What does it mean when you get student loan forgiveness? You essentially get to walk away from your student loan debts completely. It sounds like such a benefit, but it isn’t always so easy to understand what it means. In this article I’m going to tell you what student loan forgiveness is and how you can qualify for it.
First of all, student loans are not simple liabilities. Student loan forgiveness doesn’t mean that you’re not going to have to pay back what you owe. It’s simply an incentive program for students who took out more debt than they could afford to pay back. Poof! But that the government or bank that gave you that money, doesn’t just wave a magic wand and say everyone’s debt is forgiven. They have to work with you to find a payment option that makes sense.
The government offers student loan forgiveness to a wide variety of borrowers. For example, there are people with extreme income-based debt like those with Perkins or Stafford loans. These types of borrowers may also qualify for the Alternative Federal Student Loan Consolidation Plan (AFSA) and the revised Expected Family Contribution Plan (EFCP). This plan allows for the federal loans borrowers to consolidate their loans in order to save money and lower their interest. This program also offers low income-based relief to disabled or non-working borrowers.
Another group that can receive student loan debt relief through consolidation are student loan borrowers who started their education before they became able to make their minimum payments. If they continued their education beyond their early years, they may also qualify for the Plus One Credit Plan. This plan allows student loan borrowers who started school but lost their jobs to continue making their student loan payments until they reached the standard retirement age.
What about student debt forgiveness for students who left school without having the financial means to continue paying their tuition? If you are one of these individuals, you can still apply for federal student aid forgiveness programs. To qualify, you must provide proof of being unable to continue your education because of your lack of financial resources. Proof may come in the form of a bankruptcy or foreclosure, which will prevent your school from claiming bankruptcy credit against you. If you do have such a record, you can appeal to have it deleted from your credit report.
If you’re a teacher, you may be able to get forgiveness of some of your student loan debt through the Pell Grant. You can search for specific grants that are dedicated to teaching. In general, you need to show evidence of your commitment to your profession as a teacher by providing a letter of intent that includes your desire to teach and your expected salary after graduation. If you qualify for Pell Grants, you could receive up to $532 for your first two years of college. However, remember that this is a need-based grant, which means that you will only receive the money if you meet the specified conditions.
Another way to receive student loan forgiveness is to ask for deferment of your loans. If you have loans that you have not begun repayment on, you can ask to have them deferred. deferment simply means that your loans will go on for another time, instead of continuing to accrue interest. Forgiveness of your loan will usually last a minimum of five years and most often a maximum of ten years.
While student loan forgiveness offers a number of benefits, it is important to be honest with yourself about what you can qualify for and what your actual income is. If you are struggling to keep up with the payments, you may not be eligible for forgiveness at all. Also, some lenders forgive certain types of debt but require repayment or an even larger monthly payment. For example, if you have student loans that are in the form of a federal consolidation loan, you might not want to try to get them consolidated into a lower-interest rate home equity loan, simply because doing so will likely result in a larger monthly payment. In short, if you are going to pursue income-based repayment plans, be absolutely sure that you can afford the payments, as forgiveness will not last forever.