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)
Image Source: Loan forgiveness-Student Debt Relief