How to qualify for student loan forgiveness?

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    Jordan Moore
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    Jordan Moore
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    The Department of Education offers different loan forgiveness plans which eventually lead to loan forgiveness. You can qualify for these plans based on several factors including employment type, disability, and income. 

    Teacher: If you’re a teacher with Direct Loans (the most common type of federal student loan) or Federal Family Education Loans (FFEL) you could be eligible for up to $17,500 in student loan forgiveness. You must teach full-time for five consecutive academic years in a low-income elementary school, secondary school, or educational service agency to qualify.

    Government employee: You may qualify for the Public Service Loan Forgiveness (PSLF) program if you are employed full-time by a federal, state, local, or tribal government or work for a qualifying non-profit. 

    Disability: You may qualify for a total and permanent disability discharge of your federal student loan and Teacher Education Assistance for College and Higher Education (TEACH) Grant if you have a permanent, total disability and you have a Direct Loan, Federal Family Education Loan (FFEL), or Perkins Loan.

    There are also forgiveness options related to the school you enrolled in. For example, you qualify for forgiveness if:

    • Your school closes soon after you enroll or withdraw and you have a Direct Loan, Perkins Loan, or Federal Family Education Loan (FFEL). 
    • Your school defrauded you by giving you false information about the school or courses you enrolled in and you have a Direct Loan.

    You may qualify for a student loan forgiveness program if you:

    • Are a Federal Perkins Loan borrower
    • Are a parent
    • Are you a forgery victim
    • Have declared bankruptcy

    In the event of the student’s death, all federal student loans, including Parent PLUS loans, are forgiven. 

    Alternative plans since Supreme Court ruling – After a three-year pause due to the COVID-19 pandemic, student loan payments restarted in October 2023. 

    Check with your loan servicer to understand your repayment options. After the Supreme Court struck the Biden administration’s original loan forgiveness plan – which would have forgiven up to $20,000 per borrower – it made important changes to existing income-driven repayment plans (IDR). 

    Earlier this year, President Joe Biden replaced the income-driven Revised Pay As You Earn (REPAYE) plan – which caps your federal student loan repayments at 10% of your discretionary income (income you have at your disposal after essential expenditures like mortgage, utilities, insurance, and health) and forgives the remaining balance after 20 or 25 years of repayment – with the Saving on a Valuable Education (SAVE) plan. 

    The SAVE Plan includes the following changes:

    No more interest accrual: The SAVE plan would eliminate interest accrual on all loans for borrowers who are making on-time payments.

    Faster forgiveness: Under this new plan, undergraduate students who originally borrowed less than $12,000 will have their remaining balance forgiven after 10 years of payments instead of waiting 20 or 25 years. 

    Lower monthly payments: Borrowers with undergraduate student loans will see their payments cut in half. Monthly payments will go from 10% of discretionary income to 5%. Borrowers with graduate loans will still pay 10%.

    More income protection: The SAVE plan would increase the amount of income that is protected from loan payments. Under the SAVE plan, the income exception was raised from 150% to 225% of the poverty line. 

    You can apply for the SAVE plan on the studentaid.gov site. You were automatically moved to this plan if you were enrolled in the REPAYE plan.

    Last year, the United States Education Department also announced an IDR waiver. This one-time account adjustment expands what payments count towards the total needed for forgiveness. 

    The U.S. Department of Education will continue to identify, notify, and forgive borrowers who have made 240 or 300 qualifying payments depending on the type of loan and repayment plan they signed up for.

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StellarFinance, Inc. and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.

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