The Smart Student Guide to Overcoming Loan Forgiveness

federal student loans

Achieving higher education has always been a pinnacle of societal achievement. Individuals who pursued higher education could strive for opportunities that were out of reach for those who did not. Higher education has become a prerequisite for a fulfilling life and a standard requirement for a promising career. If you have it, the doors of opportunity open up on various fronts in life. With this necessity, individuals have little choice but to pay for the exorbitant college fees. That is the main reason for the growing problem of debtors with Federal Student Loans.

Though the situation looks like a nightmare with people working hard to pay their never-ending loan payments, there is a way out. Student debt problems have become such a widespread issue that it has caught the attention of people making the rules. The federal and state governments, as well as many private organizations, have come out with programs to help students rid themselves of debt, or at least, some parts of the amount. 

Barriers You will Face

There are programs designed for every kind of debtor in need of financial assistance. Your workplace or work position does not matter. If you do the necessary research, you will find a program that fits your situation. There are forgiveness plans for nurses, teachers, public servicers, nonprofit employees, and more. 

However, before taking moving ahead, you need to be aware of two challenges. The first one is that while many forgiveness or discharge programs exist to help you, it is also challenging to find the best one. If you are eligible for more than one, you would not want to waste your opportunity in a less suitable choice. Additionally, you might not find one where you satisfy all of the requirements. It is also possible that one side of the program, let’s say taxable income condition, will leave you in a worse condition than before. To sum up, it is tough to separate the wheat from the chaff in the field of financial assistance programs.

The second problem is that application to any of the available forgiveness, repayment, or cancellation plans is time and energy-consuming. They usually require a multitude of documents that might make you redo the same processes again and again. Some people try to deal with all the hassle and stress it creates, while others can simply give up due to lack of extra time. Even one of the successful applicants of Public Service Loan Forgiveness mentioned that the program awards people who have time to deal with all requirements, rather than who fits the eligibility criteria. 

Get Help Now

If you do not have time, or you want to avoid the stress of the application process, you should get expert help. We deal with student aid programs of all types, and our experts know every minute detail of available solutions. Forget Student Debt is here to be your guiding light in your darkest path full of debt payments. We can help direct you to the right program and assist with the proper application process. 

Some people might think that getting help is not necessary. This is usually the case when they do not have the needed expertise level to understand the complex eligibility requirements of financial assistance. If it was such an easy process to get student aid, then 99% of applicants of the PSLF would not have failed. The main reasons for failure are missing documents and some ineligible conditions. You have a chance to make the most of the available financial help. Do not miss this opportunity. Forget all concerns about your Federal Student Loans with the expert guidance of Forget Student Debt. 

Types of Student Aid

There are several types of student aids: forgiveness, cancellation, or discharge. Forgiveness programs eliminate all your remaining debt or a portion of it in return for your work commitment. For instance, you might be asked to serve two years for getting $10k forgiveness. As it is work-related, there are programs for nurses, teachers, nonprofit or government employees, and more. Here are some examples, but you will find a detailed explanation of each in subsequent sections:

  • Public Service Loan Forgiveness- This program is available to government or nonprofit employees. After they make 120 proper payments, the forgiveness program erases all their outstanding debt. It is one of the most popular and beneficial student aids. However, the requirements of the program are quite overwhelming. 
  • Nonprofit Loan Forgiveness- If you work for a nonprofit or tax-exempt organization, you can get rid of your loans via the PSLF program. It means you still need to make 120 qualifying payments with income-driven repayment plans. 
  • Government Loan Forgiveness- This program also includes the aspects of the Public Service Loan Forgiveness program available to federal, state, and local government employees. 
  • Teacher Loan Forgiveness- As the name suggests, this program benefits educators. Teachers need to work in an underserved school in poor areas to be eligible. They can get a maximum of $17.5k forgiveness for their Direct or FFEL loans. 
  • Nursing Loan Forgiveness- It is a generic name for available Nursing forgiveness programs. Different opportunities vary on requirements- mandatory service commitment period and award amount. However, they mostly require work in underserved hospitals. 
  • Military Student Loan Forgiveness- Generally, a bunch of available repayment plans for Military students includes in this category. Their awards and eligibility conditions vary depending on the amount of Federal Student Loans, the branch of service, etc. 

Discharge Programs

These programs are different from forgiveness. Your position or work experience does not matter for such aid. It usually offers benefits to people who suffer from school closure, bankruptcy, or have a disability, etc. Meanwhile, cancellation is very similar to forgiveness and is based on your work conditions. 

  • Closed School Discharge- You can be eligible to discharge plan if your school closes when you are a student or soon after you graduate. Then, this program can erase all your debt from direct, FFEL, or Perkins Loans. 
  • Perkins Loan Discharge and Cancellation- As it is both cancellation and discharge, more people can be eligible for this program. Depending on your work experience, you can get rid of Perkins Loans debt. Plus, certain conditions such as disability, bankruptcy, or death can qualify you to discharge. 
  • Total and Permanent Disability Discharge and Discharge Due to Death- Though the names of these programs explain their purpose and eligibility, we need to mention that they are different from the previous Perkins program. These programs let not only Perkins loans but also Direct and FFEL loans to take advantage.
  • Bankruptcy Discharge- This program has many requirements and rarely benefits borrowers. Still, there is a chance for you to get a discharge if you declare bankruptcy. 
  • Borrower Defense to Repayment- If your school does something against its promises or fails to provide proper educational service, then you can get your loans eliminated. Similar programs include False Certificate or Unpaid Refund Discharge. 

Our Guide

If you already feel exhausted with the descriptions of programs in the previous section, well, this is just the tip of the iceberg. Each of these student aids has a lot more eligibility requirements and unique application processes. That is one of the main reasons why you need to get extra help from Forget Student Debt. In this section, we will explain more details of available programs to help you understand different forgiveness that falls under Federal Student Loans. However, if you have any questions or concerns, we are ready to help you immediately. 

Public Service Loan Forgiveness

Let’s start our discussion on forgiveness programs with the absolute best program. It assists students in getting rid of all their Federal Student Loans regardless of the amount of outstanding balance. This forgiveness program is available to government employees and nonprofit workers. If you work in one of those organizations, your position there does not matter. 

There are some extra benefits to this program. First, you can work both full-time and part-time. Usually, when you work half-time, you are required to serve twice as much. However, in Public Loan Forgiveness, it is different. Instead of working for twenty years, you just need to find an additional workplace. The eligibility criteria explain that if your total work hours in more than one organization as a half-time employee sums to full-time work, then you can apply to this program.

However, there are also some downsides. First, it takes quite some time because you need to make 120 payments before application. If we consider that you make one payment per month, it will take at least ten years for you to apply. Also, payments only after the 2007 October matter. The bills that you paid before this time will not add up. Second, only Direct loan holders are eligible who also use Income-Driven Repayment plans. Yet, you can get the help of consolidation to turn your loans into a Direct loan.

Application

Applicants need to fill out the form of PSLF and send it either by mail or fax. You can input all the required information by yourself or get the help of the PSLF Help Tool. Plus, you should fill the data about your employers in Employment Certification. After review of your application, they will notify you if you passed or not. Please, do not forget that during your application, you should continue working for a qualifying employer. 

Employment Certification

When you apply to PSLF or other programs that are part of it, such as Nonprofit or Government Loan Forgiveness, you should use the Employment Certification Form. It is a useful form that assists confirming that your payments qualify. As you already know, applicants need to make 120 qualifying payments during a minimum of ten years. Throughout this period, you might change your workplace, or the conditions might differ. Therefore, you need to make sure that your payments are eligible for the program. By filling this form, you get a notification that indicates the status of your payments. 

It is advisable to submit the Employment Certification Form annually or when you change your workplace. However, it is optional during the time of 120 payments. If you do not provide it, it is not a problem. It will be mandatory when you apply for the Public Service Loan Forgiveness program. Do not forget that you will be required to fill information about all the employers you worked for during these ten years. Hence, to avoid any hassle and to confirm that you are making progress with payments, submit the form periodically.

Nonprofit Loan Forgiveness

Nonprofit Loan Forgiveness program is available to employees of tax-exempt nonprofit organizations through PSLF. The eligibility criteria include your workplace being classified as 501(c)(3) type of nonprofit. This category usually joins enterprises that deal with charity, religious activities, educational issues, and more. Other requirements demand the existence of a Direct loan, usage of the Income-Driven Repayment plan, and 120 qualifying payments.

As you already know, 120 payments take at least ten years because you earn one point for every monthly payment. Usually, people want to reduce this time and look for additional ways. However, keep in mind that overpayments will not fasten the process. You can only get one point per payment. This payment should be at least in the amount that you see in your bill. If you decide to pay more, it will not give you extra points. 

Instead of fastening the process, try to make sure that all the payments qualify for the program. If you pay less, later than the deadline, or work for an ineligible employer, your payment will not count. You can again get the help of the Employment Certification Form to keep track of the progress you make toward application. The good news is that Nonprofit Loan Forgiveness does not demand payments to be consecutive. If you worked for an ineligible employer for some period, it would not affect your status, except prolonging the 120 payment requirement.

Government Loan Forgiveness

Employees working in government organizations can take advantage of available forgiveness programs, too. Government Loan Forgiveness offers debtors a complete relief through the Public Service Loan Forgiveness programs. If you work in a federal, state, or local government, you can be eligible for this program. You should also have full-time work and make 120 qualifying payments, as mentioned earlier. Do not forget that applicants need to make complete payments on time under the Income-Driven repayment plans. Here, only your Federal Student Loans will qualify. If you consolidate other types of loans into a direct one, it will also make you eligible. 

Teacher Loan Forgiveness

Another great forgiveness program is available to teachers who have Subsidized or Unsubsidized Loans. These loans can be Federal Student Loans or Federal Stafford Loans. If you have five years of work experience, you can be eligible for this program. In return, you will receive a maximum of $17.5k financial assistance for your Federal Student Loans. 

However, it would be wrong if we say that this forgiveness has very challenging requirements. Even if you have worked for five years, you might not be eligible for the program. There exist additional conditions which qualify your commitment. For instance, you should work only in underserved schools such as the ones located in economically-poor locations. Besides, your working years should be consecutive, which is a considerable disadvantage. It means if you work four years and then leave for some reason, these four reasons will not add up to your five-year work requirement. You will be required to start working for the program all over again.

Other than those requirements, you should also not have an outstanding balance when you obtained the loan or as of October 1998. Plus, you should get the loan before you finalize your five-year commitment. Please, keep in mind that the work period before 1998 does not count. 

What If You Teach Less than a Year?

The good news is that in some conditions, your uncompleted work year can be considered as full academic year. For instance, if you teach only half of the year or your employer accepts your commitment as the satisfaction of work requirements, then you will get progress toward the Teacher Loan Forgiveness. Also, if you return to get education that is related to your teaching area, then working half a year might not be a problem. The Family and Medical Leave conditions, as well as active duty calls, will not interrupt progress, either. 

Basic Requirements

When we say this program is very challenging, we say it for a reason. We have already discussed some critical requirements. However, there are also some simple ones for teachers. To be an eligible teacher, you need to have at least a bachelor’s degree. Also, receiving state certification is mandatory. If you received your certificate as a result of the state teacher licensing examination, you are still a qualifying applicant. 

Forgiveness Award

Before we mentioned that with Teacher Loan Forgiveness, you could receive up to $17.5k. However, this amount is not available to everyone. Depending on your area of teaching, you will receive either $17.5k or $5k. You can get the highest award if you teach mathematics or science at secondary school. Alternatively, teachers working with disabled children can qualify for higher forgiveness. Applicants serving in an area other than these mentioned ones can only receive $5000. 

Double Applications

Some people ask if they can apply to more than one program. It is under specific conditions possible to do so. For instance, receivers of Teacher Forgiveness Loan can also take advantage of Public Service Loan Forgiveness. However, you can not enjoy both of them at the same time. Let’s say you worked for five years and got Teacher Forgiveness. Then, if you want to apply to the PSLF, your payments made during those five years will not add up to 120 payment requirements.  

Nursing Loan Forgiveness

People working as nurses or nursing educators can take advantage of Nursing Loan Forgiveness. However, it is not just one program. A number of different forgiveness and repayment opportunities are part of this program. Nurse Corps Loan Repayment Plan, The NHSC Loan Repayment, The Perkins Loan Forgiveness, as well as Public Service Loan Forgiveness, are available to nurses and nurse educators. In general, those programs target improving healthcare services in underserved areas where the number of healthcare professionals is low. 

Also, most of them require a work commitment in such facilities to eliminate your Federal Student Loans ranging from two years to ten years. Therefore, you do not only get financial assistance, but also a chance to help people who desperately need your service. Let’s explore some of those programs in more detail.

The Nurse Corps Loan Repayment Plan

One of the incredible repayment plans in Nursing Loan Forgiveness is The NHSC Loan Repayment. You can get up to an 85% reduction in your outstanding balance if you agree to serve three years in a Critical Shortage Facility (CSF). Such facilities are usually located in socio-economically poor locations. The program decreases your Federal Student Loans by 60% during your first two years. You subsequently have a chance to extend your contract for one more year and get 25% extra forgiveness. Also, keep in mind that this program provides additional funds in its 2020 plan for nurses working in women’s health areas. Therefore, if you work in such a position, do not miss this opportunity.

The NHSC Loan Repayment Plan

This plan is another excellent program for nurses with considerable advantages. The primary purpose of the program is pretty similar to Nurse Corps LR, which is supplying extra healthcare providers to areas in need. However, there exist more benefits regarding eligibility requirements. You can apply for this program regardless of whether you serve full or part-time. Here, you need to serve for only two years, and you will receive $50k forgiveness.

Meanwhile, this amount for half-time nurses is $30k. If the award seems less, there is a chance to extend your contract and receive more forgiveness. In the best-case scenario, you can serve for five years and get up to $100k financial assistance. Yet, again there is no guarantee for the extension. 

Also, your forgiveness will not be taxable. It means participants of this program do not need to pay extra taxes for the amount of the Federal Student Loans they get rid of. On the contrary, consider that if you choose to work in an underserved facility, your salary can be lower. These facilities are usually economically backward areas, which can cause a decrease in your salary. Besides, the program does not interfere with your compensation negotiations. Yet, it can be a small disadvantage considering the benefits the program brings. 

Military Student Loan Forgiveness

Military Personnel also has a chance to get rid of their debts through a variety of programs. One of those programs is the Public Service Loan Forgiveness. However, we discussed it several times in previous sections. So, keep in mind that it eliminates all your debt after you make 120 qualifying payments. See the details above. 

Other than the PSLF, there is the Military College Loan Repayment Program. People who received a student loan and now want to join active duty can apply to this program. Alternatively, if you already served in the Military, you can join the reserves to take advantage of the program. There is also some flexibility which allows you to choose different branches of service. Army, Air Force, Navy, and other branches qualify for this forgiveness. Usually, applicants choose the PSLF program over this Military Student Loan Forgiveness if there is no chance for them to serve in the Military. 

Eligibility Criteria

This forgiveness program also has an extensive list of requirements. Unfortunately, if you have already started your active duty, you will not be able to apply for this program. There are also some educational factors. For instance, you should get a minimum of 50 points on the Qualification Test for Armed Forces. Besides, applicants must have a high school diploma. Your loan type also matters. Federal Student Loans, FFEL, Direct, and Perkins Loans qualify for this Military Student Loan Forgiveness plan.

Awarding

Now it is time to discuss the most significant part: What will you receive in return? The exact amount of your forgiveness depends on the branch you want to serve. However, you can earn up to $65k financial assistance for your debt. Also, people who join active duty receive twice as much forgiveness than the reserves. The general rule of thumb is that active servicers receive a 33% reduction in their outstanding balance per year while others get 15% elimination. Please, pay attention that this percentage decrease applies to your outstanding balance at the end of each year. If you work for three years, it does not mean that you will get almost all your debt paid. It works in the following order:

1st year- 33% reduction of the current outstanding balance

2nd year- 33% reduction of the outstanding balance left after the first year forgiveness

3rd year- 33% reduction of the outstanding balance left after the second year forgiveness

Don’t Waste time. Get help.

You are now familiar with some opportunities to eliminate your debt. Thankfully, there are available programs for almost all types of Federal Student Loans, including Nursing, Teaching, Military, Nonprofit, and more. All you need to do is decide which one to apply to and start progressing towards it. However, as mentioned before, it is not easy to find a program that fits your conditions. Even if you find it, you need to invest considerable time, energy, and patience into the application process. Keep in mind that these programs have minute requirements that most applicants tend to ignore. To maximize your chance on the selection process, and enjoy the benefits of available forgiveness programs, contact us now.