Student loan forgiveness programs have long been touted as the holy grail of student loans, but they’re not as common or accessible as you might think. In fact, according to news about student loan forgiveness, on the US Department of Education’s website, only 15% of borrowers are likely to qualify for forgiveness under current programs. So if you’re looking to get your student loans forgiven and want to know how to do it correctly, this guide will help you navigate the process and ensure that you don’t accidentally disqualify yourself from your only chance at student loan forgiveness.
The Five Biggest Student Loan Forgiveness Programs
The federal government offers several student loan forgiveness programs, but which one is right for you? It all depends on your situation and career goals. Here are five of the most common student loan forgiveness programs available in 2022:
- The Public Service Loan Forgiveness Program (PSLF),
- Teacher Education Assistance for College and Higher Education (TEACH) Grant forgiveness,
- Teacher Cancellation for Total and Permanent Disability (TPD),
- Income-Based Repayment or Pay As You Earn forgiveness and cancellation, Income-Contingent Repayment (ICR)
- Repayment plan forgiveness.
Each program has its eligibility requirements, ranging from teaching students in an underserved area to working full-time in public service positions that provide certain types of services. If you’re eligible for multiple programs, it’s important to understand how each one works and how much time it takes to receive forgiveness.
In some cases, such as with PSLF and ICR repayment plans, payments can be forgiven after 20 years—but only if they’re made on time every month. That means no missing payments! If you’re struggling with student loans, contact our office at 561-338-9000 or click here to schedule a free consultation with one of our experienced attorneys!
Not All Schools Are Eligible For Student Loan Forgiveness.
For a school to be eligible for forgiveness, it must participate in one of three federal student loan forgiveness programs. The first two programs make students eligible for loan forgiveness after working in certain careers that are considered public service and going into professions that pay below-average salaries. For example, select university doctors, lawyers, accountants, and professors are eligible for these programs. The third program, called Income-Based Repayment (IBR), caps monthly payments at 15% of discretionary income and forgives any remaining debt after 25 years. This program applies to any graduate or professional degree student who borrowed from either Direct Loans or Federal Family Education Loans (FFEL). As you can see, eligibility requirements vary depending on your loan type and where you went to school. If your education doesn’t qualify for loan forgiveness through one of these programs, other options may still be available to help you reduce your monthly payment amount and the length of the repayment term.
Carefully Read Application Instructions.
Despite what you may have heard about forgiveness, there are some guidelines you need to follow for it to be approved. The first thing to understand is that student loan forgiveness only applies if you work for a qualified employer (or, in some cases, another public service agency) after you graduate from college. If your student loans are from a private lender and aren’t eligible for Public Service Loan Forgiveness, then be sure that your employer is one of those rare companies that offer assistance with student loan repayment as part of its benefits package. Always carefully read your employer’s policy to know exactly what they will offer and when you can apply. Make sure you get everything in writing before signing on. Some employers require employees to make 120 on-time payments before qualifying for any loan forgiveness program. Be wary of any program that doesn’t specify how many payments an employee must make—these could end up being a lengthy burden on already-hefty student debt payments. Also, never sign an agreement or contract until you’ve read through every Line—and I mean every Line! There might be important details buried within long paragraphs or tiny print; don’t just skim over them without understanding their significance because these documents are binding and difficult to get out of once signed!
Choose Your Career Wisely.
If you have a high student loan debt, you should consider your career options carefully before signing up for another degree. Think about what you enjoy, what subjects you excel in, and which jobs are available. Then make sure your education will lead you in that direction. If it won’t, don’t do it — at least not yet. For students considering paying off their student loans, these college majors should be completely avoided, says financial writer Natalie Walters at MagnifyMoney, who looked at data from Payscale’s 2015-2016 College Salary Report for her research. The study found that graduates with degrees in these fields earn less than $50,000 per year on average ten years after graduation. The good news is that they also tend to have lower tuition costs than other degrees. But if you’re looking to pay down debt quickly, those savings might not be worth it. Here are some of the worst college majors for future earnings
If You Have Your Own Business, Consult an Accountant First.
In addition to helping you keep your finances in order, a good accountant can help you analyze your business’s tax bill and ensure that you’re paying everything you need. They can also help with bookkeeping and forecasting so that you always know how much money is coming in and going out. Ask any other small business owner how important an accountant is; they’ll tell you it’s as important as having a good lawyer or doctor on retainer—and even more necessary than taking every class in your undergraduate school’s accounting program! If you have serious debt, consult a student loan expert: Whether it’s consolidation or forgiveness, there are several different ways for those with student loans to get assistance repaying their debt. Unfortunately, many people don’t take advantage of these programs because they think someone else will care for them. However, if you have high-interest rates on your loans or feel like no one else is offering options for repayment, then find someone who specializes in student loan relief and see what options are available to you. It could mean thousands of dollars saved over time. If you don’t understand something about student loans (or anything else), ask questions: Don’t be afraid to ask questions when dealing with lenders, accountants, lawyers, doctors, or anyone who deals with your money!
Don’t Give Up If Your Application Is Rejected; Reapply.
If you’re rejected for student loan forgiveness, it may be because you’re missing information on your application. You have to read more on news about student loan forgiveness, then check your application and resubmit if necessary. It’s better to get rejected now than after you finish repaying your loans and apply again. If it turns out that you’re still not eligible, consider applying for an income-driven repayment plan instead. This will help lower your monthly payments and give you a chance at forgiveness in 10 years. Income-driven plans also offer forgiveness after 20 or 25 years of qualifying payments.
Only Work In an Eligible Field Unless You Want To Refinance.
The types of jobs eligible for PSLF will change as years go by, so if you work in a non-eligible field and get your loans forgiven, your forgiveness may be taxable. This means you’ll owe income tax on it and possibly an additional 10% early-withdrawal penalty. If that sounds like something you want to deal with on top of student loan payments, keep working towards PSLF in an eligible job; otherwise, look into refinancing. Many companies offer low-interest rates, flexible repayment plans, and lower monthly payments. Some even offer student loan forgiveness after 20 or 25 years of timely payments!
Contact The Department of Education For Student Loan Forgiveness
If you’re considering using one of your loan forgiveness options, starting with your student loan servicer (the company responsible for your account) is best. Though the law doesn’t require student loan servicers to help borrowers access benefits, many do—it never hurts to ask. The Department of Education also has resources on its website about how student loans work and what programs are available for helping borrowers manage or pay off their debt. Additionally, you can speak with a CFPB-certified student loan specialist who can help you understand federal and private loans in depth and provide support while you apply for forgiveness. Once approved, they will notify your creditors that a portion of your payments should be allocated towards forgiveness each month. This is one of the benefit of reading news about student loan forgiveness.
Bottom Line on The News About Student Loan Forgiveness
Reading news about student loan forgiveness is the only way to be 100% sure you’ll have your student loans forgiven. Of course, that could change any time, so be sure you’re paying attention and keeping up with current information. Also, remember that if you don’t want student loan forgiveness, it might not apply to you anyway! On a similar note, if your goal is loan forgiveness, make sure you readjust your expectations; there are plenty of other ways out of debt or into financial security if a full discharge isn’t an option for you. It’s worth noting that those who go through programs like Public Service Loan Forgiveness often get better rates on their loans than they would have otherwise, even after factoring in interest. Ensure you understand what terms you’ll be subject to before signing up for any plan like PSLF. One last thing: as we’ve said before, taking advantage of forgiveness plans will mean making some big life changes—and can come with their risks—so think long and hard about whether or not one of these programs is right for you before signing on the dotted Line.