Public Service Loan Forgiveness (PSLF)
You could be eligible for loan forgiveness if you work in a public service job. This program, called Public Service Loan Forgiveness (PSLF), forgives student loans after ten years of payments for borrowers employed full-time by a qualified employer. To qualify, you must make 120 monthly payments on your federal loan and agree to have them serviced by FedLoan Servicing or Great Lakes Educational Loan Services.
If your employer does not participate with PSLF but does offer other repayment options, see Step 2 below for tips on how to apply those income-driven plans (IDRs) to your loan balance.
Income-Driven Repayment Plan Forgiveness
Income-driven repayment plans are great if you want to reduce your monthly payments or have them forgiven after a certain amount of time. To be eligible, you must demonstrate financial hardship, including low income and high debt. The government will also consider other factors such as family size and state of residence.
After applying for an income-driven repayment plan, you’ll receive a new payment based on your financial situation and the amount owed on your student loans. Suppose this is below what you currently pay per month. In that case, it could help reduce the total amount of interest that accrues over time – thus increasing how much get forgiven if eligible under an income-driven repayment plan (IDR). You can check with each lender for information regarding eligibility requirements for their IDRs.
In addition to those who qualify through their annual income level, there are different groups of people who might become eligible:
Some employers offer generous benefit packages that include contributions toward tuition costs; these may put employees into higher income brackets than they otherwise would be in when considering eligibility for IDRs such as PAYE or REPAYE.
Teacher Loan Forgiveness
If you work in a low-income classroom, you may be able to get your student loans forgiven. The federal government has created a program for teachers called Teacher Loan Forgiveness. If you qualify for this program, you can have up to $17,500 wiped off your loans after making 120 qualifying payments on those loans.
While it’s essential to know how much money you’ll save by paying off your debt more quickly or securing loan forgiveness programs like the ones mentioned above, other benefits come along with paying down debt quicker:
- Knowing exactly when and how much each payment will cost means being able to better budget for expenses
- Having fewer accounts open means less confusion about where money is coming from or going
Perkins Loan Cancellation and Discharge
Perkins Loan Cancellation and Discharge is a program that cancels the remaining debt of a borrower after a certain period. Your financial situation will determine the amount of repayment, but you can apply for this before completing your degree to see if it will be helpful.
Make sure you qualify and understand how the process works
Before considering what kind of loan forgiveness program you might be eligible for, you must understand the process.
When trying to qualify for any student loan forgiveness program, there are a few things to keep in mind:
How much do you owe? The first step is determining how much money you currently owe on your student loans. You can find it by logging into nelnet.com and clicking “View Your Account.” Then enter the appropriate information (Social Security Number, date of birth), so Nelnet can pull up your records.
What are the requirements? The next step is to understand each program’s available programs and qualifications. You should also know if there are benefits beyond just having your debt forgiven, avoiding penalties, or paying off interest rates for a certain period before getting rid of them altogether through forgiveness options such as Pay as You Earn (PAYE) plans or Income-Based Repayment (IBR).
To conclude, it is fundamental to understand that these programs are not free money. It is money you have borrowed, and you must qualify for the forgiveness program to get the benefits. The application process can be complicated and take years. Therefore, it is essential to review the requirements of each program before applying carefully. If your goal is to pay off your student loans as quickly as possible, this may be the right option. You should also consider if there are other ways you could reduce your loan payments or build up savings so that you don’t need this type of assistance in the future.
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