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Student loans are a massive burden for a lot of people, so when you hear “student loan forgiveness” your ears probably perk up. It’s not very common, but yes, there are some scenarios in which your federal student loan might be forgiven. Let’s check them out.
Student loan forgiveness is basically the cancellation or discharge of all or part of your student loan. Sounds too good to be true, right? Well, in most cases, it is. However, the U.S. Department of Education estimates that 39% of federal student loans meet at least one requirement for common forgiveness programs. That doesn’t automatically mean you qualify, though. As Credit.com points out, there’s a heap of other eligibility requirements you have to meet, depending on the program.
Here are the most common programs that might forgive your federal student loan:
Income-Driven Repayment Plans: There are a few different types of income-driven repayment plans, and while they’re all structured a little differently, the idea is the same: if you don’t earn enough to make your loan payment, you can apply for a new, lower monthly payment. Keep in mind, though, this just stretches out the length of your loan, so you might actually pay more over time thanks to interest. However, if you end up hitting 20 or 25 years of repayments, you may be able to apply for forgiveness for the rest of the loan. Your monthly payment also changes as your income changes. Check the Department of Education’s student aid website for more info.
Public Service Loan Forgiveness: According to the Department of Education, “If you are employed by a government or not-for-profit organization, you may be able to receive loan forgiveness under the Public Service Loan Forgiveness Program.” You do, however, have to have a Direct loan, and you can only qualify after you’ve made 120 monthly payments (10 years). You also have to be enrolled in an income-driven repayment plan as mentioned above. Beyond that, you need to have a qualifying job and you have to work there for at least 30 hours a week. According to the Department of Education, these are typical types of jobs that qualify:
Government organizations at any level (federal, state, local, or tribal)
Not-for-profit organizations that are tax-exempt under Section 501(c)(3) of the Internal Revenue Code
Other types of not-for-profit organizations that provide certain types of qualifying public services
They have more information on this program here.
Teacher Loan Forgiveness: To qualify, you have to either have a Direct Loan or a Federal Perkins loan. and you have to be a teacher at a school that serves low-income families. There’s a large handful of other requirements, and you can check them out here.
There are some even less common options for getting rid of your student loan, too. If your school closes before you could finish your program, for example, you might be able to get your debt forgiven. Or maybe you didn’t actually get your high school diploma or GED, in which case you probably shouldn’t have received a loan in the first place, and you may be able to get it forgiven.
Again, it’s a long shot for most of us, but the Department of Education has a useful list of programs and resources for student loan forgiveness. Check them out at the link below.