Student loan forgiveness. It's the kind of thing people talk about a lot, but not many people get. If you're carrying student loan debt and are hoping for student loan forgiveness, here are some options for loan forgiveness programs you may be able to take advantage of.
1. Public Service Loan Forgiveness Program
Do you work full-time for the government or a nonprofit?
Yes? Great. You may qualify to get your federal student loans forgiven under the Public Service Loan Forgiveness Program.
I say may because the PSLF program has 3 other requirements before your loans can be forgiven:
- You have to make 120 timely monthly payments (you can't pay ahead)
- You have to make those payments under an income-driven repayment plan (income-based repayment for example)
- You have to have Direct Loans.
The last requirement is huge.
The PSLF program will only forgive the balance of your Direct Loans. It does not forgive loans made under the Federal Family Education Loan program (FFEL Loans) or the Perkins Loan program.
Click here to read Can I get My Student Loans Forgiven After 10 Years?
Having the wrong type of loans is a big reason why the Department of Education rejected over 99% of PSLF applications last year.
If you're planning to take advantage of the Public Service Loan Forgiveness Program, you should only pay the amount asked of you. Not a penny more. While paying extra seems like a good idea, it's not. It may result in screwing up your 10 years of monthly payments.
2. Teacher Loan Forgiveness
In my opinion, if you're a teacher who owes more than $50 thousand in federal student debt, then the PSLF program is the forgiveness program you should pursue. The PSLF program can forgive more of your federal education debt than the Teacher Loan Forgiveness program, which caps forgiveness. The PSLF program has no cap.
But if you owe less than $50 thousand and the majority of your federal loans are from undergrad, then the Teacher Loan Forgiveness program might be a better fit for you.
You're eligible to apply after you've completed your fifth year of teaching.
3. Perkins Loan Forgiveness
Before being eliminated on September 20, 2018, the Federal Perkins Loan Program provided low-interest loans to undergraduate and graduate students that had an exceptional financial need.
Undergraduates were able to borrow up to $5,500 per year with a total cap of $27,500.
If you have a Federal Perkins Loan, you can consolidate your loan into a Direct Consolidation Loan.
Consolidation would qualify you for an income-driven repayment program.
Lastly, if you are a teacher in a low-income school, you can qualify for a total Perkins Loan Cancellation.
4. Income-Based Repayment (IBR)
The Income-Based Repayment plan is the most robust forgiveness program of all the federal student loan forgiveness programs.
Unlike the PSLF program, which only forgives Direct Loans, the IBR plan offers forgiveness for both Direct Loans and FFEL loans.
This expanded forgiveness means you can get more of your loans forgiven while making only one monthly payment.
The catch, and there's always a catch, is that you have to make 300 monthly payments before your loans are forgiven.
For many of you, that means you could be making payments well into your retirement years before your balance is forgiven.
5. Pay As You Earn and Revised Pay As You Earn
The PAYE plan and REPAYE plan are two other repayment plans that provide payments based on your income.
Both plans typically offer a lower monthly payment than the IBR and ICR plans. Under the PAYE and REPAYE plans, you'll pay a maximum of 10% of your income over 20 years.
Note: If you have federal student loans from graduate school, the PAYE plan will still forgive your Direct Loan balance after 20 years of payments. Under the REPAYE plan, you'll need to make 5 more years of payments before it will forgive your loans.
Plus, both plans offer student loan forgiveness up to 5 years faster.
Click here to read 3 Reasons Why the PAYE is Better Than REPAYE
6. Income-Contingent Repayment (ICR Plan)
Like the IBR plan, the Income-Contingent Repayment plan forgives your student loans based on 25 years.
The difference between the two plans is that at the end of those 25 years, you'll have paid much more under the ICR plan than you would have under the IBR plan.
The ICR plan uses a different formula to calculate your monthly payment than the other income-driven repayment plans.
This increased payment is the reason why I believe the ICR plan is the worst of all the income-driven repayment plans.
The ICR plan is so bad that I recommend it only for people with Parent Plus Loans.
If you have Parent Plus Loans, the ICR plan is the only plan you can use to get a payment based on your income.
You can take advantage of the ICR plan to get a lower payment for your Parent Plus Loan by consolidating your Parent Plus Loans into a Direct Parent Plus Consolidation Loan.
7. United States Military Student Loan Forgiveness Options
Each branch of the United States offers a student loan forgiveness program.
Of course, active-duty-service-members work full-time for the government. And because of this, they qualify for the Public Service Loan Forgiveness program as well.
Reach Out to an Experienced Student Loan Forgiveness Lawyer
Understanding the different eligibility requirements and value of each program increases your odds drastically of keeping your payments low while getting your student loans forgiven.
Let's talk if you'd like a student loan lawyer's help in increasing your odds of loan forgiveness.