To Cancel $0 In Student Debt
As the debate over student loan cancellation continues, social media posts surfaced claiming President Joe Biden won’t follow through on his campaign promise to act on student debt.;
During the presidential campaign, candidate Biden pledged to tackle the;$1.7 trillion student debt crisis, promising to make college more affordable and wipe out up to $10,000 for all borrowers.;
Biden just dropped student debt cancellation down to zero. Thats right, the Biden administration has decided to cancel $0 in student debt, reads a May 24 from the Gravel Institute, a nonprofit organization named after former Alaska Sen. Mike Gravel.;
A screenshot of the tweet was to Instagram on July 5 in a post with more than 3,000 likes. A response above the tweet reads: why did I vote for him.;
USA TODAY reached out to the Instagram user for comment.
The Gravel Institute did not return a request for comment,;but when a Twitter user asked for evidence, the account;pointed to a Forbes article headlined, “Biden Drops Student Loan Forgiveness From Latest Budget.”;
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What Are The Different Proposals For Student Loan Debt
President Joe Biden endorsed federal student loan cancellation as part of his campaign. In his first 100 days of office, he supported targeted student loan forgiveness in the form of a universal $10,000 per borrower.
In September 2020, Senate Democratic Leader Chuck Schumer and Senator Elizabeth Warren proposed to cancel up to $50,000 in federal student loan debt per borrower. In March 2021, President Biden requested that Secretary of Education Miguel Cardona explore the feasibility of federal student loan forgiveness for up to $50,000 per borrower. Biden also suggested that canceling student loans should depend on the type of university, forgiving all federal student loans for public universities, but not private universities.
During his 2020 presidential campaign, Senator Bernie Sanders proposed eliminating all student loan debt.
If any of the proposals were enacted, how would each affect student loan borrowers?
Know The Pros And Cons Of Refinancing Student Loans To Lower Your Monthly Payment
After knowing details about each of your loans, you might be tempted to consolidate into another loan program. Refinancing can help you lower your monthly payments, but can also increase the term length and interest rates.;You;will also;lose your federal;borrower benefits . Consolidation or refinancing your student loans can be a great option for you just know how it will impact you financially.
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Tell President Biden To Advance Racial Equity And Eliminate Student Loan Debt
Now, more than ever, it is crucial that President Joe Biden eliminate student loan debt. Because of the ongoing COVID-19 health pandemic, communities across the country are struggling to make rent payments, car payments, and purchase necessary supplies. This has an even greater impact on Black communities; we are not only sacrificing the ability to pay for necessities, but we are also sacrificing opportunities to grow our personal savings, invest in our communities, and achieve our dreams all in order to repay our student debt.;
But, the federal government has the power to change this. The government owns 90% of student debt and has the ability to ensure that higher education is both affordable and accessible to Black people. Join us in writing to President Biden to demand he implement meaningful student loan debt forgiveness not just during the COVID-19 pandemic, but for good.
What If I Am Rejected
As the PSLF has many requirements, it is quite possible that the borrower will fail one or a few of them. In this case, the officials will notify the borrowers about failure reasons. The good news is that if there is a lack of qualifying payments due to a wrong repayment plan, you can still benefit from this program.
Such change is covered in the Temporary Expanded Public Service Loan Forgiveness option. Several conditions make the borrowers eligible for this program. First, the only reason for rejection should be some or all payments made with the wrong repayment plan not Income-driven plans. Besides, the borrowers should have a minimum of 10 years of full-time experience from a qualifying employer. If the debtors 12 months prior payment and the last payment is as much as the amount should have been paid under Income-driven plans, the borrower will qualify.
Keep in mind that the TEPSLF is a temporary program; it depends on the number of available funds and is based on the first come-first serve principle. Therefore, borrowers need to act fast and cancel student loan debt with this program before it is out of funds.
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