Popular repayment plans lead to forgiveness
After 20 to 25 years of repayments, borrowers enrolled in what is called income-based repayment plans obtain the cancellation of the rest of their debt by the federal government.
“Income-driven repayment plans are also student loan forgiveness plans,” Kantrowitz said.
In the meantime, borrowers’ monthly bills are capped at a share of their discretionary income, and some payments end up being as little as $0. As a result, experts recommend low-income borrowers explore the options.
Many are eligible for civil service loan forgiveness
Signed into law by then-President George W. Bush in 2007, the Public Service Loan Forgiveness Program allows certain nonprofit and government employees to have their federal student loans forgiven after 10 years or 120 payments. .
Although the program has had its fair share of problems, the Biden administration has recently done so. a number of improvements to that.
Andriy Dodonov | stocks | Getty Images
There are generally three main requirements to be eligible for the program, although recent changes provide additional wiggle room in some cases:
- Your employer must be a government organization at any level, a 501(c)(3) nonprofit organization, or another type of nonprofit organization that provides a public service.
- Your loans must be Federal Direct Loans.
- To get the rebate, you must have made 120 eligible, on-time payments under an income-based repayment plan or the standard repayment plan.
The best way to find out if your job is in the public service is to complete an employer attestation form.
In 2013, the Consumer Financial Protection Bureau estimated that 1 in 4 American workers could be eligible for the program.
Forgiveness options for teachers, nurses and others
In addition to these two main programs, there are many other forgiveness opportunities that many borrowers miss because they don’t know about them, experts say.
Full-time teachers who work for five consecutive years at a low-income school may qualify for loan forgiveness of up to $17,500 under the Teacher Loan Forgiveness Program.
The Nurse Corps Loan Repayment Program allows certain nurses to obtain up to 85% of the cancellation of their student debt.
There are many other loan cancellation possibilities that are often unknown…
Marc Kantrowitz
higher education specialist
Healthcare professionals who commit to at least two years of service in a Native American community can receive up to $40,000 in student loans through the Indian Health Services Loan Repayment Scheme.
John R. Justice Student Loan Repayment Program It provides loan assistance of up to $4,000 per year, or up to $60,000 in total, to public defenders and state and federal prosecutors who agree to remain employed in those positions for at least three years.
Federal agencies also offer student loan repayment assistance programs, Kantrowitz said. Agencies can make payments to a federal employee up to $10,000 per year, for a total of $60,000, according to at the US Office of Personal Management.
Meanwhile, there are many state-level student loan remission programs.
For example, the Get on Your Feet Loan Forgiveness Program in New York offers some recent graduates who are enrolled in an income-based repayment relief plan equivalent to 24 months of payments.
And Texas attorneys who work for specific legal aid programs may be eligible for the Texas Student Loan Repayment Assistance Program.
“Student loan forgiveness is based on the borrower’s occupation, in most cases,” Kantrowitz said. So they should seek forgiveness according to their work, especially their condition.
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