43 million American adults are in student loan debt. And if you’re one of these statistics, you understand how difficult it is to repay your loans. Did you know there’s a way you may be able to get out of debt? There are student loan forgiveness programs that can erase your debt.
Does it sound too good to be true? There are plenty of legitimate programs that can get you out of student loan debt. Many of them have specific qualifications and requirements, so it’s important to know your options.
Here’s a complete list of student loan forgiveness programs.
Income-Driven Repayment Plan
This payment uses your monthly income to determine your monthly expenses. This plan most benefits large loan balances relative to the income amount.
There are four different varieties: income-based repayment, pay as you earn, revised pay as you earn, and income-contingent repayment.
Here’s a breakdown of each type of plan.
Income-Based Repayment (IBR)
Through IBR, you only pay 10%-15% of your discretionary income. You make these payments for 20-25 years to achieve loan forgiveness. Keep in mind, loans under this tax plan can be taxed as income.
Pay as You Earn (PAYE)
This program is like the IBR program. You only pay 10% of your discretionary income toward your loans. After you make payments for 20 years, any remaining balance becomes eligible for forgiveness. In addition, a forgiven balance may be treated as taxable income.
Revised Pay as You Earn (REPAYE)
This one is like PAYE. The main difference is when your loan is forgiven. For undergrads, loans are forgiven after 20 years. Graduate loans are forgiven after 25 years. If you make a lot of money, you could also be paying more than you would with a traditional repayment plan.
Income-Contingent Repayment
If you’re looking for a plan that really works with your income, this one is for you. You’ll either pay what you normally pay in a fixed 12-year plan or 20% of your discretionary income, whichever is less.
Remember, you must make your payments on time and in full for your balance to be forgiven after 25 years.
This option won’t lower your bill as much as other plans, but there are benefits. For example, if you’re a parent who took out a PLUS loan for your child’s education, you could qualify for this forgiveness plan. But you’ll have to consolidate the loans first.
Public Service Loan Forgiveness
This is available to nonprofit and government employees with federal student loan debt. After you make 120 student loan payments, you can get your remaining balance forgiven with no taxes. You’ll have to make payments while enrolled in an income-driven repayment plan.
Perkins Loan Cancellation
Borrowers with federal Perkins loans can cancel 100% of their loan balance if they work in a public service job for five years. In addition, the balance will significantly decline with each year worked in public service.
Student Loan Forgiveness for Nurses
Nurses with student loan debt have many forgiveness options. This includes Public Service Loan Forgiveness, Perkins loan cancellation, and the NURSE Corps Loan Repayment Program (which pays up to 85% of a nurse’s unpaid college debt).
Keep in mind, most nurses will qualify for Public Service Loan Forgiveness. The NURSE Corps Program is highly competitive, and few borrowers have Perkins loans.
Teacher Loan Forgiveness
Full-time teachers who work in low-income public elementary or secondary schools may be eligible for Teacher Loan Forgiveness after working in the field for five consecutive years. They can have up to $17,500 in federal direct or Stafford loans forgiven.
Unfortunately, teachers must have taken out loans after October 1, 1998, to qualify.
Military Student Loan Forgiveness and Assistance
Military personnel has their own student loan forgiveness program. This extends to anyone who was listed in the Navy, Army, National Guard, Air Force, and Coast Guard.
Qualifying officers and soldiers could receive up to $50,000 to pay off federal student loans through the Student Loan Repayment Program.
State-Sponsored Repayment Assistance Programs
Licensed workers in certain states may qualify for student debt assistance programs. These programs are open to nurses, teachers, lawyers, and doctors. These programs will contribute a certain amount to your loans for a specific number of years if you’re licensed and working full-time in that field.
To find out if your state offers this type of program for your profession, contact your state’s higher education department.
Borrower Defense to Repayment Discharge
Were you frauded by your college? If so, you may qualify for debt relief. File a claim with the U.S. Department of Education. If your college was involved in fraud or misrepresentation that affected many borrowers, you could have your debt wiped clean.
Closed School Discharge
Did your school close? If so, you could also qualify for student loan discharge. But you can only qualify if you were enrolled at the time of the school closing or left within 120 days of the school closing without receiving a degree.
If you qualify, you don’t need to make any more payments and may even be refunded some of your payments.
Unfortunately, if you’re an alumnus, you don’t qualify for closed-school discharge.
Total and Permanent Disability Discharge
If you or a loved one is permanently disabled (both physically and mentally), then you can discharge your loans. You’ll have to provide documentation to prove your disability.
Remember, the government may monitor your disability status and finances for three years after claiming disability discharge. If, after this time, the government doesn’t believe you’re qualified, you could have your loans reinstated.
Total and Permanent Disability Discharge for Veterans
There’s also a similar program that’s available to veterans. You can have your student loans completely discharged if you’re a veteran who’s permanently disabled. There is a chance your discharge could be declined due to state tax liability (there’s no federal tax liability).
Discharge Due to Death
What happens to your student loan debt if you die? Do your executors have to pay it off? Actually, no. If your death certificate is submitted to the loan servicer, your debt is wiped clean.
What if your parents used a PLUS loan to pay for your schooling? This loan will also be discharged if the parent who holds the loan dies.
Are You Eligible for These Student Loan Forgiveness Programs?
From income-based repayment programs to certain life events occurring, there are many reasons why you may have your student loan balance removed.
There are lots of student loan forgiveness programs available. Do you qualify for any of them? Get a free evaluation to find out.
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