AdminIf you have student loans, you may have heard of calls about student loan forgiveness. The government or private companies will pay off your loan in exchange for working at nonprofits or organizations that serve underprivileged communities. If you qualify, it’s free money to get out of debt and get your financial life back on track! Here are some things to know about student loan forgiveness before you try to apply for it.
What Is Student Loan Forgiveness?
There are a few types of student loan forgiveness(SLF). One is a discharge in bankruptcy. Another option is Public Service Loan Forgiveness, where you can have your loans forgiven after 120 qualifying payments (10 years) if you work for a nonprofit or government organization. There are also deferment and forbearance options, where interest will still accrue, but your payments are halted. These options are typically not as desirable as actual loan forgiveness because they come with conditions and require that you pay back all of your loans at some point—even if it’s an extremely expensive price tag. If you think you qualify for the loan, speak with an expert before signing up for any repayment programs. Most people who file for a loan discover that they don’t qualify. They end up making more money on their debt than paying it off would cost them. Instead, exploring other payment options like refinancing or consolidation might be better.
Why Are So Many People Trying To Get It?
The Obama administration announced a new income-driven repayment plan (IBR) for federal student loans in 2015. It seemed too good to be true. Under IBR, your monthly payments are capped at 10% of your discretionary income, and you can get that amount forgiven after 20 years of payments. After 30 years, any remaining balance is completely wiped away—no more debt! This was especially exciting news for those who have borrowed from private lenders. Unfortunately, if you have private loans, there’s no way to enroll in an income-driven repayment plan with them. So what’s a borrower to do? Many people are turning to STF as their only option for paying off their debts. But is it worth it? And how does one even go about getting SLF anyway? Let’s break down everything you need to know about whether or not it’s possible and how best to get it… and if it’s a good idea.
What Are You Qualifying For If You Get It?
There are several different types of student loan forgiveness programs out there on calls about SLF. Still, you’ll generally be in Line for them if you have a government or government-guaranteed student loan and work in public service. Eligible jobs vary from federal, state, and local level jobs (police officers, public defenders) to nonprofit work (teachers, social workers). If you qualify for it and think getting your debt forgiven would be awesome—rest assured that it is! Just know that not all eligible applicants get their debts forgiven because funding for these programs is limited. If you qualify, be sure to fill out your applications as soon as possible since most applications will take more than a year before they’re approved. To learn more about SLF, check out The U.S. Department of Education’s website.
Many students don’t realize that paying off student loans isn’t necessarily about paying down principles; it’s about paying down interest first. If you make payments on time every month, your balance should go down — no matter what type of repayment plan you’re on.
How Do You Get It In Real life, Once Approved?
In 2017, President Donald Trump signed a law ending one of three primary income-driven repayment plans (IDR) used by borrowers. The plan, Revised Pay As You Earn (REPAYE), offered forgiveness after 20 years of payments. A new federal program replaces REPAYE with an income-driven repayment plan with a more generous forgiveness feature: Public Service Loan Forgiveness (PSLF). Borrowers in certain public service jobs can have their loans forgiven after making 120 qualifying payments. In 2018, anyone approved for IDR may qualify for PSLF if they meet certain requirements related to their job and loans. But there are some key differences between REPAYE and PSLF that you should know about before applying. Here’s what you need to know about SLF under PSLF.
If you’re considering filing for SLF under PSLF with the help found in calls about SLF, it makes sense to start getting ready now to take full advantage of your benefits once your application is accepted. Keep reading to learn how to prepare yourself financially and otherwise so that when your work qualifies you for student loan forgiveness under PSLF, your financial situation will be ready too.
- Fill out FAFSA annually: Federal aid comes in all shapes and sizes, including scholarships, grants, tax credits, and work-study jobs. In addition, many funding opportunities are available through government agencies such as state governments or other sources like nonprofits or private organizations.
The Tough Lessons Learned By Getting Approved For Student Loan Forgiveness
I was approved for SLF, which made my life harder, not easier. Here’s what I learned from getting $50,000 forgiven. A few years ago, I was approved for SLF after being in my job for five years. At first, I couldn’t believe it; it was a dream come true! Or so I thought. In reality, getting my loans forgiven had a surprising effect on me that I wasn’t expecting: It made me feel trapped in my job—like there was no way out. The uncertainty of having millions of dollars sitting around just in case paralyzed me because it ended up making me feel more risk-averse. When you’re eligible for student loan forgiveness, your employer can ask you to stay at least another year as part of your contract with them. If you leave before then, they can take back all or part of your forgivable balance (and any accrued interest). If you’re thinking about leaving your job soon anyway, then maybe it doesn’t matter—but if you’re planning on staying put and keeping things status quo, then getting SLF could make things even more difficult than they already are. What happened when I left my company is proof enough that sometimes having too much security isn’t always a good thing. I’m glad I got my loans forgiven, but I wish I would have done things differently along the way.
Bottom Line On Calls About Student Loan Forgiveness
No doubt it feels good to imagine waving a magic wand and making student loans disappear, but don’t get your hopes up. First, you must make 120 monthly payments on time. Your work would have to be in a qualifying public service job—teaching, for example, or at a nonprofit hospital. Even then, not everyone qualifies for calls about student loan forgiveness: service members can get their loans forgiven through another program that President Trump hasn’t touched. Bottom Line: Don’t count on it happening until after you’ve made your 120th payment, and maybe even longer.
Admin