Student loan borrowers can finally get an answer on student loan forgiveness. President Biden isis expected to make an announcement on Wednesday, with many speculating it could be related to his .
“I’m looking at doing debt reduction. I’m not looking at $50,000 debt reduction. But I’m looking closely at whether or not there will be additional debt forgiveness.” , Mr. Biden said in April. Mr. Biden previously pledged to forgive at least $10,000 of federal student loan debt per borrower. If adopted, this pardon could of dollars.
However, it would bring much-needed relief to those burdened with student loan debt. About two-thirds of all U.S. college graduates graduate with debt, according to a 2021 report from the Institute for College Access & Success (TICAS). It is therefore not surprising that many graduates want to know more about and loan release options.
Who is eligible for student loan forgiveness?
In addition to this potential and extensive loan forgiveness, there are also student loan forgiveness programs already in place for borrowers who meet certain employment and payment criteria.
The caveat is that most of these programs are federally funded and only apply to federal loans. There are also strict qualifications – such as your profession, specific student loan plan, military status and more – if you want to get part of your loans. Check out the student loan forgiveness programs listed below to see if you qualify.
If you have private student loans, there are other options available to you to alleviate some of the financial hardship that student loan debt may cause you. Check out the different student lenders to see what types of terms, rates, and offers they offer.
Student Loan Forgiveness Programs
Here are some student loan forgiveness programs to consider, according to Federal Student Aid (FSA):
- Waiver of public service loan (PSLF): Available to full-time employees of eligible government agencies or nonprofit organizations who have made at least 120 one-time payments.
- Income Based Reimbursement Plan (IDR): Allows borrowers to adjust their monthly payments based on their discretionary income; after a certain number of payments, any remaining balance can be cancelled.
- Loan forgiveness to teachers: Full-time teachers in certain low-income areas can qualify for loan forgiveness of up to $17,500 after teaching for at least five consecutive years.
- Military pardon: Some branch members may be eligible for United States Department of Defense (DOD) student loan repayment after qualifying for military service.
There are also many state programs as well as forgiveness options for employees in certain areas. For example, if you are a nurse, doctor, pharmacist, or select other healthcare professionals and agree to work in specific facilities (such as research hospitals or those serving low-income communities), you may qualify for the repayment of part of your loans. every year.
If you don’t qualify for any of these programs or have a private student loan, check out this lender market to see what kind of offers you might qualify for.
What to do if you don’t qualify for student loan forgiveness
If you don’t qualify for a federal student loan forgiveness program — or have private student loans — there are other ways to save money on your loan repayment.
For example, if you are in the military, the Servicemembers Civil Relief Act (SCRA) may limit the interest rate charged on your loans while you are on active duty. If you have federal loans, you can take advantage of income-driven repayment options to potentially lower your monthly payment and can even use loan forbearance or deferral options during times of financial hardship.
Federal and private borrowers can also take advantage of the IRS student loan interest deduction. This allows you to deduct up to $2,500 or the total interest you paid this tax year on qualifying loans (whichever is less) as long as you meet certain income limits.
You do not know what to do ? Consider hiring a financial expert for help.
Student Loan Forgiveness vs. Discharge
Loan discharge is a process that essentially cancels some (or all) of your eligible student loans. While the end result is the same as student loan forgiveness (you no longer have to pay off that portion of your student loan debt), forgiveness of your loans is a very different process.
You could potentially apply for forgiveness of your eligible federal student loan if:
- You are on total and permanent disability (TPD).
- You declare bankruptcy and initiate adversarial proceedings.
- Your school closes while you are enrolled or shortly after graduation (read the guidelines carefully).
- Your school falsely certified your loan eligibility or signed for your loan without your knowledge.
- You dropped out of school, but the school did not repay your remaining loan to the service agent.
Federal student loans can also be canceled if a borrower or relative who took out a PLUS loan on behalf of a student dies and a family member or representative files specific documents, according to the FSA.
If your school has been deceptive in some way or violated certain state laws, you may also be eligible for a release through what is called Borrower’s Defense Against the loan payment. The specifics vary by location and situation, but include such things as misrepresenting schools’ rankings or its willingness to accept credit from other schools. If you think you qualify for this, be sure to fully explain your experience in the application.
Beware of Student Loan Forgiveness Scams
When it comes to almost everything in the financial world, there is the potential risk of scams. Although these scams can take many different forms, common warning signs include:
- Companies not affiliated with or in partnership with the Department of Education (ED).
- A request for initial payment for loan forgiveness services.
- Companies that contact you to ask for personal information, such as your Social Security Number (SSN) or Federal Student Aid login information.
In general, you should be wary of companies that contact you first, promising instant or full loan release or forgiveness. These scams often involve limited time offers or require your immediate attention. You may also be able to spot a scam if the correspondence contains grammatical errors or unusual punctuation.
At the end of the line
Simply put: student loans are expensive. In 2020, the Federal Reserve found that the median amount of school-related debt for self-payers was between $20,000 and $24,999. Graduate students and those in professional degree programs are likely to owe even more.
So it’s wise to take advantage of available student loan forgiveness programs if you haven’t already. If you don’t meet the criteria for any of the above, go to the Federal Student Aid website to learn about other possible options, like the discharge options mentioned above.