What is Student Loan Forgiveness? Learn how it works!
What is Student Loan Forgiveness? Check out how it works and learn if you would be eligible to get debt relief.
by Aline Augusto
Student Loan Forgiveness: how to get a debt relief
Recently, president Joe Biden released a plan to concede forgiveness for low-income federal student loan borrowers. The government might forgive, cancel or discharge your student loan under certain conditions. It does not apply to private loans, though.
According to specialists, up to 8 million people will get relief, costing approximately $400 billion.
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Although the plan is still being announced, as well as the application process has been released, people started to search for more information about student loan forgiveness.
So, keep reading because we will explain all about it today!
What is it?
Student loan forgiveness means that you don’t need to keep repaying the rest of your loan or all of it. It is important to note that the loan considered in the process is only a federal student loan.
In general, forgiveness and cancellation mean the same. In summary, when the government forgives or cancels your Federal Student Loans, you don’t have to pay it anymore.
Usually, it happens due to your job. But, in President Joe Biden’s plan, forgiveness is also related to low income.
In addition, only military, educational, and public service professions are eligible.
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How does it work?
Recently, the discussion about student loan relief has increased since the levels of crisis and debt are too high.
When the government forgives or cancels your student loan, part of the debt or all the debt will no longer exist.
The eligibility requirements are very restricted, and although many would love relief from their debt, only a few can get it.
Probably, with the Biden administration’s plan, the number of student loan forgiveness will increase.
But we will have to wait until they release the application process. Furthermore, it is important to mention that requirements vary according to the type of loan and occupation.
Usually, forgiveness or cancelation applies to certain public service jobs, including government employees, teachers, and the military community.
Now, learn the types of forgiveness or cancelation.
Public Service Loan Forgiveness
Public Service Loan Forgiveness is a program that concedes forgiveness to those who work for the government or a non-profit organization.
Also, the program is available for direct loans. But you must have paid at least 120 qualifying monthly payments.
Furthermore, the repayment plan needs to be qualified under the program’s conditions, and you must work full-time for a qualified employer.
Teacher Loan Forgiveness
The Teacher Loan Forgiveness Program is available for direct loans and FFEL Program loans.
To be eligible, you must teach full-time for at least five complete & consecutive academic years in a low-income elementary school, educational service agency, or secondary school.
In addition, the program offers forgiveness of up to $17,500 on qualified loans.
Perkins Loan Cancellation and Discharge
As the name says, the Perkins Loan Cancellation and Discharge program offers cancellation and discharge for Federal Perkins Loans based on your employment or volunteer service.
However, you must meet the eligibility requirements. The program includes Perkins Loan Teacher Cancellation.
Loan forgiveness vs. Discharge
Forgiveness or cancellation means you don’t have to pay your federal student loan anymore. Therefore, part of your debt or all of it will no longer exist, and you will get relief.
Usually, as mentioned above, forgiveness and cancelation are given for certain jobs related to public services, including government employees, teachers, and the military community.
Also, the newest Biden plan includes forgiveness for low-income borrowers who meet the requirements.
But, there is another type of debt elimination. Federal student loan discharge means you don’t have to repay your debt or part of it.
However, unlike forgiveness and cancellation, you must prove permanent disability to get a discharge. Also, you’ll get discharge if the school you attended is closed.
Eligibility requirements vary widely depending on the type of loan and circumstances.
Moreover, it is crucial to understand that no matter your situation, while you apply for debt relief, you must continue repaying your loan.
How to Apply For Forgiveness
As mentioned above, the eligibility requirements vary according to the type of loan and occupation.
Usually, student loan forgiveness, cancellation, and discharge are given to those who work in the public service community, including federal employees, military members, and teachers.
Applying for forgiveness is neither easy nor fast. But, if you think you may be eligible, you must contact your loan servicer or the school or designated that made the loan.
The government can approve or deny your application. If your application is approved, you are no longer required to continue repaying all or part of your loan debt.
However, if your application is denied, you must continue repaying your loan.
Also, be aware of the latest news about the Biden Administration’s plan to offer relief federal student loans for low-income borrowers.
Furthermore, take a look at some companies that offer programs to help you get the relief you need for other types of loans.
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