Updated: 2020-07-13 by
Student loan forgiveness programs can bring great relief to borrowers who qualify, and now many people may qualify for them and not even realize it!
If you DO qualify, they are a magic bullet. But to qualify you muyst work hard for them, serving your community for 10 years or more, and making regular payments for 10 years, after which your entire remaining balance on the loans is erased!
The program was launched in 2007, and the right kind of qualifying loans didn't become common until 2009, so it's only recently, as of 2019 and 2020 that people just now are eligible to qualify for getting their remaining payment wiped out.
Folks who benefit from forgiveness programs usually work for low pay in jobs that help others -- for example, teachers, public defenders, or health care professionals working with populations in need.
If you have worked in a government or non-profit job for 10 years and have been making IDR payments on your direct student loan for 120 payments, you may qualify to have the remaining payments eliminated.
Federal Public Service Loan Forgiveness (PSLF) Program. IT WORKS! It is NOT DEAD!
The best known and most widely used student loan forgiveness program is the federal government's public service program. The goal of the program is to encourage graduates to work full-time in public service jobs.
Under the program, the government will forgive a borrower's
- Direct Federal Loans,
- after they have made 120 regular IDR payments -- that's ten years' worth --
- while working full time for a federal, state, or local government agency or for a nonprofit organization.
Despite what you may have heard, Pubic Service Loan Forgiveness is NOT Dead!
You may have heard, a while ago that 99% of PSLF applications were denied. True! BUT, according to the The Student Loan Lawyer, Joshua Cohen, those applications were rightly denied, because they lacked one of the three essential elements required for Public Service Loan Forgiveness.
1. The right kind of employer
- must be a Government employer (town, county, city, whatever)
- you must be a W2 employee
- You have to be full time (or averaging 30 hrs a week, whichever is higher)
2. the right kind of loan
- you must have a "Direct Loan" direct from the Department of Education
- if you have an FFEL loan, you must to consolidate it into a direct loan
- if you have a series of Direct Loans, (Parent Plus loans can be gotten by parents who work for public service)
3. You must be paying on an IDR - Income Driven Repayment plans.
Joshua Cohen explains it all in detail in this excellent video, from May 6. 2020.
Let's talk PSLF and other forgiveness programs people have doubts about. As always, ask questions. I'll answer them live!Posted by The Student Loan Lawyer on Wednesday, May 6, 2020
For full details about the program, see the Department of Education website.
Watch Out for Loan Forgiveness Scams
Beware of individuals or companies that offer to help you get rid of your loans -- for a fee. It doesn't cost anything to apply for legitimate loan forgiveness or cancellation programs. If you think a company is trying to take advantage of you, learn more and file a complaint.
Know the Tax Consequences of Loan Forgiveness
Be aware, too, that the IRS sometimes views forgiven loan amounts as taxable income. If you fulfill a public service requirement, you will probably avoid paying taxes on the amount of your forgiven loans, but you should talk with a tax professional to be sure you won’t be surprised with a tax bill.
Other Ways to Manage Your Student Loans
If loan forgiveness won’t get you the relief you need, you may want to explore other ways of reducing, postponing, or eliminating your student loan payments. The following articles can help.
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Under certain circumstances, you can get your student loans wiped out. Your options depend on what kind of loans you have and when you took them out.
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