Student Loan Forgiveness
Candlefocus EditorWhen it comes to paying for college, student loan debt can be a financial burden for many graduates. Student loan forgiveness is a program designed to make it easier for graduates to pay off their student loans. Student loan forgiveness eliminates part or all of a borrower's federal student loan debt, which may be a blessing for those facing overwhelming amounts of debt.
Only federal direct loans are eligible for loan forgiveness, and private loans are excluded. The government offers loan forgiveness programs to those borrowers who work in service positions, or who face financial hardship beyond their control.
A common way to receive student loan forgiveness is to work in a public service career. The government offers loan forgiveness to borrowers who have worked in public service or in the military for 10 years while making 120 payments on their loans. At the end of that time, their remaining debt is forgiven.
Another option for student loan forgiveness is to enroll in one of the federal income-based repayment plans. This can lower your monthly payments and if you stay enrolled for 20-25 years, your remaining debt is forgiven.
Student loan forgiveness may also be available under certain circumstances outside of the borrower’s control. For example, if a student has passed away, filed for bankruptcy or is a victim of certain types of identity theft, their loans may be forgiven. Additionally, students who feel their educational institution defrauded them can apply for loan forgiveness under the category of "borrower defense."
It's important for those considering student loan forgiveness to understand that it may have an adverse effect on their credit score, tax liabilities and other aspects of financial life. There are different requirements and regulations for each program, so it’s important to understand the details before deciding whether to pursue loan forgiveness.
In sum, student loan forgiveness can be a great way to reduce debt and gain financial freedom. It’s important to understand the scope of the loan forgiveness programs and research the details to make sure the program is right for you.