Source: Flickr user travelingtribe.
Wishing your student loans would magically disappear? You’re not alone. Did you know that you may qualify for student loan forgiveness?
Unfortunately there is not a magic wand that will let you quickly wipe out your debt. But, there are some perfectly legitimate ways for all kinds of people to have their student loan debt forgiven under some circumstances.
The best part is that these two programs are available to just about any kind of student, no matter their degree or career choice.
About These Student Loan Forgiveness Programs
One thing to keep in mind about these programs is that they are both administered by the U.S. Department of Education. As such, they are only applicable to Federal student loans, such as subsidized and subsidized Federal Direct loans. In other words, they won’t apply to any private loans you may have accrued from Sallie Mae or other private lenders.
But, seeing as how how most students owe a big percentage of their student loan debt to the U.S. Dept of Ed, this shouldn’t be a big deal for many people. It may not allow you to completely eliminate all of your debt, but it should help you put a big dent in it if you’re able to qualify.
Here are the two programs to consider:
1. Public Service Loan Forgiveness
Amount forgiven: Up to 100% of remaining federal student loans
Qualification period: 10+ years
Pretty much any student, regardless of their chosen major or career, can qualify for Public Service Loan Forgiveness (PSLF).
In order to qualify for this student loan forgiveness program, you’ll need to work for one of the following types of organizations:
- Non-profit, tax-exempt
- Government (state, local, federal)
The function of your job within this organization does not matter. In fact, the only thing that matters is that you’re employed full time (average of 30 hours per week) at a qualifying organization and that your federal loans are in good standing.
You’ll be required to make qualifying payments on your loans for at least 10 years under this program, but once that period is up, you’ll be eligible to apply for PSLF.
Learn more about Public Service Loan Forgiveness
2. Income-based Repayment Forgiveness
Amount forgiven: Up to 100% of remaining federal student loans
Qualification period: 20-25 years
If you’re in need of more immediate help with your student loans, and would like to have them disappear entirely some day, then you can enroll in one of the many income-based repayment programs offered by the U.S. Dept of Ed.
There are many options to choose from, but each of these will allow you to tie your monthly payment to a percentage of your income, and then, after a certain period of years, allow any remaining balance on your loans to be forgiven entirely. Not a bad deal, right?
Indeed, this gives many graduates a way to both lower their monthly expenses and also put a finite period on the length of their loans.
The only drawback is that the 20-25 year qualification period is usually longer than the original term of your student loan, which means you’ll be paying on them for a longer period of time before receiving that forgiveness. This also means that you may end up paying more, in total, over the life of your loans, even if you have some amount forgiven at the end of the period. So consider your options carefully here and be sure to do the math on which is the better financial decision for you.
