Student Loan Forgiveness – Options

Loan forgiveness: getting your loan’s remaining or part of the balance cancelled out.

Eligibility for loan forgiveness: when the forgiving party feels that the debtor has given back to the society – for instance by teaching or public service.

Obama student loan forgiveness

  • Originally called the William D. Ford Direct Loan program
  • Is an option for federal student loans only
  • Offers 5 repayment options:
    • Standard repayment – pay a fixed amount on a monthly basis till the loan is repaid in full
    • Graduated repayment – the amount to be paid will gradually increase every two years
    • Income contingent (ICR) – payments to be made will depend on the borrower’s income, family size, loan balance, and interest rate.
    • Income based (IBR) – income and family size will determine the monthly payments to be made. 15% of the income is to be paid
    • Pay As You Earn (PAYE) – payments are based on the borrower’s income, 10% of the income is to be paid

Teacher loan forgiveness

  • You need to teach for five full and consecutive academic years after the 1997-1998 academic year to be eligible
  • You should not have defaulted on your loans
  • You can get anywhere between $5000 and $17,500 depending on your circumstances
  • You can qualify for complete loan forgiveness after 10 years of repaying their loans
  • This program is for encouraging graduates to have a career in teaching

Public Service Loan Forgiveness

  • You qualify if you work full time in a public service job
  • You can have your loan balance forgiven after making 120 income based payments
  • Is applicable for these loan types: Direct Subsidized/Unsubsidized, Direct Consolidated Loans, Direct PLUS, Direct Stafford Subsidized/Unsubsidized

Total and Permanent Disability Discharge

  • You qualify if you have a physical or mental impairment due to which you cannot work properly or do gainful activity
  • You need to prove your disability to the Department of Education(DoE)

Student Loan Forgiveness

Image Source: Loan forgiveness-Student Debt Relief

Posts You May Like

Why Create Financial Budgets With Excel?
What to Look For in a Legit Debt Relief Program?
5 Valuable Tips on Debt Consolidation That You Must Consider
The Importance of a Financial Planner During a Divorce