Student loans are often a large weight either on the shoulders of the student or on the shoulders of the parents. When deciding whether or not to get a student loan, many young adults start off with the assumption that they’ll use the money for education expenses and then later discover that they can’t afford to pay the bill. The stress associated with student loan debt can be overwhelming. However, there is relief available to those who understand how to consolidate student loans and how to apply for student loan forgiveness programs. When you are caught in this type of financial storm, the question becomes, “What qualify you for student loan forgiveness?”
First, you must understand what student loan forgiveness is. The Direct Loan Program was initiated in 1966 by Congress to help students relieve some of the financial burden of school. It is designed so that students who demonstrate an inability to repay their loans are not charged interest rates higher than the minimum rate for subsidized and unsubsidized (Stafford) loans. The Federal Direct Loan Program pays interest for both subsidized and unsubsidized federal student direct loans at a fixed rate, once the student graduates. Because this federal government program is not popular among borrowers, there is no default payment penalty for federal Direct Loan Program students.
In order to qualify under the federal government’s teacher loan forgiveness program, the borrower must demonstrate extreme financial hardship. This may include incurring outrageous medical bills or losing his or her job. Another requirement of the teacher loan forgiveness program requires that the borrower be enrolled full-time in a school. If you are a part-time student, it does not matter, as long as you are enrolled full-time in a qualified school.
If you are a dependent of someone in the United States military, you could qualify for IDR plan. Student loans are sometimes paid back through a service organization such as the Veterans Association or the Veterans of Foreign Wars. To qualify under the IDR plan, the borrower must have at least a bachelor’s degree from an accredited college. Once you have received your first private student loan forgiveness payment, your eligibility to apply for more student loan forgiveness payments automatically increases to the next level.
If you are a veteran, you qualify for tax benefits to pay for your college education. If you are a member of the Selected Reserve, you could also qualify for student loan forgiveness if you have been honorably discharged. There are many states that provide assistance to encourage service members and their spouses to complete their college education. In many states, a high school education is considered a sufficient measure of education to help achieve financial success.
You can get additional information on student loan forgiveness programs from your local State Department of Education. In addition to state programs, there are federal and private lenders that offer repayment plans for graduates who have exhausted all available federal assistance. The repayment plans offered by the federal government include subsidized and unsubsidized loan repayments. In order to qualify for federal aid, you must meet income requirements.
Repayment plans for federal loan forgiveness allow graduates to continue making payments even if they have an income-driven bankruptcy. For borrowers who qualify for subsidized repayment plans, the repayment plan usually pays the borrower at least the monthly minimum payment amount. The Department of Education offers several options for qualifying borrowers. For those who do not qualify for subsidized plans, the Department offers income-driven repayment plans.
Students who are in part-time employment or a student with dependents may qualify for income-contingent loan forgiveness. The repayment begins after the student has completed his or her graduation. For borrowers in public service, the repayment begins after two years of the end of the federal student loan. Income-driven repayment plans are not available to borrowers with loans that are in default.