These programs can help you wipe out student debt
What are the best ways to get rid of student loan debt? And when is loan forgiveness possible? It doesn’t take much to see how many student loan debts college graduates in the United States have. Average debt and total debt don’t really mean anything. However, if you are worried about the amount you owe, you’re not alone. It is important to find a solution.
What Loans are Eligible for Student Loan Forgiveness?
Forgiveness is only available for direct loans made by federal government. Direct loans made by the federal government are not eligible. You may be eligible to consolidate federal loans into one consolidation loan. Forgiveness is not available for non-federal loans, such as those handled by private lenders or loan companies.
Borrowers with federal student loans who went to for-profit colleges in 2020 and sought loan forgiveness because the school had defrauded or broken specific laws were denied. The former President Trump vetoed an bipartisan resolution which overturned new regulations that made it more difficult to get loan forgiveness. On July 1, 2020, the new, more burdensome regulations came into effect. Under the Biden Administration in 2021, $1. Nearly 92,000 students were the victims of college fraud and owed student loans totaling $1.
Income-Driven Repayment Plan Forgiveness
Federal student loans have a standard 10-year repayment term. You can enroll in an income-driven repayment program (IDR) if a 10-year repayment term makes monthly payments prohibitive. You don’t have to pay anything and can even complete the paperwork on your own.
Income-driven programs allow you to make payments over a period of 20-25 years. Your payments are limited to 10% to 15% of your net take-home income. If you have made all qualifying payments by the end of that term, any remaining balance on your loan will be forgiven. The payments are determined by your household income and your family size. They will range from 10% to 20% of your discretionary earnings.
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Program for Teacher Loan Forgiveness
Teachers are not eligible for student loan forgiveness. Teachers may be eligible to have up $17,500 in federal student direct and Stafford loans forgiven if they teach for five consecutive academic years at a low-income school. No eligibility is given to loans that were made before Oct. 1, 1998.
A teacher must be a highly qualified teacher. This means that you need at least a bachelor’s and full state certification. Forgiveness is only available to science and math teachers at secondary level and special education teachers at elementary and secondary levels. Other teachers are not eligible for forgiveness.
Public Service Loan Forgiveness
You could qualify for student loan forgiveness if you are employed full-time in a U.S. federal or state, local, tribal, or not-for-profit institution. To qualify, you will need to make 120 payments. These don’t necessarily have to be consecutive.
The program has had many problems. In 2007, the government established the PSLF program. It was controversially launched when the first borrowers were eligible for forgiveness in 2017. Nearly all the applications of the first round of borrowers were denied within a year. Many borrowers were denied the forgiveness that they earned due to technicalities. Some borrowers discovered that their loan servicers misled them about their eligibility. Only 5,500 borrowers had received their loan balances disgorged as part of the program by June 2021.