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How can I get my student loans forgiven?

Document with title student loan forgiveness.
Document with title student loan forgiveness. Getty Images/iStockphoto

Student loan borrowers finally got an answer on student loan forgiveness. President Biden made an official announcement on student loan forgiveness in August after months of saying he was taking a "hard look" at student debt reduction. 

Despite pleas from some Democratic lawmakers to cancel up to $50,000 in student debt for each loan holder, Mr. Biden will not go that high. Instead, he announced a plan to cancel up to $10,000 in federal student loan debt per borrower and an additional $10,000 for recipients of Pell Grants. When enacted, that forgiveness could cost the U.S. billions of dollars.

However, it will provide much-needed relief for those overwhelmed with student loan debt. 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. So, it should come as no surprise that many graduates want to learn about student loan forgiveness and loan discharge options.

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. Look into refinancing your loans to reduce your interest rate and lower your payments.

Who qualifies for student loan forgiveness?

Here's a quick overview of Mr. Biden's student loan forgiveness plan:

  • $10,000 for federal student loan borrowers who didn't receive Pell Grants (only applies to those earning less than $125,000 a year or couples earning less than $250,000 a year)
  • $20,000 for federal student loan borrowers who received Pell Grants

If you fall into one or both of these categories you can apply for forgiveness now via the online federal student aid forgiveness application

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. The caveat is that most of these programs only apply to federal loans. There are also strict qualifications if you want to have any portion of your loans cleared. 

If you don't qualify for any of these programs or if you have a private student loan, check out this lender marketplace to explore student loan refinancing options and see how much you could save.

Student loan forgiveness programs

You don't have to solely rely on the forgiveness program announced in the summer. There are plenty of student loan forgiveness programs to consider, according to Federal Student Aid (FSA). See if you qualify for any of the following:

  1. 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.
  2. 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.
  3. 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.
  4. 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.

Other student loan relief options

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.

Borrowers with private student loans should seriously consider refinancing their loans. This could help lower the monthly payment via a lower interest rate. Refinancing, however, is generally only beneficial for private student loan borrowers. Refinancing a federal loan could lead to the loss of certain protections and benefits (like debt forgiveness).

if borrowers don't want to refinance their private student loans there are other options to consider. 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. 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 loan 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.

Bottom line

To put it simply: Student loans are expensive. 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's wise to take advantage of the student loan forgiveness programs available if you haven't already. If you don't fit the criteria for any of the above, then head to Federal Student Aid's website to learn more about other possible options - like the discharge options mentioned above.

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