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There are three ways to have your student loans forgiven:
The first two are available for federal student loans only, and the last one is achievable for federal or private student loans.
You may also decide to have your loans discharged or forgiven. However, be aware that these are two different circumstances. Loans are forgiven for those who work at a qualified job, such as teaching for low-income communities. After a certain amount of time, the loans are forgiven. Loan discharge is granted when borrowers cannot pay back the loans for reasons such as death, fraud, disability, identity theft, or bankruptcy.
If you want to apply for personal loans for students, it’s a must to get acquainted with the options for student debt forgiveness. Consider the type of career path you want to follow and how it may help you decrease your loans over time. You may consider volunteering, becoming a teacher, or joining the military. While these options may not appeal to everyone, they are the best way to achieve student debt forgiveness.
If you are working for a government-operated entity or a non-profit organization, you may be eligible to receive student debt forgiveness under the Public Service Loan Forgiveness (PSLF) program. This program forgives the remaining balance of your debt after 120 months of making payments under a qualifying repayment plan for a full-time employer.
Teachers who work full-time at a low-income public school or a secondary school may qualify for Teacher Loan Forgiveness after working for five years. They may have up to $17,500 in federal loans or Stafford loans forgiven.
Nurses have a few options when it comes to student debt forgiveness:
The NURSE Corps Loan Repayment Program pays up to 85% of a nurse’s student debt; however, it is a competitive program, so it may not be the most realistic option for everyone.
If you have a loan and are making payments on an income-based repayment plan, you can have the remainder of your student loan forgiven after 25 years or 10 years after working in the public service. The federal government gives four income-driven repayment plans, which allow you to cap your loan payments at a percentage of your monthly income. The only loans that are not eligible are Parent Plus loans, Parent Plus consolidation loans, and student loans in default.
Your monthly student loan payments are based on your income and family size. Loans that are taken out after July 22nd, 2014 on the income-based repayment plan are forgiven after 20 years instead of 25. For more information, visit the Federal Student Aid website and IBR page.
Those who have worked years to pay off their student loans may not be so keen on others receiving student loan forgiveness. If the Federal government forgives your loans, this essentially means that taxpayers will be paying off your college education.
Private student loan forgiveness does not exist, but if private lenders did offer loan forgiveness, the banks’ other customers would effectively pay the loans through additional fees and interest.
In some cases, you may need to report your forgiven student loans as taxable income, which could potentially increase your tax liability that year when you file for taxes in April. However, not all student loan forgiveness programs need you to pay taxes on the forgiven debt. This is a matter to discuss with your accountant or tax preparer.