For the past seven years, Kat has been helping people make the best financial decisions for their unique situations, whether they're looking for the right insurance policies or trying to pay down debt. Kat has expertise in insurance and student loans.
Kat Tretina Personal Finance WriterFor the past seven years, Kat has been helping people make the best financial decisions for their unique situations, whether they're looking for the right insurance policies or trying to pay down debt. Kat has expertise in insurance and student loans.
Written By Kat Tretina Personal Finance WriterFor the past seven years, Kat has been helping people make the best financial decisions for their unique situations, whether they're looking for the right insurance policies or trying to pay down debt. Kat has expertise in insurance and student loans.
Kat Tretina Personal Finance WriterFor the past seven years, Kat has been helping people make the best financial decisions for their unique situations, whether they're looking for the right insurance policies or trying to pay down debt. Kat has expertise in insurance and student loans.
Personal Finance Writer Mike Cetera Editor in Chief, Forbes Marketplace U.S.Mike Cetera is the editor in chief for Forbes Marketplace U.S. Mike has written and edited articles about mortgages, savings accounts, CD rates and credit cards for more than a decade. Prior to joining Marketplace, his work appeared on Bankrate, The.
Mike Cetera Editor in Chief, Forbes Marketplace U.S.Mike Cetera is the editor in chief for Forbes Marketplace U.S. Mike has written and edited articles about mortgages, savings accounts, CD rates and credit cards for more than a decade. Prior to joining Marketplace, his work appeared on Bankrate, The.
Written By Mike Cetera Editor in Chief, Forbes Marketplace U.S.Mike Cetera is the editor in chief for Forbes Marketplace U.S. Mike has written and edited articles about mortgages, savings accounts, CD rates and credit cards for more than a decade. Prior to joining Marketplace, his work appeared on Bankrate, The.
Mike Cetera Editor in Chief, Forbes Marketplace U.S.Mike Cetera is the editor in chief for Forbes Marketplace U.S. Mike has written and edited articles about mortgages, savings accounts, CD rates and credit cards for more than a decade. Prior to joining Marketplace, his work appeared on Bankrate, The.
Editor in Chief, Forbes Marketplace U.S.Updated: Sep 27, 2022, 6:15am
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If you’re like most college graduates, you left school with a substantial amount of debt. According to the Federal Reserve, adults in 2019 who had college debt typically owed between $20,000 and $24,999.
For those struggling with student debt, loan forgiveness or loan discharge can sound like a dream come true. However, these programs are only available for federal student loans, not private ones, and the qualification requirements can be rigorous.
Below, learn about the different programs available and how to apply.
The U.S. Department of Education offers several forgiveness and discharge programs for federal student loans. You may qualify to have some or all of your loans forgiven or discharged in certain situations.
While the terms student loan forgiveness or cancellation and loan discharge are often used interchangeably, they’re actually very different from one another.
You may qualify for student loan forgiveness or cancellation based on your qualifications, such as your career path. Or, you may be eligible for loan discharge based on circumstances beyond your control, such as becoming totally and permanently disabled.
You can qualify for federal student loan forgiveness based on a range of circumstances, including the type of work you do, your disability status and whether the college you attended defrauded you. There are far fewer student loan forgiveness programs available for private student loans than federal loans. But if you’re having trouble making private loan payments, you can look into loan modification through your lender or repayment assistance programs.
Each federal forgiveness option works a little differently, depending on whether it’s a discharge, cancellation or forgiveness program. Some, like Public Service Loan Forgiveness, require you to make a certain number of on-time monthly payments before applying for forgiveness. Others, like Perkins loan cancellation, provide forgiveness on an ongoing basis based on years of qualifying service. In most cases, you’ll have to provide proof of eligibility.
With student loan forgiveness programs, you typically make payments for a set period of time. After you meet the forgiveness programs’ requirements, the remaining loan balance is canceled.
Income-driven repayment (IDR) plan forgiveness is a good option if you cannot afford your payments under a 10-year standard repayment plan. With this approach, you enter into an IDR plan, which bases your monthly payment on your family size and discretionary income. Depending on your situation, you could qualify for a much lower monthly payment than you’re making now.
Your repayment term may be 20 or 25 years, depending on what plan you choose. If you still have a balance at the end of your repayment period, the remaining amount is forgiven. However, the canceled loan amount may be taxable as income.
To qualify for IDR plan forgiveness, you must be eligible for one of the following IDR plans and have a balance after making payments for the full repayment term:
If you have Perkins loans—the last of which were issued in 2018—and work in public service, you may be eligible for partial or full loan forgiveness. Depending on your position, you could have up to 100% of your loans forgiven within five years.
Below is the list of eligible career paths and the amount of debt that can be canceled.