Are you wondering about the topic “can student loans be forgiven”...The answer is Yes, but you have to qualify for it by meeting the necessary requirements
Forgiveness means all or part of your student loan is wiped away. this is to say that student loan forgiveness means not paying back the loans used to pay for college. But the federal government doesn’t just wave a magic wand over everyone’s debt.
You must qualify for forgiveness, and that’s a challenge because, in most cases, one of the requirements is 10 years (120 months) of steady, on-time payments.
Types of Student Loan Forgiveness
Public Service Loan Forgiveness (PSLF) – This type of student loan forgiveness is specifically designed for people who work in public service jobs for either the government or a nonprofit organization. You may also be able to get all or part of your loan forgiven by providing specified volunteer work, military service, or medical practice.
To have a loan forgiven under the public service program, you must first make 120 qualifying payments (which means paying the minimum amount due on time). These payments must be made while you are working for a qualified employer—generally, a federal, state, or local government or a nonprofit organization with tax-exempt status.
In effect, you qualify after 10 years on the job and 10 years of monthly payments (120 payments overall). Potentially eligible positions include those in nursing, government, police and fire departments, and social work.
Only direct loans made by the federal government (currently known as the William D. Ford Federal Direct Loan Program) are eligible for student loan forgiveness. Non-federal loans (those issued by private lenders and loan companies) aren’t part of this program.
Borrower Defense – If your school misled you or engaged in other misconduct in violation of certain state laws, you may be eligible for a loan discharge, officially known as “borrower defence to loan repayment” forgiveness.
Applicable to any William D. Ford Direct Loan Program loan, borrower defence originally involved the cancellation of all of your current federal student loan debt if you could demonstrate that you had been defrauded or substantially deceived by the college you attended. Implemented during the Obama administration, borrower defence applied mainly to private, for-profit schools that engaged in dubious practices.
Teacher Loan Forgiveness – This type of student loan forgiveness comes in if you teach full-time for five complete and consecutive academic years in certain elementary or secondary schools or educational service agencies that serve low-income families, and meet other qualifications, you may be eligible for forgiveness of up to a combined total of $17,500 on eligible federal student loans. Get the details about Teacher Loan Forgiveness.
Income-Driven Repayment (IDR) Plans – If you repay your loans under a repayment plan based on your income, any remaining balance on your student loans will be forgiven after you make a certain number of payments over a certain period of time. Learn about IDR plans and how to apply.
Military Service – In acknowledgement of your service to our country, there are special benefits and repayment options for your student loans available from the U.S. Department of Education and the U.S. Department of Defense.
Benefits include interest rate caps under the Servicemembers Civil Relief Act and Department of Defense student loan repayment programs. Learn more about federal student loan benefits for members of the U.S. armed forces.
AmeriCorps – The Segal AmeriCorps Education Award is a benefit received by participants who complete a term of national service in an approved AmeriCorps program—AmeriCorps VISTA, AmeriCorps NCCC, or AmeriCorps State and National.
After you successfully complete your service, you are eligible to receive a Segal AmeriCorps Education Award, which can be used to repay qualified student loans.
4 Ways to Get Your Student Loan Forgiven
Canceling student loan debt is a popular thing to talk about, It has been a popular topic for more than 20 years and 45 million people still owe $1.7 trillion.
Have a job that serves the public good – This is to say that, if you’re a teacher or police officer or firefighter or social worker or health care worker or government employee who kept up with payments for 10 straight years, you’ve got a good shot. If you are a sign spinner or pet psychic, forget it.
Have a repayment plan that is based on your income – You will still have to pay a large chunk of your debt over a long period, but under the current laws, a portion will be forgiven at the end. Available for federal student loans.
Get a discharge – A discharge is when you can’t repay the loan for a variety of reasons, like death, disability, fraud, identity theft or bankruptcy.
Consolidate all your loans into one debt – You can get your student loans forgiven by consolidating all your loans into one debt, then applying for forgiveness by filing a special application: Federal Student Aid’s Public Service Loan Forgiveness (PSLF) & Temporary Expanded PSLF (TEPSLF) Certification & Application. Remember, if you wish to apply or reapply under the temporarily looser restrictions, you must request loan consolidation and submit the application.
Who Can Apply for Student Loan Forgiveness?
The government’s announcement was directed to borrowers who attended Corinthian schools, but all students who feel that they were misled by their schools could be eligible for loan cancellation.
“Under the Borrower Defense to Repayment [program], certain conduct by a school you attended might make you eligible to receive a discharge of some or all of your federal student loans,” reads the Department of Education’s website.
“The most common types of conduct that might make a borrower eligible for loan relief through Borrower Defense to Repayment discharge are misrepresentations of the truth made by the school or its representatives during their efforts to recruit you to enrol at the school or to continue your enrolment at the school.
“These misrepresentations typically take the form of untruthful representations of the school’s selectivity in admitting students, its rankings as compared to other schools, the job placement and earnings outcomes of its prior graduates, or the likelihood that its credits will be accepted by another school or that it will accept credits from other schools.”
Advantages of Student Loans Forgiveness
- Relieves burdensome debt.
- Encourages public service.
- Increases disposable income/spending.
Disadvantages of Student Loans Forgiveness
- Takes years to qualify.
- May increase taxable income.
- Can accelerate accrual of interest Aww(income-driven repayment plans).
Student Loan Discharge
Discharge is an additional way to achieve student loan forgiveness. It is generally awarded by a judge and can apply to both Federal and private student loans. Discharge is granted under extremely rare circumstances.
Discharging student loans through bankruptcy is extremely rare. It is technically not impossible, but demonstrating undue hardship is very difficult. Read more about the differences between forgiveness and discharge.
Circumstances for Student Loan Discharge
- Permanent disability or death.
- Victim of identity theft.
- Unauthorized signature of the loan by the school without your knowledge.
- False certification of student eligibility.
- Unpaid refund, which is when you withdrew from school and it didn’t return the required loan funds. to your loan servicer.
- School closure while you were enrolled.
Discharging student loans through bankruptcy is extremely rare. It is technically not impossible, but demonstrating undue hardship is very difficult. Read more about the differences between forgiveness.
Student Loan Forgiveness vs. Student Loan Discharge
Student loan forgiveness and student loan discharge are always contradictory but they are not related, although their end results are similar, student loan forgiveness is nb reported quite the same as student loan discharge.
A loan discharge immediately stops the borrower’s obligation to repay the debt (in contrast, with loan forgiveness, a borrower continues repayments until their application is approved). cases, a discharge may also entitle a borrower to receive a refund of payments previously made on a loan.
Loan discharge often occurs when the borrower declares bankruptcy, dies, or becomes permanently disabled. There can also be situations in which a loan is discharged because the educational institution was guilty of fraud.
With discharges, borrowers are relieved of the requirement to pay their federal student loans if it’s proven, for example, that the educational institution misled the student in a meaningful way.
In general, federal education loans may be eligible for discharge under certain “circumstances beyond the borrower’s control.” Those circumstances do not include things like having to drop out of college before graduating or being unable to find a job after graduation.
Such circumstances do include a school engaging in illegal recruiting tactics, such as guaranteeing the student a well-paid job upon graduation, or other misconduct as grounds for a loan discharge.
Differences Between Student Loans Forgiveness, Cancellation, and Discharge
The terms forgiveness, cancellation, and discharge are always interchangeably used as being the same thing but they are not. If you’re no longer required to make payments on your loans due to your job, this is generally called forgiveness or cancellation.
If you’re no longer required to make payments on your loans due to other circumstances, such as a total and permanent disability or the closure of the school where you received your loans, this is generally called discharge.
I hope this blog was helpful in clearing your thoughts about a student loan if it can be forgiven. Do well to comment and share.