Here’s How To Get Student Loan Forgiveness | #Education

What’s the best way to get student loan forgiveness?

Here’s what you need to know.

Student Loans

You may be wondering: “How can I cancel my student loan debt?” It’s a common question, especially during the Covid-19 pandemic. While there have been several proposals in Congress to cancel student loan debt, none have become law. Therefore, you can’t expect that you will get automatic student loan forgiveness in the near-term. So, what’s the best strategy to get student loan forgiveness? Here are two main options to consider:

Income-Driven Repayment Plans

Income-driven repayment plans are only for federal student loans (not private student loans) and are available through the U.S. Department of Education, which is led by Secretary Betsy DeVos. Income-driven repayment plans allow you to make student loan payments based on your income, family size and state of residence. There are four main types of income-driven repayment plans:

  1. Income-Based Repayment (IBR)
  2. Pay As You Earn (PAYE)
  3. Revised Pay As You Earn (REPAYE)
  4. Income-Contingent Repayment (ICR)

These income-driven repayment plans typically require that you pay 10-20% of your discretionary income each month. Based on your personal financial situation, it’s possible that your monthly payment may be as low as $0. While that may be helpful in the short-term in the form of financial relief, it’s important to note that interest still accrues on your student loan balance. So, how do you get student loan forgiveness? After you make monthly payments for 20 years (undergraduate student loans) or 25 years (graduate student loans), you can receive student loan forgiveness on your remaining student loan balance. That said, you may owe income taxes on the amount of student loan forgiveness you receive. For example, if after 20 years of monthly payments, your remaining student loan balance is $30,000, you may owe income taxes at your personal income tax rate on the $30,000.


Public Service Loan Forgiveness

Public Service Loan Forgiveness is a federal program that Congress created in 2007 to help student loan borrowers who work full-time for a qualified public service or non-profit employer to receive student loan forgiveness. Here are some key details, among other requirements:

  • Must work for a qualified public service or non-profit employer
  • It’s your employer that matters (saying you do “public service work” is not enough)
  • Full-time work of at least 30 hours per week
  • Must make 120 monthly payments
  • Student loan forgiveness applies only to federal student loans (not private student loans)
  • Must be enrolled in an income-driven repayment plan
  • Must make at least a majority of your monthly student loan payments while enrolled in an income-driven repayment plan

Next Steps

Income-driven repayment plans and the Public Service Loan Forgiveness program are two popular ways to receive student loan forgiveness. There are other ways too, including the Teacher Loan Forgiveness program. You can also seek student loan forgiveness if you have a total and permanent disability or through the bankruptcy process. However, there is no program that will magically cancel your student loan debt. Importantly, most student loan forgiveness programs only apply to federal student loans (not private student loans). The disadvantage of student loan forgiveness programs is they are not immediate. For example, the Public Service Loan Forgiveness program takes at least 120 months, or 10 years, and income-driven repayment plans can take 20 to 25 years. If you want immediate savings on your student loans, consider student loan refinancing and get a lower interest rate.


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