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What You Need to Know About Student Loan Forgiveness Programs

Student loan forgiveness programs might sound too good to be true, but if students qualify for specific requirements, their debt will be forgiven. In this article, we will talk more about the nature of student loan forgiveness plans, the types of forgiveness, along with cancellation and discharge, and finally, the differences between federal and private loan forgiveness.

Understanding Student Loan Forgiveness

The student loan forgiveness plan was created to release borrowers (most often the students) from their obligation to repay their student loan debt. It is important to mention that different federal student loan forgiveness programs exist, and understanding them will help a person determine whether they are eligible for the plan.

Types of Forgiveness, Cancellation, and Discharge

Let’s take a look at the types of student loans and their most important characteristics.

Federal Student Loan Forgiveness Programs

In the last few years, the federal government in the United States has been trying to improve student loan programs, providing opportunities for higher education. The Biden administration has presented the so-called SAVE plan. This new plan aims to significantly decrease many low- and middle-income borrowers’ monthly payments and, eventually, provide them with a shorter path to loan forgiveness.

Public Service Loan Forgiveness (PSLF)

The Public Service Loan Forgiveness (PSLF) program was designed for people who work in public service in federal, state, tribal, and local government or for non-profit organizations. Students who have made ten years’ worth of monthly payments can enroll in the program and receive their remaining debt forgiven tax-free.

Income-Driven Repayment (IDR) Plans and Forgiveness

In 2023, the Income-Driven Repayment (IDR) plans helped almost 855,000 student loan borrowers, who obtained $42 billion in relief. The plan includes four plans – Saving on a Valuable Education (SAVE), Income-Based Repayment (IBR), Pay As You Earn (PAYE), and Income-Contingent Repayment (ICR). Although they are very different, the plans are similar in how they limit payments from 10% to 20% of a person’s discretionary income and forgive the remaining loan total after 20 or 25 years of payments, respectively.

Loan Forgiveness for Nurses and Healthcare Professionals

Medical graduate school can be expensive and leaves many students in burning debt. According to the Association of American Medical Colleges, around 70% of medical school graduates had an average debt of approximately $200,000 per person in 2021. 

The National Health Service Corps (NHSC) Loan Repayment Programs provide loan repayment aid in exchange for at least two or three years of work in specific medical areas.  

Loan Forgiveness for Military Service

There exist many programs designed for loan forgiveness for military service. Some of the most famous ones are the Air Force Judge Advocate General’s Corps Loan Repayment Program (JAG), the Army Reserve College Loan Repayment Program (MOS), and the Army Student Loan Repayment: Active Duty. The JAG corps might repay you up to a $65,000 student loan. 

Only federal student loans are eligible for up to $20,000 in loan balance payments through the MOS Program. To qualify for the last program, one needs to enroll for at least three years and achieve a score of 50 or better on the so-called Armed Forces Qualification Test (AFQT).

Loan Forgiveness for Lawyers and Other Professionals

Just like medical school, law school can be costly and often results in high levels of debt for graduates. The good news is that there exist some forgiveness programs for which lawyers can apply, such as Public Service Loan Forgiveness (PSLF), Income-driven Repayment (IDR), and Perkins Loan Forgiveness. Depending on the type of loan you have, either federal or private, will affect which programs you can qualify for.

Private Student Loan Forgiveness

Private student loan forgiveness is very hard to obtain and can’t be compared to federal student loans. In case you are struggling to find a way to pay back your private student loan, you can always contact your lender, who might offer you help. Moreover, there exist different private student loan repayment assistance programs that can help you get money to repay your private student loans.

Differences Between Federal and Private Loan Forgiveness

Government-backed federal loans have more structured criteria and established pathways for forgiveness, while private loan forgiveness options can vary significantly between lenders. This means that borrowers with private loans may need to work with their lenders to investigate potential relief options.

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