What is the Federal Government’s Student Loan Program Forgiveness Program?
Student loan forgiveness can free you from the responsibility to pay back half or all of your college loan debt. The prospect of seeing such debt disappear can sound like a sheer dream come true. However, in reality, not very many individuals find themselves eligible for this type of forgiveness. When you apply for forgiveness for your student loans, there are several factors that go into your eligibility. If you have had your student loan debt discharged as a result of bankruptcy or some other similar financial hardship, you may qualify.
The first thing you will want to do is speak to a representative from the Catalog of Student Aid (CSS) or the U.S. Department of Education. These organizations can help you determine if you qualify for student loan forgiveness. You will be able to learn more about your eligibility requirements after you complete an application.
Another way to determine eligibility for student loan forgiveness is to contact the lender where you received the loan. Each school has a different method for calculating eligibility. Most schools use a formula based on income and assets. If you have not been paying on the loan in several years, you will probably not be eligible for the benefit of a reduction in your debt. In addition, if you do not have enough saved up to pay your monthly bill, your repayment options will be limited.
There are a few different types of student loan forgiveness programs that may apply to you. If your loans are held in deferment, forbearance or bankruptcy, you may not even know they exist. Federal subsidized and unsubsidized federal loans may be eligible for a one time payment, either at the time of discharge or as part of your income-based repayment plan.
There are several types of student loan forgiveness plans. If you qualify for one of these programs, your interest will be dropped from your student loans. One of the most common forgiveness plans is the extended deferred discharge program, or EDD program. This plan allows the borrower to have his student loans discharged if he meets specific requirements. Some of the requirements can include having a job and being in good standing with his or her current employer. Eligibility for subsidized and unsubsidized federal loans is usually determined by annual financial aid reports.
The other two types of student loan forgiveness plans are payback versus forgiveness programs. In payback, borrowers who have enrolled for at least five years in a repayment program may have some or all of their loans forgiven. With this program, borrowers have the option to have the remaining balances of their loans reduced. Most borrowers who are eligible to participate in payback forgiveness programs have a grace period of six months following graduation. At any point during this six month grace period, they can apply for additional forgiveness.
Another type of student loan forgiveness program is income-driven repayment plans. These repayment plans require the borrower to choose a payment amount that falls within a predetermined range. Usually, borrowers will qualify for this type of forgiveness if they earn less than a certain amount. Eligibility typically depends on the filing status of the individual. However, any non-traditional borrowers who have exhausted all available federal assistance and do not qualify for subsidized and unsubsidized loans may also qualify for income-driven repayment plans.
The student loan forgiveness program is another way the federal government helps graduates who may be struggling with high student loan debt and may be facing possible unemployment. One of the reasons the federal government offers student loan forgiveness programs is to encourage graduates to return to school. Graduates with debt problems are more likely to be employable once they graduate and begin working. Unfortunately, many graduates have very little information about the student loan relief programs, or do not understand all the options that are available to them. In order to find out more, many graduates turn to professional organizations such as The College Board and The Association of Student Aid Professionals. These organizations can provide helpful advice for both current and potential students.