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Student Loan Forgiveness: Possible Options to Pay off Student Loans


Student-loan-optionsMany borrowers are unaware of the repayment programs, such as the Student Loan Forgiveness Programs, which can make your student loans disappear. Borrowers are unaware of these programs due to the lack of information provided about these programs. Student loan forgiveness programs are instituted by the federal government (as well as some state governments, organizations, and businesses) that eliminate all or part of a student’s loans if he or she qualifies. These options exist to help borrowers shoulder the burden of student debt if they give back to their community, work in fields or areas of need, or face unpredicted, extenuating circumstances.

Loan forgiveness happens when the forgiving party (e.g., the government) determines that the borrower has given back to the community in a way, like through teaching or public service. Federal and governments, as well as organizations, offer these programs to promote service in needed fields or high-need areas. There are many ways borrowers can have their federal student loans forgiven through a variety of government programs:

  1. Become a public school teacher in a low-income area. The Teacher Forgiveness Program will pay up to $17,500 of your federal Stafford loans or the entirety of your Perkins loans can be forgiven in exchange for five consecutive, full-time years as a teacher at certain low-income elementary or secondary schools. More information about the Teacher Loan Forgiveness can be found on the Federal Student Aid website, Teacher Loan Forgiveness | Federal Student Aid .
  2. Joining the military can also has the benefit of offering student loan forgiveness. Each branch of the military, from the Army to the National Guard, has its own student loan forgiveness program. Borrowers can get more information on these programs by contacting their branch.
  3. There are also loan forgiveness programs for those who work in the public service, government, or non-profit job. The Public Service Loan Forgiveness Program (PSLF) is intended to encourage individuals to enter and continue to work full-time in public service jobs. Under this program, borrowers may qualify for forgiveness of the remaining balance due on your William D. Ford Federal Direct Loan Program (Direct Loan Program) loans after you have made 120 qualifying payments on those loans while employed full-time by certain public service employers.  More information about Public Service Loan Forgiveness can be found on the Federal Student Aid website,  Public Service Loan Forgiveness | Federal Student Aid .
  4. One plan that is available to all borrowers regardless of who they work for is the Income Based Repayment (IBR). IBR allows borrowers to limit the amount they pay each month to 15 percent of their discretionary income. IBR also forgives loans — even if they are not entirely paid off — after 25 years of payment and has other advantages as well.  Also if you have newer federal loans borrowers may qualify for the Pay as You Earn Program, which caps payments at 10 percent of discretionary income and forgives loans after 20 years of payments. More information about Income-Based Repayment Plan (IBR) can be found on the Federal Student Aid website, Income-Based Plan | Federal Student Aid , and Pay as you earn information can also be found at the Federal Student Aid website, Pay As You Earn Plan | Federal Student Aid .

In order to get the word out about these loan repayment plans the Consumer Finance Protection Bureau is focusing on educating employers about these programs so they can they tell current employees and use them to attract new ones. The agency has created a toolkit, available at ConsumerFinance.gov/pledge, which can be used by both workers and organizations to find out what their options are.

According U.S. Department of Education statistics, two out of every three students who graduated from college in 2008 financed some part of their education with student loans. American Public University Systems understands unforeseen situations occur. With that in mind, APUS includes an eBook by Salt Money, covering multiple options to help borrowers manage their student loan debt. APUS reminds our borrowers that not all loans can be discharged or forgiven. Planning a career and making loan payments is the best solution. Students are not encouraged to borrow assuming that it will be discharged or forgiven later.