What is student loan forgiveness? It means that you no longer have to continue making payments on your student loans to your lender. It is an incentive program for people who took out more education than they could afford to pay back. However, it can only be admitted, once, during a grace period.
The federal government is the one who will decide if the student loan forgiveness is granted or not. The government will allow the borrowers to apply for student loan forgiveness if they meet the eligibility criteria. To qualify, borrowers must have filed their taxes with the IRS within five years and must have started to pay their loans after the sixteenth year of graduation. This means that the earlier you file, the better.
The other option that you can use to get student loan forgiveness is to consolidate your federal student loans into one payment. You will have to get a lower interest rate on the combined loans. This will save you on the principal amount. There is also a plan called the Income-Based Repayment (IBR) in which borrowers pay a small percentage of their total loans, interest plus fees, every month. While this repayment plan has lesser interest as compared to the IBR, the annual payments are much higher. Thus, the choice between the two plans is very difficult to make.
If the borrowers receive student loan forgiveness, they are then given the chance to repay their loans in two to four years. But if the borrowers do not qualify for the financial hardship exemption, they need to repay what they owe as early as possible. In some cases, the borrowers can also apply for extended deferment if they can prove that they have incurred a financial hardship due to a death in the family, involuntary separation or an economic disaster.
Private student loans cannot be consolidated into federal consolidation. But you can apply for deferred repayment if you have federal student loan forgiveness. You just need to ask the private student loans provider about the procedure to apply for deferred repayment. If you have applied for deferred repayment, you may still apply for financial relief from the Obama government if you repay your student loan debt with a grace period after graduation.
Another way to receive federal student loan forgiveness is by working your way through the repayment program. The requirements for this program differ for each individual loan company. It is best to contact the company directly so that you can understand more about it. There is a standard procedure to follow in order to apply for forgiveness. In most cases, you need to prove that you have experienced financial difficulties before you can apply for forgiveness.
It is a good idea to work while you are in school. But if you do not have enough financial assistance to help you pay your tuition and living expenses, try to find the right track to start your career. A big part of qualifying for federal help is the ability to demonstrate that you are on the right track in terms of earning your degree. You need to work hard in order to succeed in your college career. The financial assistance you get will just go to further your efforts towards qualifying for forgiveness.
There are many student loan forgiveness programs. If you have eligible debts, you just need to apply for the federal one. Remember to include all your subsidized and unsubsidized federal student loans in your application. You may even be eligible for other federal loans if you have earned some Pell Grant eligibility or work part-time in a public service job. If you qualify, you may be able to lower the amount you have to pay back with the federal consolidation plan or other federal relief programs.