These Programs Can Help You Wipe Out Student Debt
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How can people get rid of their student loan debtand, specifically, when is loan forgiveness an option? We don’t need another statistic to tell us how deep in student loan debt U.S. college graduates are. Total debt and average debt figures don’t mean much, except to say that if the sums you owe keep you up at night, you’re in good company. What really matters is finding a solution.
Death Doesn’t Necessarily Wipe Out Consolidated Loans
If spouses have consolidated their federal student loans together, one spouse’s death wipes out only that spouse’s portion. In the past, spouses could consolidate their federal student loans. Now, though, married couples aren’t allowed to combine their student loans into a single, shared Direct Consolidation Loan.
Biden Administration Cancels $1.5 Billion of Student Debt for Borrowers
In 2021, the U.S. Department of Education announced that:
- 72,000 student loan borrowers who previously had part of their federal student loans canceled under a “borrower defense to repayment” claim will now get full student loan relief
- about 41,000 borrowers whose federal student loans were discharged due to total and permanent disability and then reinstated will get a discharge
- more than 323,000 borrowers with total and permanent disabilities will get automatic student loan discharges, and
- $1.1 billion in federal student loans for around 115,000 borrowers who attended ITT Technical Institute will be automatically discharged.
Also, the American Rescue Plan Act exempts student debt forgiveness from federal taxation until January 1, 2026.
Student Loan Forgiveness For Healthcare Workers: Payments Start On September 1 2022
CARES Acts administrative forbearance period began in March 2020, and millions of borrowers have taken advantage of it. In addition to federally guaranteed student loans, those in default on private FFEL loans are also included in the pool of eligible loans.
Borrowers who havent made payments after the forbearance period ends on August 31 should get their finances to make payments again.
For at least 21 days before the first payment is due, the U.S. Education Department says that borrowers should expect information and services on how to resume payments.
For now, you can check the Federal Student Aid and your loan servicers websites to ensure that your contact information is up to date. That way, you can be alerted when payments resume.
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How To Get Your Student Loans Forgiven: Three Paths
Cancelling student loan debt is a popular subject in todays climate, but its been a popular topic for more than 20 years and 45 million people still owe $1.7 trillion.
That could change if Biden and Congress reach some sort of compromise on how much to cancel and qualifying requirements.
In the meantime, option No. 1 for student loan forgiveness is having a job that serves the public good. If youre a teacher or police officer or firefighter or social worker or health care worker or government employee who kept up with payments for 10 straight years, youve got a good shot. If you are a sign spinner or pet psychic, forget it.
Option No. 2 is through a repayment plan that is based on your income. You will still have to pay a large chunk of your debt over a long period, but under the current laws, a portion will be forgiven at the end.
Those options are available for federal student loans.
Option No. 3 is called a discharge and its available for federal or private loans, but you probably dont want to go there. A discharge is when you cant repay the loan for a variety of reasons, like death, disability, fraud, identity theft or bankruptcy.
Executive Director Marriner S Eccles Institute University Of Utah
Dont tell me what you value. Show me your budget, and Ill tell you what you value.
Even modest student loan forgiveness proposals are staggeringly expensive and use federal spending that could advance other goals. The sums involved in loan-forgiveness proposals under discussion would exceed cumulative spending on many of the nations major antipoverty programs over the last several decades.
There are better ways to spend that money that would better achieve progressive goals. Increasing spending on more targeted policies would benefit families that are poorer, more disadvantaged, and more likely to be Black and Hispanic, compared to those who stand to benefit from broad student loan forgiveness. Indeed, shoring up spending on other safety net programs would be a far more effective way to help low-income people and people of color.
Student loan relief could be designed to aid those in greater need, advance economic opportunity, and reduce social inequities, but only if it is targeted to borrowers based on family income and post-college earnings. Those who borrowed to get college degrees that are paying off in good jobs with high incomes do not need and should not benefit from loan-forgiveness initiatives that are sold as a way to help truly struggling borrowers.
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Obtaining A Federal Direct Consolidation Loan
To obtain a federal direct consolidation loan, contact the US Department of Education.
If you have not yet consolidated, you can seek a federal direct consolidation loan in order to obtain an income contingent repayment plan. Federal direct consolidation loans are available if you havent been able to obtain a FFEL consolidation loan, income sensitive repayment terms acceptable to you or if you have defaulted on your FFEL loans.
You can request income-contingent repayment or income-based repayment. The consolidation loan application does not currently include a checkbox for requesting these repayment plans, so you must ask for it separately.
Whats Next For Student Loans
In addition to Bidens Emergency Action Plan, he has also proposed measures to forgive $10,000 in student loan debt per year for borrowers who complete national or community service, double Pell Grant values and lower the obligations of people on income-driven repayment plans. In his first months in office, he has also worked with the Department of Education to revise existing programs that offer loan forgiveness, like total and permanent disability discharge and borrower defense to repayment.
Its important to remember that Bidens Emergency Action Plan, as well as his more long-term student loan plans, are only proposals at this point. For now, federal borrowers can continue to take advantage of the federal forbearance period, which President Biden has extended through Sept. 30, 2021.
Student Loan Forgiveness For Borrowers Defrauded By Corinthian Colleges
The Biden administrations announcement last week centered on a federal student loan cancellation program called Borrower Defense to Repayment. That program allows federal student loan borrowers to request loan forgiveness if they were defrauded or misled by their school via misrepresentations about critical elements of their degree program such as admissions, credit transferability, or career prospects.
Through Borrower Defense to Repayment, the Education Department will be cancelling nearly $6 billion in federal student loans for 560,000 former students of Corinthian Colleges. Corinthian was a notorious national chain of for-profit colleges that collapsed in 2015 under the weight of numerous federal and state investigations into its activities.
Lawsuits brought against the schools, including an early lawsuit brought by Kamala Harris when she served as California Attorney General, alleged that Corinthian intentionally misrepresented job placement rates and engaged in false advertising. The federal government later found that Corinthian had misrepresented students’ ability to transfer credits to other institutions.
When Corinthian collapsed in 2015, former students were left with mountains of debt and useless degrees . Dozens of these students organized a debt strike in 2015 to pressure the federal government to forgive their student debts, and their efforts eventually led to the establishment of a formal Borrower Defense application procedure.
Student Loan Forgiveness For Healthcare Workers: Will You Get Loan Forgiveness
PSLF has a limited waiver that allows you to credit formerly ineligible loan payments toward your loan cancellation requirements. Senate Democratic Leader Patty Murray has proposed extending the loan forgiveness limited waiver until 2023.
If Congress accepts Whitehouses two proposals, teachers and frontline health care workers can qualify for further student loan forgiveness.
As White House Chief of Staff Ron Klain has indicated, its feasible that Vice President Biden would extend the moratorium on new student loan payments for the fourth time. In addition, Biden is also contemplating the cancellation of student loans on a large scale for those who have taken out student loans.
After September 1, 2022, federal student loan payments will begin again. So pay off your college loans as soon as possible. In other words, its time to weigh your options.
Now, here are some options to consider.
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Could The Government Forgive All Student Loans
Canceling all federal student loans might be surprisingly affordable for Uncle Sam.
Editors Note: This article discusses the viability of plans to wipe out all student debt in the United States. For details on existing programs, be sure to check out our page on student loan forgiveness programs.
For years, the idea of forgiving all student debt has functioned more as a wish of student loan borrowers than a viable policy position. As time has passed more politicians have gotten behind the idea.
Because such a move would provide immediate financial relief to millions of Americans, it certainly merits a serious discussion.
Borrowers who have student loans will also want to follow this debate closely as it could affect their financial planning.
Who Is Eligible For Pslf
To qualify for PSLF you must be employed full-time by a US federal, state, local or tribal government agency — this includes the military — or a nonprofit organization. You must have federal Direct Loans or other types of federally backed loans that have already been consolidated into Direct Loans and you must make 120 qualifying payments . Examples of borrowers who qualify for PSLF are workers like teachers, nurses and firefighters who serve their local communities.
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Indian Health Services Loan Repayment Program
A medical professional can help the American Indian communities or Alaska Natives and get a two-year term in exchange for $40,000 in student loan repayment.
After the initial two-year commitment, you can join for as many one-year terms as you choose. Any healthcare practitioner is eligible to apply. However, those from the service communities are given preference.
Quebec Loan Remission Program
Under the Quebec Loan Forgiveness Program, you can get up to 15% of your provincial student loan forgiven if you finish your studies within a specified period or youve received a bursary from the Loans and Bursaries Program for each year of your studies.
The specified period of study is normally:
- 27 months for a college-level technical program
- 24 months for an undergraduate university program, over a 3-year period
- 32 months for an undergraduate university program, over a 4-year period
- 16 months for a masters program without a thesis
- 20 months for a masters program with a thesis
- 32 months for a doctorate program
Eligibility Requirements For The Quebec Loan Remission Program
To qualify for this provincial loan forgiveness program, you must:
- Have been granted a bursary under the Loans and Bursaries during each award year of your studies
- And, have finished an education program that results in an undergraduate degree within the specified study period. Loan remission may also be possible for past college studies, as long as they pass requirements.
- Or, have finished a college-level training program that results in a Diploma of College Studies within the specified study period.
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Student Loan Pause: Support Or Oppose The Extension
President Joe Biden extended the student loan payment pause for the fourth time during his presidency. . Progressive Democrats have called this student loan relief through August 31, 2022 an essential financial lifeline during the Covid-19 pandemic. Republicans in Congress have labeled the continued student loan payment pause as fiscally irresponsible and bad public policy. When asked if they supported or opposed the extension of student loan relief, 53% of respondents either strongly or somewhat support the extension. In contrast, 36% either strongly or somewhat oppose the extension of the student loan moratorium. .
What Is The Pslf Program
The PSLF program, first launched in 2007, was designed to help public servants pay off their loans faster. The program works by offering loan forgiveness to eligible public servants who have made 120 qualifying student loan payments. Yet almost 99% of borrowers who have applied since 2008 were denied prior to the October expansion.
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Loan Forgiveness For Doctors
The healthcare professions, especially physicians, dentists, pharmacists and mental healthcare workers, have several options, both national and local, to receive loan forgiveness.
The requirements and the amount forgiven vary dramatically, depending upon which program you enter. Check out the links to see the amount of loan forgiveness available and requirements for Army doctors Indian Health Services, National Institute of Health, as well as state-by-state programs.
On The Heels Of Another Extension Of The Repayment Moratorium The Biden Administration Takes Another Step To Expand Debt Relief
While the broader debate of widespread student loan forgiveness continues on, the Education Department has made changes to beleaguered programs designed to lower student debt for low-income borrowers. The Education Department announced that at least 40,000 borrowers would immediately have their debt canceled and more than 3.6 million will receive at least three years of credit toward forgiveness under the income-driven repayment plan , one of several programs aimed at providing incremental student loan relief.
Earlier this month, President Biden extended the moratorium on repayment of federal student loans, this time until the end of August. Its the sixth extension of the suspension of payments, which began under the Trump administration at the beginning of the pandemic.
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Public Service Loan Forgiveness
If you are employed by a government or not-for-profit organization, you may be able to receive loan forgiveness under the Public Service Loan Forgiveness Program.
The Public Service Loan Forgiveness Program forgives the remaining balance on your Direct Loans after you have made 120 qualifying monthly payments under a qualifying repayment plan while working full-time for a qualifying employer.
Note: Servicing for this program is managed by another federal student loan servicer. If you enroll in Public Service Loan Forgiveness, your eligible loans will be transferred from Great Lakes to that servicer. Also note, you may not receive a benefit for the same qualifying payments or period of service for Teacher Loan Forgiveness and Public Service Loan Forgiveness.
How To Determine If You Qualify
The first step in determining your eligibility is visiting the FSAs website and logging into your account. Youll be able to search your employer within the FSAs database and add information about your employment. Once you find your employer, youll be able to see whether it qualifies under PSLF.
Next, according to SBPCs walkthrough guide, youll want to determine which type of federal student loans you have. Direct Loans are eligible for PSLF while other loans need to be consolidated into a Direct Consolidation Loan. Until the end of October 2022, previous qualifying payments youve made on a non-Direct Loan will count for the necessary 120 payments PSLF requires for forgiveness.
Once youve completed the steps above, youll need to confirm your employment. You should then be able to submit your PSLF form.
The FSA has created a help tool to guide borrowers through completing the form.
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Ways To Qualify For Federal Student Loan Forgiveness
Even if plans for broad student loan forgiveness dont come to fruition, you can find several ways to have your federal student loans forgiven. These depend on the type of job you have and the repayment plan youre under. Forgiveness options include:
You may qualify for a student loan cancellation or discharge if you become totally disabled or if your school closes while youre enrolled.
How Much Debt Could Be Canceled
Biden has consistently resisted political pressure to cancel $50,000 per borrower. In late April, he reiterated that if he did provide additional loan forgiveness, it would not be as much as a $50,000 reduction.
The White House has long maintained that the President would support canceling $10,000 per borrower.
Chingos estimates that canceling $10,000 for households earning less than $125,000 a year would result in forgiving a total of $277 billion in student loan debt.
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Federal Perkins Loan Cancellation
Federal Perkins Loans have a separate forgiveness program because your school is the lender, not the federal government. To apply, contact the financial aid office at the school that administered your Perkins Loan and request the application forms. You need to be a full-time employee in a qualified career.
Qualifying Perkins Loan Forgiveness Jobs:
- Soldier in hostile fire or imminent danger pay areas
- Law enforcement or corrections officer
- Nurse or medical technician
- VISTA or Peace Corps volunteer
- Librarian with a masters degree
- Attorney employed in a federal public or community defender organization
- Employee for public or nonprofit organization that serves high-risk children and their families from low-income communities
- Staff member for educational component of the Head Start program
- Staff member for a state-licensed or regulated pre-kindergarten or child care program
- Professional provider of early intervention services for the disabled
- Speech pathologist with a masters degree
- Special education teacher for children with disabilities in public, other nonprofit schools or educational service agency
- Teacher in a field designated by the state as teacher shortage areas
- Teacher in a designated educational service agency that serves students from low-income families
- Faculty member at a tribal college or university