Can my student loan be forgiven?

Can my student loan be forgiven?

Document with title student loan forgiveness.

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Today, most college students find themselves relying on student loans to pay for their ever-increasing educational expenses – from tuition to housing, books and school supplies.

Roughly two-thirds of all U.S. college graduates finish school with debt, according to a 2021 report from the Institute for College Access & Success (TICAS). In 2020, the Federal Reserve found the median amount of school-related debt for those who paid their own way hovered between $20,000 and $24,999. Graduate students and those in professional degree programs are likely to owe even more.

So, it should come as no surprise that many graduates might find themselves wondering about student loan forgiveness and loan discharge options available to them. If you’re looking to cut down your student loan debt, there are several options to consider. Here’s a look at some programs that could help you at least lower your outstanding student loan balance.

Can my student loan be forgiven?

First thing’s first: Yes, student loans can absolutely be forgiven through a variety of different programs. The caveat is that most of these programs are funded by the federal government and only apply to federal loans. There are also strict qualifications if you want to have any portion of your loans cleared.

If you have private student loans, there are other options available to you in order to alleviate some of the financial strain student loan debt may be causing you. Check out various student loan lenders to see what kind of terms, rates and offers they have.

President Biden has been considering a student loan forgiveness plan for a large number of existing borrowers. If enacted, that forgiveness would add to the country’s federal deficit, costing the U.S. billions of dollars.

“I am considering dealing with some debt reduction. I am not considering a $50,000 debt reduction. But I’m in the process of taking a hard look at whether or not there will be additional debt forgiveness,” Mr. Biden said in April. Mr. Biden previously vowed to cancel at least $10,000 in federal student loan debt per borrower. He’s expected to give an update on that soon.

4 student loan forgiveness programs

In addition to this potential, wide-sweeping loan forgiveness, there are also student loan forgiveness programs already in place for borrowers who meet certain employment and payment criteria.

Here are some student loan forgiveness programs you may want to consider, according to the Office of Federal Student Aid (FSA):

Public Service Loan Forgiveness (PSLF): Available to full-time employees of qualifying government agencies or non-profit organizations who have made at least 120 on-time payments.Income-Driven Repayment (IDR) Plan: Allows borrowers to adjust their monthly payments according to their discretionary income; after a certain number of payments, any remaining balance may be forgiven.Teacher Loan Forgiveness: Full-time teachers in certain low-income areas may qualify for up to $17,500 in loan forgiveness after teaching for at least five consecutive years.Military Forgiveness: Certain branch members may qualify for U.S. Department of Defense (DOD) student loan repayment after qualifying for military service.

There are also many state programs as well as forgiveness options for employees in certain fields. For example, if you are a nurse, doctor, pharmacist, or select other medical professionals and agree to work in specific facilities (such as research hospitals or those serving low-income communities), you may qualify to get a portion of your loans repaid each year.

If you don’t qualify for any of these programs or if you have a private student loan, check out this lender marketplace to see what kind of offers you may qualify for.

What to do if you don’t qualify for student loan forgiveness

If you don’t qualify for a federal student loan forgiveness program – or you have private student loans – there are other ways to save money on your loan repayment.

For example, if you are in the military, the Servicemembers Civil Relief Act (SCRA) can limit the interest rate charged on your loans while you are on active duty status. If you have federal loans, you can qualify for income-driven repayment options to potentially reduce your monthly payment and can even utilize loan forbearance or deferment options during times of financial hardship.

Both federal and private loan borrowers can also take advantage of the student loan interest deduction from the IRS as well. This allows you to deduct up to $2,500 or the total interest you paid that tax year on qualifying loans (whichever is less) as long as you meet certain income limits.

Not sure what to do? Consider tapping in a financial expert for help.

Student loan forgiveness vs. discharge

Loan discharge is a process that essentially cancels out some (or all) of your eligible student loans. While the end result is the same as student loan forgiveness (you no longer have to pay back that portion of your educational debt), getting your loans discharged is a very different process.

You could potentially apply to have your eligible federal student loan debt discharged if:

    You are totally and permanently disabled (TPD).You declare bankruptcy and file an adversary proceeding.Your school closes while you’re enrolled or shortly after you graduate (read the guidelines carefully).Your school falsely certified your loan eligibility or signed for your loan without your knowledge.You withdrew from school but the institution didn’t refund your remaining loan to the servicer.

Federal student loans may also be discharged if a borrower or a parent who took out a PLUS loan on a student’s behalf dies and a family member or representative files specific documentation, according to the FSA.

If your school was deceptive in some way or violated certain state laws, you may also be eligible for discharge through what’s called Borrower Defense to Loan Payment. The specifics vary by location and situation but include things like misrepresenting school rankings or its willingness to accept credits from other schools. If you believe you qualify for this, make sure you fully explain your experience in the application.

Beware of student loans forgiveness scams

When it comes to almost anything in the financial world, there is a potential risk of scams. While these scams can come in many different forms, common warnings signs include:

    Companies not affiliated or partnered with the Department of Education (ED).A demand for upfront payment for loan forgiveness services.Companies that reach out to you asking for personal information, such as your social security number (SSN) or Federal Student Aid login information.

In general, you should be wary of companies that reach out to you first, promising instant or complete loan discharge or forgiveness. These scams often imply limited-time offers or request your immediate attention. You may also be able to spot a scam if the correspondence has grammatical errors or unusual punctuation.