If you’re struggling to repay student loans, you’ll love the help provided by government student loan forgiveness programs. Find out how to qualify for various student loan forgiveness programs. And also what scams to watch out for.
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Could you qualify for help paying off your student loans?
Is it really possible to get the government to help you repay your student loans?
Yes, but there are very specific eligibility requirements for these programs.
So the question becomes, how can you qualify for these student loan forgiveness programs?
Could the Government Help Repay Your Student Loans?
All loans – including student loans – are legally binding. Meaning that even if you were a minor when you signed up, you’re still legally obligated to repay those loans.
But there are exceptions to every rule. And ways to get “help” repaying certain loans. Here are 10 ways to get money to help pay off your student loans.
1. Teacher loan forgiveness program
If you’re willing to teach for five complete, consecutive years in certain low-income areas, you may become eligible for forgiveness of up to $17,500 total on eligible federal student loans. As with every federal program, there are numerous requirements in order to qualify. Check them out here.
2. Public Service Loan Forgiveness (PSLF) program
You may qualify for forgiveness of the entire remaining balance of your Direct Loans once you’ve made 10 years (120 months) of qualifying payments… if you work full-time for a qualifying government or not-for-profit organization.
This program was designed to encourage students to enter relatively low-paying careers such as firefighting, government, public interest law, the Peace Corps, and more.
PSLF is especially useful for graduates who planned to pursue a public service career anyways. But 10 years is a long time to work for forgiveness if you really want to be in a more lucrative career. Click here for more information.
If you’ve been denied loan forgiveness because some or all of your payments were not made under a PSLF-qualifying plan, you may still qualify under the Temporary Expanded Public Service Loan Forgiveness (TEPSLF) program. Learn more about this option here.
3. Income-Driven Repayment (IDR) plans
Four types of income-driven repayment plans are available through the federal government. They all allow you to cap your loan payments at a percentage of your monthly income. When you enroll in one of these plans, after 20 or 25 years (depending on the plan), your remaining balance is eligible for forgiveness.
IDR plans are designed to help you better manage your loan payments by capping them according to your income level. Click here to learn more.
4. AmeriCorps programs
If you complete a term of service with an approved AmeriCorps program, you can become eligible to receive a Segal AmeriCorps Education Award, which you can use to repay qualified student loans. Click here for more information.
5. Nurses’ loan forgiveness programs
Nurses with student debt have various options for student loan forgiveness… like PSLF, Perkins loan cancellation, and the NURSE Corps Loan Repayment Program. The NURSE Corps program covers up to 85% of qualified nurses’ unpaid college debt. But this program is highly competitive. Few grads have Perkins loans, leaving the PSLF as the best of the bunch for most nurses.
Watch out for scams like “Obama student loan forgiveness.”
Red Flag Warning: “Obama Student Loan Forgiveness”
There’s actually no such thing as “Obama student loan forgiveness.” It’s a scam you should avoid.
So-called “debt relief” companies use that title for a hodgepodge of free federal programs… that they charge you to enroll in.
Enrolling in these free programs is, well… FREE! You can do this on your own through the Department of Education. You should never pay a company for this.
Don’t Qualify for Any of Those? Check Out These Other
Student Loan Forgiveness Options
Though qualifying federal programs offer the most options, a few others are worth noting as well. Like the others, eligibility for these depends on your profession and location.
1. Military student loan forgiveness programs
Military personnel in the Army, Navy, Air Force, National Guard, and Coast Guard have their own loan forgiveness options. The National Guard, for example, offers up to $50,000 in loan payoffs for qualifying soldiers and officers through the Student Loan Repayment Program.
2. State-sponsored loan repayment programs
Some states offer repayment help to persons in certain professions, namely teachers, nurses, doctors, and lawyers. For example, Mississippi’s Teacher Loan Repayment Program pays up to $3,000 per year for a max of four years on undergrad educational loans for teachers working in particular geographic and/or subject areas. To see if you qualify, contact your state’s higher education department.
3. Other Loan Repayment Assistance Programs (LRAPs)
Some governments or organizations offer loan repayment assistance programs for public service professionals. The American Bar Association has a list of state LRAPs for attorneys. The National Institutes of Health offers up to $35,000 in debt assistance to certain health professionals.
4. Perkins loan cancellation program for teachers
Graduates who borrowed under Perkins loans can get as much as 100% of their loans cancelled if they work in a public service job for five years.
For example, the Perkins loan teacher benefit goes to teachers who work full-time in certain low-income public schools, or who teach certain in-demand subjects like special ed, math, science, or foreign language. Click here for more information.
5. Other discharge programs
Programs also exist for graduates whose school was involved in widespread fraud… or graduates who become totally disabled or die… as well as those in various other circumstances.
Some companies also offer assistance with student debt repayment as part of their employee benefit package.
Caveats of Forgiveness, Cancellation, and Discharge Programs
Though legitimate programs are available for free, there are still hidden costs to consider. You should go in with your eyes wide open.
Forgiven loans may be taxed as regular income.
You may owe income tax on forgiven loans.
In other words, you’ll owe tax on the forgiven loan amount. The exception to this tax liability is when you have to work for a certain type of employer or in a certain profession to qualify for the loan forgiveness.
Case in point: loans discharged through PSLF are not taxable due to their career or professional requirements. But loans forgiven under IDR plans are taxable.
Loans discharged after a borrower’s death or disability used to be taxed as income, but that law changed on December 31, 2017. They are no longer taxed.
Forgiveness is not available on loans in default.
You’ll need to get federal loans back in good standing before they can be eligible for forgiveness programs.
Debt forgiveness scams are commonplace.
So-called debt relief companies are out to make a quick buck at your expense. Go through the proper (free) channels. Debt that’s already hard to pay off won’t get easier by adding new fees to it. And you don’t need to. The legit government programs cost nothing to apply to.
