5 Ways to Get Your Student Loans Forgiven
January 10, 2017 | Your Finances
With the average bachelor’s degree grad racking up an average of $35,000 in student loans,1 it’s no wonder many Millennials are postponing milestones like buying a home, marriage and starting a business. Now imagine how your life would look if your student loans were paid off. It may not be out of reach for some.
Here are five methods of student loan forgiveness you may be able to use to kiss your debt good-bye more quickly.
1. You work in public service. If you’ve worked in public service for at least 10 years and have a federal loan under the Direct Loan Program, you may qualify for public service loan forgiveness. Full-time firefighters, teachers, doctors, nurses, federal workers, military personnel and others who have made 120 qualifying monthly payments under a qualifying repayment plan may be eligible.
2. You’re a teacher. The Teacher Loan Forgiveness program may help you minimize or pay off your federal loans. Eligibility requirements mandate are that you teach full-time for five complete and consecutive years in specific elementary and secondary schools or educational service agencies. If you qualify, you may be eligible for forgiveness of up to $17,500 on your Direct Subsidized and Unsubsidized Loans and your Subsidized and Unsubsidized Federal Stafford Loans. You also may qualify for forgiveness if you have outstanding Perkins Loans.
3. You’re in the military or considering enlisting. Aside from public service loan forgiveness, which can be an option for service members, each branch of the military has its own student loan forgiveness program often given as enlistment incentives. The amount of forgiveness sometimes depends upon the service member’s rank. Unlike many other forgiveness options, qualified service members can have private loans forgiven as well as federal loans.
4. Your debt-to-income ratio is high. If you have one or more outstanding federal student loans, you may qualify for an income-driven repayment plan. These types of repayment plans were largely designed for borrowers who have a large loan balance relative to their incomes. Another perk—all four of the main programs automatically forgive your balance after 20 or 25 years.
5. You become disabled. In the unfortunate scenario that you become physically or mentally disabled, all or a portion of your qualifying loans could be forgiven. The government will require proof, and there are three ways to provide the information. The Federal Student Aid site provides the steps to take for this type of forgiveness.
If you’re up to your ears in debt, these forgiveness options may help to give you the breathing room you need. After reviewing your options, consult with a financial professional to help make sure your debt repayment plan fits together with the rest of your comprehensive financial plan.
1Life Delayed, American Student Assistance, 2015