These Are Rare Cases Where Student Loans Can Be Forgiven
Student loans are a huge burden for many people, so when you hear “student loan forgiveness,” your ears are likely to perk up. It’s not very common, but yes, there are several scenarios in which your federal student loan might be forgiven. Let’s check them out.
Student loan forgiveness is basically the cancellation or repayment of all or part of your student loan. Sounds too good to be true, right? Well, in most cases it is. However, the US Department of Education estimates that 39% of federal student loans meet at least one requirement for general forgiveness programs. However, this does not automatically mean that you qualify. As Credit.com points out , there are many other requirements that you must meet, depending on the program.
Here are the most common programs your federal student loan can forgive:
Income-oriented repayment plans : There are several different types of income-oriented repayment plans , and while they are all structured slightly differently, the idea is the same: if you don’t earn enough to pay off the loan, you can apply for a new one. , lower monthly payment. However, keep in mind that this simply lengthens the duration of your loan, so you can pay more over time with interest. However, if you end up receiving repayment within 20 or 25 years, you can apply to forgive the loan balance. Your monthly payment also changes as your income changes. Visit the Department of Education’s student assistance website for more information .
Government Service Loan Forgiveness: According to the Department of Education, “If you work for a government or a nonprofit organization, you can get a government service loan forgiveness program.” However, you must have an outright loan and can only apply for it after you have made 120 monthly payments (10 years). You must also be a member of the income-driven repayment plan as mentioned above. In addition, you must have a suitable job and must work at least 30 hours a week on it. According to the Ministry of Education, these are typical types of work that meet the requirements:
- Government organizations at any level (federal, state, local or tribal)
- Non-profit organizations exempt from taxes under section 501 (c) (3) of the Internal Revenue Code.
- Other types of non-profit organizations that provide certain types of relevant government services
They have more information about this program here.
Teacher Loan Forgiveness: You must have either a direct loan or a federal Perkins loan to participate in the program. and you must be a teacher in a school that serves low-income families. There are many more requirements and you can check them here .
There are a few other less common ways to get rid of a student loan. For example, if your school closes before you can finish the program, you may be able to receive debt forgiveness. Or maybe you didn’t actually get your high school diploma or GED, in which case you probably shouldn’t have received the loan at all and you can get her forgiveness.
Again, this is unlikely for most of us, but the Department of Education has a helpful list of programs and resources for student loan forgiveness. Check them out at the link below.
Forgiveness, Cancellation & Disclaimer | Federal Student Aid, U.S. Department of Education