Doesn’t forgiveness just sound like a wonderful concept when it comes to student loans? You work hard and apply for loans, you earn your degree(s), you work hard in the real-world after college and then your debt is forgiven. If only it were that easy and simple to repay student loans! Student loan forgiveness can really make or break your financial future if that is the path you have chosen as your means to an end for student loan debt. The reason this can be your chosen path is depending on the profession you choose to pursue, there are programs in place to forgive your student loan debt. Also, with recent student loan changes by the Obama administration more individuals may qualify for student loan forgiveness, regardless of their profession or industry choice.
Who can be Forgiven
Student who took have federal loans and have maintained good standing and payments for at least twenty years will be discharged of their remaining federal student loan debt at that time. Professions such as public school teachers, public hospital nurses and military personell can qualify for student debt forgiveness programs for any federal loans they may have. There are similar forgiveness programs with private loans as well, although their terms may be more stringent and specific.
Qualifying for Forgiveness
You would be surprised how many individuals do qualify for forgiveness on a daily basis. There are some that qualify and dont realize it, thus they do not take advantage. You should also check with your employer about student debt discharge. Many employers offer reimbursement for classes taken while employed, but in addition, depending on the field and if you are on a contract commitment with that employer it may be in their best interest to further educate you while reducing your education expenses.
The Obama administration recently improved on the student loan laws in the US. Under the new act, borrowers are only allowed to pay a max of 10% of their income as their monthly loan payment regardless of the amount the individual is earning. The act also included details on forgiveness due to hardship and other economic misfortunes. This program will certainly benefit most, but not all student loan borrowers. One of the major benefits that was heavily publicized when the act was passed was that all remaning student loan debt an individual ma have after 20 years of federal loan payments is automatically cleared. While caping interest rates on federal loans and lowering repayments, this is a win-win situation for current and future federal student loan borrowers
At this time only federal loans qualify for the act under Obama, meaning Stafford and Perkins, not private loans. In addition, there are work-related organizations that offer federal student loan borrowers another option to gain forgiveness on their debts. AmeriCorps and Peace Corps are just two examples of organizations where your volunteer work will be repaid to you via student debt discharging. The amount discharged varies heavily on the organization and the terms of your agreement with them, such as time, location, hours, etc.
It is not much surprise but another option for federal student debt forgiveness is joining a branch of the military or serving the public through other services. Military organizations and public service positions entail benefits that may allow you to discharge federal student loan debt after a number of years of service or on the job. If this is an approach you plan to take, it is important to ensure you reviewed all the commitment details on your part to the organization. Many times breaches to the contract can result in a total loss of potential forgiveness. State government job also offer similar forgiveness offers such as working for a public attorney office or the local court system.