Who Qualifies For Student Loan Forgiveness?
Student loan forgiveness is one of the best ways to pay off your student debt. The government offers a variety of plans that allow you to have some or all of your student loans canceled. In order to qualify for student loan forgiveness, however, you need to meet certain requirements based on your type of loans and employment situation. In this post we’ll cover the most common types of federal student loan forgiveness programs available today in detail so that you can see where you stand!
Public Service Loan Forgiveness
- What is the Public Service Loan Forgiveness program?
The Public Service Loan Forgiveness program is a federal loan forgiveness plan for borrowers who work in public service for a minimum of 10 years. The goal of this program is to encourage students to pursue careers in lower-paying fields, such as teaching and other public service positions that don’t pay very well or offer high salaries—the kind of jobs that aren’t especially attractive and therefore don’t attract many applicants. In fact, most programs are so difficult to get into that they require you to apply while still in school (meaning before you have any student debt). You can also qualify if you are unemployed but actively seeking work at least 30 hours per week, or if your employer has been approved by the Department of Education (DOE). Borrowers who meet these requirements will be eligible for both PSLF and IBR/PAYE plans with qualifying loans only; however, it’s worth noting that if your monthly payment under PAYE exceeds 15% of your discretionary income after taxes are taken out each month, then DOE won’t consider your balance eligible for PSLF cancellation even though it may otherwise be considered eligible under PAYE terms themselves because DOE does not factor taxes into their calculations about whether someone qualifies for PSLF cancellation based on their total income level as part of determining whether someone might qualify based on their discretionary income level alone; instead DOE bases its decisions solely on how much money one owes each month towards their remaining balance while taking no account whatsoever towards any other types debts such as credit cards or medical bills
Income-based repayment plans
If you have federal student loans, it’s possible to make your payments more affordable by switching to an income-based repayment plan. These plans are designed to be more flexible than standard repayment plans and better fit the needs of borrowers.
- The amount of your monthly payment is based on your income and family size, and is recalculated each year.
- Your loan balance will be forgiven after 20 or 25 years, depending on which plan you choose (but not earlier).
Income-based repayment plans have higher monthly payments than standard plans — but they also offer benefits such as loan forgiveness after a certain number of years.
Pay As You Earn Repayment Plan (PAYE)
PAYE is a lower monthly payment plan that allows you to pay less while also getting your loans forgiven sooner. The catch? You will have to pay taxes on the amount of money that’s forgiven, but that’s better than paying off your loan for 30 years.
PAYE is for borrowers who have student loans through any federal program (even if it was a private student loan). Eligible borrowers can apply by filling out this form and submitting it with proof of their income and family size. If you don’t know what kind of loan you have, go ahead and fill out this form anyway—it might just work!
You must have an adjusted gross income under $50,000 annually as an individual or $100,000 as a household (or less), unless there are extenuating circumstances such as being in school full-time or being unemployed for more than half the year due to illness or disability. In those cases, your annual income still must be below the thresholds listed above ($60k individually; $120k household).
Revised Pay As You Earn Repayment Plan (REPAYE)
The Revised Pay As You Earn Repayment Plan (REPAYE) is a repayment plan for federal student loans that allows borrowers to cap their monthly payments at 10% of their discretionary income. The borrower’s required payment will be recalculated each year, based on annual changes in the cost of living and other factors. REPAYE is available to borrowers with federal student loans who have low income and high debt relative to their financial circumstances.
Borrowers typically must be new borrowers as of Oct. 1, 2007, or older than 30 years old,have received a disbursement after Oct. 1, 2011, and have received a loan from the William D Ford Federal Direct Loan Program at any point between July 1, 2013 and July 16th 2017
Income-Contingent Repayment Plan (ICR)
Income-Contingent Repayment (ICR) is a federal repayment plan that allows you to pay off your loans according to how much money you make. If you work in certain professions and have a low income, ICR can help.
- Who qualifies for ICR?
- Student Loan Forgiveness: You may be eligible if:
- Your monthly student loan payment amount under the Standard Repayment Plan (10 years) or Graduated Repayment Plan (20 years) is greater than it would be under the ICR plan.
- You aren’t eligible for other repayment plans such as Income-Based Repayment or Pay As You Earn.
Private student loan forgiveness
Private student loans are a different animal from federal student loans and have very different rules.
Federal student loans may be eligible for forgiveness, discharge, consolidation, deferment or forbearance. Private student loans can’t be forgiven unless you’ve paid them back in full over time (in which case they’re not really private anymore). They can’t be discharged if you qualify for bankruptcy relief. And if you have a forbearance or deferment with a federal loan that is shared with your private lender, the borrower must pay both sets of interest rates until the end of their grace period or deferment/deferment period on their federal loan (or until their payments resume).
Private lenders do offer some benefits that aren’t available through federal programs: Some will work with borrowers who don’t qualify for income-driven repayment plans; others may offer lower interest rates than federal Perkins Loans or Parent PLUS Loans; and others offer flexible payment options such as single monthly payments instead of installment payments spread over 10 years (which offers more money upfront but less overall savings).
Employment-based student loan repayment assistance
Employment-based student loan repayment assistance refers to the federal program administered by the Department of Education that helps eligible applicants pay back their student loans. This type of assistance is available for both undergrad and graduate degrees, but there are certain requirements and deadlines you must meet in order to qualify for it.
Typically, employment-based student loan repayment assistance is available for up to three years after graduation date or completion date (whichever comes first). However, some repayment programs offer extended terms depending on your work history with them. Once you’ve chosen a career path, finding one that aligns with your interests and goals can help ensure that the job feels fulfilling while also helping reduce stress levels associated with living paycheck-to-paycheck due to crushing debt payments each month—especially if those payments are being made on behalf of someone else who isn’t putting forth their own effort towards reducing them!
Teacher loan forgiveness
If you’re a teacher and have taught full time in an elementary or secondary school that is eligible for Title I funds, there are options for student loan forgiveness. The teacher must be employed by either a public or nonprofit elementary or secondary school, or educational service agency which serves predominantly low-income families. Other qualifications include:
- You must have been employed at least five consecutive years under an approved teaching service agreement.
- You must teach core academic subjects such as English/Language Arts, history/social studies, mathematics, science or foreign languages
- You must provide direct classroom teaching to students as opposed to support staff roles such as curriculum planning and research
Perkins loan cancellation
Who Qualifies for Perkins Loan Cancellation?
If you have received a Perkins loan, then you may qualify for cancellation of your debt. To be eligible, you must have completed two or more years of qualifying service in the Peace Corps or AmeriCorps VISTA program and meet other requirements such as having a “substantial financial hardship.” You can only apply if:
- Your school participates in the Perkins Loan Program
- You are enrolled at least half time in an eligible degree program at an eligible college
- You remain enrolled at least half time during each payment period that comprises your repayment term (usually 10 years)
It’s important to know where you stand.
One of the best things you can do is to know where you stand. Knowing your options and what they entail will help you make better decisions, both financially and professionally. For example, if you are interested in one particular industry or career but aren’t sure whether it’s right for you, knowing your student loan forgiveness options can help guide that decision.
If someone is interested in becoming a lawyer but isn’t sure if they want to go into law school yet, they may decide that they want to become an intern while they still have access to their loans (and interest rates). With this option available, he or she wouldn’t need to worry about making payments on his/her loans while working as an intern at a law firm; instead he or she could just focus on getting some experience before jumping into higher education.
It’s important to know where you stand. If your debt is eligible for forgiveness or cancellation, it could be the key to getting out of debt and saving thousands of dollars in interest payments over time. However, if you don’t qualify for any type of student loan forgiveness or cancellation program then you may have no other option except paying back what you owe in full when it comes time for repayment.