Today we have a guest post from Matthew Jade. If you’re interested in guest posting here, check out the guidelines. Enjoy!
Student loans are toxic to the middle class, pushing some people move to extreme options like bankruptcy or selling off their valuable possessions when they can’t find other ways to get out of their debt. What people don’t understand is that there are a number of student loan forgiveness and relief programs available which may help them in forgiving part or all of their federal loans. There are however eligibility conditions and other terms to these forgiveness and relief programs.
The Consumer Financial Protection Bureau estimates that around one-fourth of the American workforce may be eligible for repayment and loan forgiveness programs.
Here are just a few circumstances under which you can get your get all or some part of your loan repayments discharged or eliminated.
Total or Permanent Disability Discharge
Since July 2013 people with permanent disabilities were given relief over repayments of their student loans. Federal loans under the Direct Loan Program, Federal Family Education Loan Program and Perkins Loan Program can all be discharged for those who are eligible. After evaluation the provided information the U.S. Department of Education will decide your eligibility to total or permanent disability discharge. Veterans can get their documents from department of Veteran affairs which authenticates their claim to disability connected to their service. You can submit your social security disability insurance or health care professional’s certification as documents.
Obama Student Loan Forgiveness
Through the Obama Student Loan Forgiveness program borrowers are able to consolidate all of their federal loans into one big loan on which they are given various choices to repay their loans in a more manageable way. After you enroll for an income-based, income-contingent or pay-as-you-earn repayment program, your outstanding balance will be forgiven after 20-25 years, depending on the condition of the program you join.
The forgiveable amount is dependent on three factors:
- Your discretionary income
- Amount borrowed
- Change in your earnings during the time of your repayments.
Through this program a borrower is required to pay a fixed amount of their discretionary income. For an income-contingent repayment plan you will be making your payments based on income and family size. However, your outstanding loan balance and interest rate will also be considered in all of these programs.
Public Service Loan Forgiveness
If you are a full-time public service employee, your remaining balance after 120 regular and on-time payments, will be forgiven. Only those 120 regular payments made after October 1, 2007 are eligible to qualify for this forgiveness program. For Public Service Loan Forgiveness program, you should make your payment through either income-based or income-contingent repayment plans. With these two repayment plans you can benefit the most on your public service loan forgiveness.
Public service jobs are those associated with the federal, state, tax-exempt non-profit organization, local government agencies and full-time AmeriCorps or Peace Corps positions. And it doesn’t matter what the nature of your position is. Any non-profit organization which is not tax-exempt but serving in the public service sector also qualifies for this program.
Teacher Loan Forgiveness
There was once a time when people loved going into teaching as an occupation. But with the increasing college costs and overall low teacher wages, people are more and more moving into higher-income industries. In order to encourage people to opt for teaching in public schools, specifically ones that serve low-income families, teachers are forgiven a certain amount on their loans. Teachers who serve as full-time employees for five consecutive academic years in a low-income school are entitled for a partial discharge up to $17,500 on your federal loans.
Before getting any elimination or discharge on any of your federal student loans you must first thoroughly research the nature of your loans and repayment plans. You might be eligible to partial or complete loan forgiveness but you need to do your homework. Of course, all of these programs are subject to change depending on the evolving administrative and educational policies. So make sure to keep up!
Mathew Jade is a passionate blogger who loves to write on finance and debt related topics. For more information follow @Mathew_Jade
Have you been able to take advantage of one of the government student loan forgiveness or repayment programs?