How Student Loan Forgiveness Works And Who Qualifies

From the murky waters of low net worth to the inability to afford a decent home, student loans will derail your life. The numerous disasters that come with being indebted are hard to overstate. The wholesome life you so dream about could remain a mirage if you do not take the necessary precautions.

Further to these drawbacks, pursuing your dream could be an uphill task for you. Perhaps, you will end up forgoing grad school too. It is unfortunate that these student loans hardly go away. But does that mean that you should give up? The simple answer to this would be no. That aside, it would be valuable to explore the different approaches to handling your situation.

Though things might seem a little grim, you will find hope in student loan forgiveness programs. With various options at your hand, this might seem to be a suitable path for you. However, there is a need for you to be sure of how the programs work. It is to that end that we explore v few insights into the same. Read with us!

Does Student Loan Forgiveness Work?

Student loan forgiveness is a program you will find conceivable and worth considering. As mentioned, we have different programs that you could consider. That implies that the processes and eligibility criteria will vary from one loan to another. Most often, you will need to choose from the following approaches.

  • Public service loan forgiveness program
  • Income-based repayment plans
  • Federal Perkins loan cancellation
  • Student loan discharges

While loan cancellation and student loan discharges could help address your predicament, they are not entirely loaning forgiveness programs. To that end, our focus shall remain on PSLFP and income-based repayment plans.

So, how does this process work? Regardless of the plan, you will often start by submitting a duly filled and comprehensive loan forgiveness application. Take the time to confirm with the loan servicer whether you qualify for it or not. Remember to keep making payments when your application is under review.

Once the application is reviewed and approved, part or whole of the amount is forgiven. That implies that if it is partial forgiveness, you will need to pay the remaining balance. Conversely, you will no longer need to worry about payments if the whole amount gets discarded. Did you know that some cancellations will allow you to receive a partial refund of what you already paid?

How about if your application gets denied? First, it is not the end of life. In such situations, you will remain responsible for the repayment of your loan. You could, however, consider consulting your loan servicer for friendlier repayment options. On the other hand, you could consider asking for further review. This move often comes in handy if you feel there was an error in the initial assessment.

One of the most crucial issues would be understanding which options you have at hand. It is only through this that you will be sure of a reliable way out. How about we take a look at these options? Remember, our focus is on public service loan forgiveness programs.

Here is what you should keep in mind:

Public Service Loan Forgiveness Program

The goal of the Public Service Loan Forgiveness Program was to ease the burden of costly student loans on highly qualified graduates. This way, they would feel encouraged to pursue careers in the public service sector.

It would suffice to mention that this forgiveness program is suitable for those with Direct Federal Student Loans. Whether you took a Direct Plus Loan or a Direct Consolidation Loan, this remains your ideal option out. Well, private students will hardly be lucky under this program.

Unless you are a full-time employee working at least 30 hours weekly, this program is a fantasy to you. Further to this, it would help if you were ready to commit to 120 on-time monthly installments after consolidation. While at it, some of the areas given special attention will include education, health, law enforcement, vet medicine, and public law.

Various repayment plans will come in handy for you. Up to four options will be up for grabs, including PAYE, REPAYE, Income-Based, and Income-Contingent Repayment Plans.

• Pay As You Earn Repayment Plan

With this approach, you will pay up to 10% of your discretionary monthly income. At the lapse of 240 months, any remaining balance gets thrown out of the window.

• Revised PAYE Repayment Plan

Relatively similar to the Paye Plan, this payment plan takes between 20 and 25 years to complete. However, once you get into this program, you remain ineligible for other income-driven repayment plans.

• Income-based repayment plan

This approach adjusts the monthly student loan payment as per your family size and income. It ensures that your monthly repayment installments are as affordable as possible.

• Income-contingent repayment plan

This product is relatively similar to the IBR arrangement. However, its basis is on the family size, income, and the amount you borrowed. Further, monthly deposits tend to be a little higher.

Why you should consider student loan forgiveness

Various benefits emerge once you indulge in this move. Perhaps, understanding the merits will encourage you to make your application. Some of the top advantages you will get will often include the following:

• You will no longer need to worry about taxes on the forgiven amount. Once you get the forgiveness, the chargeable tax disappears too

• The program ensures that you get an affordable way to repay the loan or get rid of it completely. Once you attain the set period, you will be free from student debt

• There are no restrictions on which job you are doing. Various jobs will allow you to enter this arrangement, whether in private or public practice. Nothing could offer you more convenience

Most importantly, you will get the peace of mind you have always desired. This way, your emotional, as well as financial growth, becomes inevitable.

Now is the time to consider this program. Take the time to identify which programs offer you enhanced value and settle on it. Do not wait until you sink into too much debt or even depression.