Student Loan Forgiveness Program

by MAtthew RossJune 8th, 2019

If you have a federal student loan and you are struggling to pay off your student debt, then there is a good chance you are going to benefit from the loan forgiveness programs that are available to borrowers. These programs tend to be income-based repayment plans where your loan payments are not based off the cost of your degree but based off your current level of income. All income-based repayment programs have different ways a person might benefit. These programs were designed when the economy tanked in 2007 to help borrowers when they hit a rough patch in life. 

What’s this you have been hearing about forgiveness programs?

There is always lots of talk in the different circles about the Student Loan Forgiveness Programs that everyone is hearing about. This is not surprising as the federal student loan deficit teeters around $1.6 billion and growing. But what is all this “forgiveness” your hearing about? Do you qualify? What is to expect? Come along with me as we discover the different loan forgiveness programs. 

How long will I wait for loan forgiveness?

We should start out by saying that if your college did not mislead you about your education or violate any state laws where you are asserting something called Borrowers Defense to Repayment, then loan forgiveness is not something that will happen overnight. The programs available for loan forgiveness range from 120 to 240 months in most cases. Once enrolled into the proper repayment plan you begin making your qualifying payments towards your loan forgiveness program. You also must re-certify every 12 months to remain in the program and your payments need to be made under the qualifying payment plan. 

More than 1 million student loan borrowers each year go into default.

Do I qualify for the Public Service Loan Forgiveness program?

The government recognizes those who work in public service and have federal student loans by offering a program that rewards the borrower with loan forgiveness once they complete 120 qualifying payments on their federal student loans. In order to enter this program, you must be employed full time for the City, State, Federal Government, 501(C)(3) Non-Profit.

Positions that might see public service loan forgiveness include but not limited to Teachers, Principals, Nurses, Police & Fire Employees, School Bus Drivers, Post Office Workers.

This program has the strictest guidelines and requires timely re-certifications every 12 months. 

What will my payment be in the program? 

We will begin by saying that the lowest payment someone would qualify for in the income-based repayment programs is $0.00 per month. If you get approved for a $0 payment this qualifies as a payment toward program term.

120 Months (10 Years) – Public Service Loan Forgiveness
240 Months (20 Years) – Student Loan Forgiveness Program
300 Months (25 Years) – Graduate Student Loan Forgiveness Program

The programs are income based, so your payments will always be something you will be able to afford, usually about 10% of your annual income spread out over 12 months. Those who fall below the minimum poverty lines are not penalized but given a $0 payment instead. In these programs those who demonstrate the most extreme hardships see the most benefits. 


What do you mean that “I have to re-certify”? 

These are income driven repayment plans where your monthly payment is decided every 12 months and is based off your current income and household size. You must re-certify every year to maintain your enrollment status. If you don’t re-certify by your deadline your consequences will vary depending on what income driven plan you are on. All plans result in your accrued interest being capitalized. If you are Public Service Loan Forgiveness you must also submit an employment verification along with your income verification. If you miss your re-certification you may delay the date you can achieve your student loan forgiveness. 

I let my student loan default, am I eligible? 

We get it, everyone falls on hard times and the bills stack up higher than we expected. If your student loans are defaulted, then you are not immediately eligible for the loan forgiveness programs. You must have your loans in good standing in order to participate in federally backed programs. The student loan default rate is estimated to be at about 10.8%. Most of these borrowers are 90+ days late and have an account status of default. If your student loans are in default you must move fast before they start garnishing your wages ant taking your taxes. A qualified Student Loan Coach would be able to help you remove the default from your record in a variety of different ways. Once the default is removed you become eligible for the income-based repayment plans.  

I am now considered permanently disabled; do I qualify? 

While it is terrible that this has happened to you, it can also work in your benefit as well. If you can provide a letter from the SSA or your doctor, you could potentially qualify for a 100% discharge of your federal student loans. If you feel like you may qualify you might want to speak to an experienced Student Loan Coach to determine eligibility. 

My school closed is there a closed school loan forgiveness? 

Unfortunately, this is looking like it is starting to trend. Large for-profit campuses are shutting their doors and leaving students stranded. Don’t panic there is student loan forgiveness programs that are available to you as well. First things first, NEVER, and I repeat myself, NEVER participate in a teach-out or allow them to transfer any of your credits. Once they do this, it lets them off the hook for having to reimburse your student loans. You must have been actively enrolled in the school when it shut down and have not received you diploma or certificate to be eligible for student loan forgiveness. 

This is way too much, should I just talk to an expert? 

Many borrowers opt to speak to an experienced Student Loan Coach when they choose to navigate the windy river of student loan forgiveness programs. The reason being is because the banks have no interest in helping the borrowers get their loans forgiven. That’s where we come in, we’re on your team. We have streamlined the process of getting you qualified and getting the correct documents processed and sent out so you can receive the benefits of the federal assistance programs.