Besides purchasing a home, getting a higher education can be one of the most expensive endeavors in your life. While some students get scholarships or obtain grants that don’t have to be paid back and others have parents who can afford to pay for their education fully, many students have no choice but to obtain federal student loans.
Student loan debt rivals credit card debt to be the number one debt most working adults carry. While this fact may be disheartening, all hope is not lost if you carry federal student loan debt as there are some ways to gain debt forgiveness.
Debt Forgiveness Programs
Student debt forgiveness programs were developed to show compassion for students with an overwhelming amount of student debt. There are many smaller and local programs you can apply for; however, you will have to do your research to find them.
There are four major debt forgiveness programs you can apply to; however, they will not take on debts of students who are in default status, which means they have not paid against the loan in over nine months. These debt forgiveness programs are Public Service Loan Forgiveness, Perkins loan cancellation, Income-based repayment, and Teacher Loan Forgiveness specifically for students who went to school to become teachers.
While each of these programs is widely available, they have extremely strict requirements that have to be followed. They often require the yearly filing of paperwork and intricate program rules and steps to follow. Because the amount these programs give out each year is limited, if you are using the program and have even one slipup when it comes to procedures, you are removed from the program. It is important to consider your options before using any of these programs carefully.
Other Loan Forgiveness Options
There are a few different types of occupation-based loan debt forgiveness programs available, depending on how you live. Such programs are mainly for attorneys, doctors, and other professionals who pay more than the average amounts for advanced degrees. Students who used such loans have a great shot of getting the entire debt forgiven after just five years. The process mainly depends upon the type of profession, particularly for the people who have a full-time job in a community.
There is a government-subsidized student loan forgiveness program with multiple options under the plan, one of which may be right for you. All of these loans or debt forgiveness plans are only for students with federal student loans.
- Standard Repayment Plan: Under this plan, your payments are fixed to pay in full over ten years.
- Income-Contingent Repayment (ICR) Plan: This repayment plan is based on your discretionary income at the time of the plan implementation or a fixed monthly payment over 12 years, also based on your discretionary income at the time of implementation.
- Income-Based Repayment (IBR) Plan: This repayment plan is based on 10 to 15% of your income and will change if your income changes. There are two IBR plans, the standard IBR plan for students who obtained a federal loan before July 1, 2014, and the New Borrower plan for those who have obtained a federal student loan after that date.
- Pay as You Earn (PAYE) Plan: This repayment plan will cap at 10% of your discretionary income at the implementation time. If you still have any debt after making regular payments for 20 years, the rest of your debt will be forgiven if you go on to earn a graduate or professional degree that would be extended to 25 years.
Permanent Disability Release
Through the Department of Education (DoE), if a student who has a federal student loan has an incapacitating physical or mental disability and cannot contribute to what is considered significant gainful activities (a job), there may be some debt relief for a federal student loan.First, the student must prove the disability with an authenticated doctor and have supporting documentation. Once permanent disability is determined, the student debt is canceled; however, the student cannot apply for any other educational loans. The only way a student can apply for loans and continue their education is to obtain a letter from a qualifying doctor that shows they can now engage in gainful activity (get a job.) About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks™️ file, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.