With more graduates concerned about how they will pay for their education and student loan debt growing by the day, new federal rules are offering better hope. Although most students who take these loans plan to repay them, repayment can sometimes be a problem due to unforeseen circumstances. In most of these situations, many students are considering student loan forgiveness or discharge programs to help them overcome the financial hardships of having to repay loans for many years. Here are some points you should understand about these programs.
What is student loan forgiveness? Loan forgiveness occurs when your loan lender eliminates all your loan repayments after you have met certain eligibility requirements like serving in specific public services. You can also qualify for partial loan repayments of you serve in the military, agree to move and live in certain areas or work in certain professions. Loan forgiveness is also possible through other options such as discharge. You can only qualify for discharge programs if you are facing issues beyond your control that make it impossible for you to repay your loan. Once you qualify for loan forgiveness or discharge, you are exempted from making any further repayments.
What qualification options are available for loan forgiveness? There are two main programs under which federal student loans can be forgiven: The Public Service Loan Forgiveness Program and Teacher Loan Forgiveness Program. If you want to qualify for a public loan forgiveness program, you need to work in one of the specified public areas of service and make monthly loan repayments in full over a certain time frame. For those after teacher loan forgiveness programs, qualifying requires that you be a full-time teacher in a low-income school or education institution for a minimum of five years consecutively. It's important to know the specific eligibility requirements needed so as to qualify for the various loan forgiveness programs available.
How does student loan discharge work? If you file for bankruptcy, are totally or permanently disabled, your school closes before the loan repayment period is over, pass way or there is false certification of your loan eligibility, you can qualify for a student loan discharge. In order to be eligible for a discharge, you have to apply directly with the loan lender. For those with private student loans, the discharge options discussed above may not apply. You should be aware of the specific qualification requirements needed for discharge.
Should you apply for a student loan forgiveness program? Any student or graduate who can meet the eligibility requirements can apply for these programs. Loan forgiveness programs have no negative effect on your credit and will actually help reduce your overall debt. In case you can't qualify, you can opt for other reliable alternatives like loan modification, consolidation and refinancing. Whichever option you choose, it's important to get necessary guidance on how to qualify for such programs.