FEDERAL STUDENT LOAN FORGIVENESS PROGRAMME
Loans, especially student loans, can be an amazing friend in time of need until its time to pay back every single penny and with interest, then they go from being a sweet little soul to straight up bitchy in a flash. But this depends on your salary earnings once you exit the “student phase” of your life.
While ignoring the obvious fact that student loans helps you start your life in debt, they are a worthy investment; quite helpful too. However, once you’re out of school, you have to keep up with repayment so that it doesn’t tank your credit score.
But, if your salary earnings makes it a struggle to keep up with repayment, making the debt a real peace of mind thief, you can snatch your sanity back by eliminate the debt via a federal student loan forgiveness program. This, however, depends on the type of student loan you obtained.
To quickly examine the meaning of loan Forgiveness, it is simply a phrase used to depict the fact that you are no longer required to repay some or all of your loan as a result of some circumstances.
Just as it is titled, the first thing you should know about the federal student loan forgiveness program is that it is carved out specifically for federal student loans alone. In other words, if your loan is a private loan, the loan forgiveness programs listed here won’t work for you because they are for federal student loan borrowers.
However, there are diverse ways to manage your private loan debts. Furthermore, there are certain criteria you have to meet to obtain loan forgiveness via any federal student loan forgiveness scheme. If you are drowning in your student loan debt, read on to see the light at the end of this dark tunnel.
While the federal student loan forgiveness program is like a savior, it is not without certain criteria that has to be met for you to be eligible to loan forgiveness. These criteria differ based on the different programs that exist.
Here are some federal student loan forgiveness that you can apply for.
These various types are often classified into three;
- Student Loan Forgiveness program,
- Student Loan Cancelation program
- and Student Loan Discharge program.
Note: Although the three terms; Forgiveness, Cancelation and Discharge mean the same thing, in this context, they are used differently.
Cancelation and Forgiveness depict situations whereby you are no longer required to keep making payments on your loan as a result of your job.
Discharge on the other hand refers to situations whereby you are no longer required to make payment on your loan as a result of extreme circumstances like death, permanent disability or the closure of the school where you got the loan from. Below are the various types of federal student loans that you can look into based on the above stated classification.
FEDERAL LOAN FORGIVENESS PROGRAMS
1. Income-driven repayment forgiveness.
Just as it is named, this loan forgiveness program allows you make payment on your loan based on the amount you earn.
In other words, when enrolled in any of the four income-driven repayment plan offered by the federal government, you would be able to make your loan payments at a certain percentage of your monthly income.
After 20-25 years of payment, this program makes the rest of your loan eligible for forgiveness depending on which of the four plans you are enrolled in.
This loan is specifically for those whose federal student loan debt swallows a large chunk of their annual income. Hence, it helps you take the weight of the debt off of your income.
The four income-driven repayment plan includes;
- Revised Pay As You Earn Repayment Plan (REPAYE),
- Pay As You Earn Repayment Plan (PAYE),
- Income-Contingent Repayment Plan (ICR),
- Income-Based Repayment Plan (IBR)
2. Public Service Loan Forgiveness
This loan forgiveness program often called PSLF was established to help those who work with the government or in a non-profit organization to pay off their loan balance after they must have made 120 qualifying payment.
Here are the eligibility criteria to acquire this loan:
- Employment status:
the first step to being eligible for student loan forgiveness is to be a government worker. That is, you have to be employed either by the US federal, state, local government.
If you work for or with a non-profit organization, or serve as a full time AmeriCorps or peace Corp volunteer, you would still be eligible for loan forgiveness.
On the other hand, working for or with certain employers like; labor unions, partisan politics organization or for profit organization, automatically disqualifies you for loan forgiveness.
- You must be on a full time employment.
Working on a full time differs in definition from employer to employer. Therefore, if you work under a qualifying job, you would be considered as working full time if you meet your employer’s definition of the term “full time” or if you work at least 30 hours a week.
However, if you work part time in more than one job that qualifies you for loan forgiveness, you would still be eligible for loan forgiveness if the hours you work for, when combined, amounts to at least 30 hours per week.
ELIGIBLE LOANS: As earlier stated, not all loans are eligible for forgiveness. Only direct loans such as loans received under the William Ford Federal direct loan are eligible for PSLF. However, for other federal student loans to be considered for forgiveness, you would need to consolidate it into a direct consolidation loan. More so, for emphasis sake, private loans are not eligible.
- PAYMENT AND REPAYMENT PLAN:
to qualify for loan forgiveness,you have to meet up with the monthly required payment. In other words, it is necessary to pay the full amount due as shown on your bill. More so, you have to make your monthly payment 15 days after due date so as to qualify for loan forgiveness.
It is important that for you to be employed full time with any qualifying employer to further qualify for loan forgiveness. You can qualify for up to 100% forgiveness in PSLF and this happens after 10 years or 120 payments.
Until you have successfully made 120 eligible payment, you won’t be able to officially apply for PSLF. As human beings, nothing last long and change is quite inevitable.
As a result, you might switch jobs from time to time which, sometimes, might require you to move in and out of working in the public sector/ eligible jobs. Hence, in order to ensure that you are making eligible payment, you have to complete and submit the Employment certification form.
Endeavor to submit this form annually and every time you switch jobs. More so, make sure your loans are in Direct Loan Program to be eligible.
As an employee in the public sector who is interested in getting loan forgiveness, if your payment in the Direct loan program is in the following repayments; IBR, ICR, PAYE, or REPAYE, you have nothing to worry about as these repayments are considered as qualifying payments.
3. Teacher Forgiveness program:
As a public elementary or secondary school teacher with a student loan debt, life can be tiring, especially if your income is quite low. In other to take the financial burden off you, this Federal program was crafted to help you settle all of your student loan debt.
Qualifying for this loan requires that you meet some criteria as a teacher. Some of these criteria includes; you must have been working as a public school teacher (elementary level or secondary) full time for five consecutive academic years whereby one of those years must at least be after the 1997-98 academic year.
You should possess the necessary certifications that qualifies you as a teacher like a bachelor’s degree etc. You should be employed at a school or an educational service for low-income students, Loans eligible for forgiveness under this program are those that was taken before the five year qualifying period. Etc
4. Loan Forgiveness for Nurses:
Nurses who were able to complete their college education with the help of student loans can also have their loans forgiven once they get into the labor market. In fact, like a princess with several maids to tend to her needs, nurses with student loans have several student loan forgiveness program options.
Some of which includes; Public Service Loan Forgiveness (PSLF), Perkins Loan Cancelation and the more narrowed forgiveness program called Nurse Corp Loan Repayment program. It is quite interesting that the Nurse Corp Loan Repayment program helps settles up to 85% of your student loan debt if you are a qualified nurse.
4. State-sponsored repayment assistance programs:
In matters of loan repayment and forgiveness, location also plays a vital role in loan repayment. Depending on the state you live in, certain states offer amazing loan forgiveness program which are, as indicated by the title, state sponsored. To qualify, you simply have to be a teacher, lawyer, doctor or nurse with a specific license.
One of such forgiveness program sponsored by the state is the Mississippi Teacher Loan Repayment program. This program offers teachers with a certain license $30,00 per year for a maximum period of four years on student loan for teaching full time in a geographical location.
To be certain you qualify for any of the forgiveness program under this state sponsored loan forgiveness, endeavor to check with your state’s higher education department. There are other repayment plans for individual profession like the LARP for lawyers working in public interest law etc.
5 Military Loan forgiveness and assistance:
here is a loan forgiveness program for military personnel like Army officials, Navy, Air force, National guard and coast guard.
This is a student forgiveness loan you can lean on where to get your college loan settled so you can live a normal life. Soldiers who are eligible could receive up to $65,000 for the purpose of clearing or settling their student loan debt depending on which arm of the military you are in; Army, Navy, Air force etc.
However, it should be noted that one of the requirements to qualify you for this loan is that you should score at least 50 in the Armed Forces Qualification test.
FEDERAL STUDENT LOAN CANCELLATION PROGRAM.
Perkins loan cancellation:
If you’ve been wondering if it’s possible to have all of your loan completely settled by the government, well, programs that fall under this category do just this.
The Perkins loan cancelation program makes it possible for you to get your loan debt canceled if you have been working for five years at a public job. Most times, percentages of their loans are discharged incrementally each year as you work.
Those eligible for the Perkins loan cancelation are teachers who work full time in low-income public schools; elementary or secondary or who teach certain subjects like foreign language, math, science or special education.
FEDERAL STUDENT LOAN DISCHARGE PROGRAMS
Closed School Discharge:
Okay, so you just took a student loan and you still are enrolled in school but you woke up one morning only to find out that the college you are enrolled in and took out a huge student loan for (this is a very crucial part) has closed or shutdown for reasons best known to them.
Well, before you hit the panic button or go bananas, there is a better way around this shit hole you just almost got into and it’s the close school discharge program.
Once enrolled in this program, you would have your loan discharged. In other words, you won’t have to bother about paying back what you owe. However, if the school closes right after you’ve graduated, you would still qualify for this program if you enroll within 120 days upon the school’s closure.
It should be noted that while processing your application for this loan discharge program, you would still have to keep repaying your debt until it has been approved. Upon approval, you would be refunded all or some of what you’ve paid.
Total and Permanent Disability discharge:
Disability, physical or mental, is another valid reason why your student loan debt can be canceled.
As an individual suffering from either mental or physical disability and still has, during your college years, taken out federal student loan to settle your school bills and other college related needs, you can have your loan discharge as a result of your disability.
However, you have to provide proof of your condition via valid and necessary available document that actually proves that you are disable.
It should be noted that once your loan have been successfully discharged, the government might go on to monitor your disability and finances for a period of three years so that once you do fall short of the requirements, your loans would be reinstated. Visit disabilitydischarge.com for more details on the application process.
Discharge due to death:
They say death is the end of man. This concept proves true in this context as once you die, regardless of what you lost your life to, every penny that you owe in student loan would be discharged under this program once a relative is able to present a death certificate to prove that you are really dead.
The enlisted programs for Student loan forgiveness, cancelation and discharge could be considered a tip of the iceberg as there certainly are lots of other programs that you as an individual on a low-income can benefit from as regards your student loan debt.
These programs are designed to help lift the burden off you so you can quickly pay off your student loan debt and at least, have a sense of financial dependence.