June 17, 2021

Student Loan Forgiveness – How To Erase Student Loan Debt

Erasing student loan debt is possible. Student loan forgiveness programs were started by the U. S. Government in order to give graduates a chance to get a good start in their new careers without having to worry about loan debt. This specifically refers to forgiveness of loans such as the Stafford and Perkins which are federally funded programs. For those who qualify, debts can be wiped away in exchange for service-based work.
Student Loan Forgiveness

There are many ways to become eligible for the loan forgiveness program. Participating in government-sponsored jobs or joining the Peace Corps or the military are three of the most common. These programs are often designed for those who have no specialty training. For professionals who are trained in the specialty areas, however, there are other program options.

Those with medical training, law degrees, or teaching credentials have forgiveness programs that allow individuals to work in their area of expertise where their services are needed most. One may become a public service lawyer or a teacher in a low-income school district and qualify for complete loan forgiveness. However, taxes are applied even on loan forgiveness programs.

Let’s say you work for a low-income school district. An $8000 loan which is forgiven will still show an additional $8000 annual income, which is taxable, for the year it was paid. Although this means extra taxes will have to be paid on this money, the benefits of reducing or eliminating school loans far outweigh the amount paid in a tax bill.

All of these programs require a commitment of time. For a teacher, public service lawyer, our public health medical official, a commitment of 10 years is typical. For those who elect to work in programs like the Peace Corps much less time is required to earn the credits needed to forgive loans. With the rising cost of tuition at the college and university level this is an important alternative that should be considered.

There are also instances where private student loans can also be forgiven. By contacting the lender and requesting information on the qualifications for eligibility for this type of program, one may find that their fear of being in debt for 30 to 40 years is erased in a very short amount of time. This allows one to begin life after graduation free from the constraints of a debt ridden a life.

The Department of Education Teacher Forgiveness Loan Program requires one consolidate their loan through the Direct Loan program. They still must make 120 payments, or 10 years worth, but the remainder of their debt is totally forgiven. It is the belief of program designers that paying for only 10 years instead of 30 is a good incentive for ensuring that qualified individuals serve for extended periods of time in the areas where they are most needed.

Changes in the law under the Obama Administration, called the College Cost Reduction and Access Act, may open up new opportunities for loan forgiveness for those currently in school or newly graduated. One of these changes may be an income-based repayment plan. There are stringent guidelines currently in place the primary of which is that a time commitment must be made at the inception of the agreement. Researching student loan forgiveness options will provide many students with a plan for how to repay a debt that often appears overwhelming at the onset.

Learn more, click here: http://www.mass.gov/?pageID=mg2homepage&L=1&L0=Home&sid=massgov2


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