Student Loan Cancellation – What Are the Options?
When you are looking for student loan forgiveness, there are some very specific criteria to be aware of. To qualify for federal student loan forgiveness, you have to be enrolled fully and actively in approved income-based repayment plans while also making the bulk of your student loan repayments while enrolled at least partially in an approved student loan repayment program. The latest federal student loan debt statistics indicate that 1.4 million student loan recipients were inappropriately enrolled in the wrong student loan repayment plans… These students are eligible to receive federal student loan forgiveness – but they must apply. Applying for forgiveness is the first step toward repayment.
Now, how do you apply? What do you need to qualify? As mentioned, there are several eligibility requirements to be considered for federal student loan forgiveness. For borrowers who don’t meet one of these qualification standards, they will not be able to apply for discharge on their own.
Two eligibility requirements typically apply to eligibility for federal student loan forgiveness. The first requirement is that borrowers must have an acceptable cosigner. In order to apply for federal student loan forgiveness, a borrower must attach a signed, sworn statement from a cosigner that states that he or she understands that the cosigner will pay the borrower’s debts if the borrower is unable to make student loan repayments.
The second requirement is that borrowers must be employed or enrolled as a full-time student in an approved college or university while receiving federal assistance. Students who are in public service (i.e. the military or National Parks Service) programs may be exempt from this requirement. A few states also offer state-specific federal student loan forgiveness programs. For example, in Alaska a student who is currently receiving state funded education benefits may exclude that funding from his or her federal debt if the student is working under a state plan and is eligible for state assistance.
Many private student loan borrowers have federal debt forgiveness qualifications attached to them by virtue of having certain types of student loans. For example, Stafford loans and Perkins loans will discharge upon complete repayment. Direct payments may not be discharged. There are also private student loan forgiveness programs based on the borrower’s military service or presence in the Armed Forces.
Private student loan forgiveness programs differ from the federal student loan forgiveness programs in that they do not require borrowers to have earned a degree. Only certain types of federal student loan borrowers can qualify. Typically, these borrowers must have completed a high school education or an equivalent course.
Students with both subsidized and unsubsidized federal student debt may qualify for both types of student debt forgiveness programs forgiveness. For those borrowers, qualifying for federal student debt forgiveness may involve repayment plans where the federal government would forgive a portion of the borrower’s student debt. In many cases, the remaining balance would be repayable to the government. There are many options for students who qualify.
There are other federal student loan forgiveness options for individuals who hold certain positions in the community and/or have volunteered for public service. There are also private student loan forgiveness plans for those with subsidized and unsubsidized student loans. The borrower may be able to find a scholarship or grant that will cover part or all of their college costs. For more information on federal student loan forgiveness programs, or for general information on student loans, check the website of the U.S. Department of Education’s Office of Student Aid. You can also visit the official federal student aid website.