Note that the situation for student loans has changed due to the impact of the coronavirus outbreak and relief efforts from the government, student loan lenders and others. Check out our Student Loan Hero Coronavirus Information Center for additional news and details.
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While there are legitimate student loan forgiveness programs that will cancel your student debt, there are also plenty of scams out there, too. So it’s natural to be skeptical about whether student loan forgiveness is real.
To help you access the real programs (and avoid the scams), here’s what you need to know about legitimate student loan forgiveness programs:
- Yes, student loan forgiveness is real, but…
- Where to get legitimate student loan forgiveness
- 4 things you need to know about student loan forgiveness
- Watch out for these student loan forgiveness scams
- How to seek student loan forgiveness
The short answer? Yes. The long answer? It can take a long time to get it.
Getting loan forgiveness is a lengthy process that only applies under certain circumstances. It’s also only available for federal loans; forgiveness for private student loans doesn’t exist. So if someone is promising to erase your debt with a private lender, it could be a student loan forgiveness scam.
The only exception is student loan repayment assistance programs (LRAPs), which sometimes give you financial assistance to pay off both your federal and private loans. These typically come from a state or private organization. You can check out a long list of LRAPs here.
If you want to pursue a federal loan forgiveness program, you might have to switch to an income-driven repayment (IDR) plan. With these plans, you’ll pay a percentage of your income toward your student loans.
Although your monthly payments on an IDR plan might be lower than on the standard repayment plan, the term of your loan will be longer. With a longer repayment term, you could end up paying much more in interest than if you stayed on the standard 10-year term.
As mentioned, these six options are only for federal student loans — you’ll have to try LRAPs for your private debt.
1. Income-driven repayment
2. Public Service Loan Forgiveness
3. Teacher Loan Forgiveness
4. Total and Permanent Disability Discharge
5. Perkins Loan cancellation
6. Student loan forgiveness or cancellation by profession
The Federal Student Aid (FSA) office offers four IDR repayment plans:
- Income-Based Repayment (IBR)
- Pay As You Earn (PAYE)
- Revised Pay As You Earn (REPAYE)
- Income-Contingent Repayment (ICR)
All these plans adjust your payments in accordance with your income. If you still have a balance at the end of your repayment term, the remainder will be forgiven.
- Maximum monthly payment: Generally 10%, 15% or 20% of your discretionary income, depending on the plan and when you borrowed
- Loans are forgiven: After 20 or 25 years of payments
The Public Service Loan Forgiveness (PSLF) is an option for professionals who work in public service. After 10 years of service, your loans will be forgiven.
But make sure you meet all the requirements of the program and submit an Employment Certification form each year. You wouldn’t want to get to the end of your 10 years only to find out you weren’t eligible for the program (as many borrowers found out the hard way).
- Maximum monthly payment: Dependent on your repayment plan, but you’ll need to put your loans on an IDR plan
- Loans are forgiven: After 10 years of payments on an IDR plan while working in a qualifying public service job
The Teacher Loan Forgiveness program is available for teachers who work in low-income schools or qualifying educational agencies. Through this program, you could get up to $17,500 in loan forgiveness, depending on what subject you teach.
- Loans are forgiven: After five consecutive years of qualifying work
- Loan forgiveness amount: Up to $17,500 for full-time, highly qualified teachers of math, science or special education; up to $5,000 for full-time highly qualified teachers of other subjects
If you experience a total and permanent disability, you could qualify to get your entire federal student loan balance canceled. You might also be eligible for loan cancellation if you die or go bankrupt, or if your school closed or made fraudulent claims. You can read more about these student loan discharge programs here.
- Loans are forgiven: Upon proof of total and permanent disability
Although the Perkins loan program ended in September 2017, some borrowers still have Perkins loans that they borrowed before this time. If you do, you could get your Perkins loan cancelled if you work in a qualifying profession for a certain period of time.
- Loans are forgiven: Upon proof of employment in a qualifying service career
Lastly, you’ll find other forgiveness programs for particular professions. Here are comprehensive student loan forgiveness guides for:
- Law enforcement
- Doctors, nurses and physician assistants
- Professors and teachers
Is federal student loan forgiveness real? Yes, with some caveats.
1. Not everyone is eligible
To be eligible for some income-driven repayment plans, for example, your payments must be lower than what they’d be under the standard 10-year repayment plan.
Say you earn $30,000 per year as a social worker but have $80,000 in debt because of your master’s degree. Tying your loan repayment to your income would keep your payments lower over a longer period. It would cost you more to repay the loan unless you qualified for loan forgiveness.
2. Forgiveness takes a long time
Depending on which program you’re pursuing, your student loans might not be forgiven for decades. In that time, you’ll pay more in interest than under the standard plan.
And remember: When it comes time to finally get your loans forgiven, your remaining balance might not be all that big.
3. Your remaining loans might be taxed
In the eyes of the Internal Revenue Service, a student loan that’s forgiven at the end of an IDR repayment plan is typically considered to be taxable income. So if you eventually manage to have $50,000 worth of loans forgiven, you might be on the hook for paying federal (and possibly state) taxes on that amount.
4. It’s not always worth it
As noted above, you might pay significantly more in interest if you opt for forgiveness through an IBR plan. Run your numbers through our IBR calculator to see exactly how much.
Since many student loan forgiveness programs require you to work in public service, you’ll likely earn a lower salary than you would in the private sector. You’d almost certainly earn a higher income as a lawyer for a firm representing name-brand clients than you would as an attorney for the government, for example.
Although the programs above are legit, you’ll want to be on the lookout for loan forgiveness scams.
For example, seemingly legitimate student loan forgiveness companies might charge you to fill out government forms for your student loans. But you can complete the paperwork yourself for free by using the tools on the FSA website.
Even worse, other companies might call and pretend they can forgive your student loans for a fee. Don’t buy into this. You’ll never have to pay a fee to participate in a student loan forgiveness program. Only loan forgiveness scams will ask you for advance fees.
Along with student loan forgiveness scams, there are also plenty of other student loan scams. If you’ve fallen victim to one of them, you may contact:
- Your bank or credit card company: You could seek to stop the payment to the scammer if you paid a fee upfront.
- The three major credit bureaus: You could report fraud or freeze your credit report to avoid future harm.
- The Office of the Inspector General: You could ask for advice if your student loan information was compromised.
- The Consumer Financial Protection Bureau (CFPB): You could report the business and submit a complaint.
If you’re struggling to repay your loans and think forgiveness is the right path for you, read our comprehensive guide to student loan forgiveness. See if you qualify for any existing options.
If none of the legitimate federal programs apply to your situation, consider putting your loans into deferment or forbearance. You may also refinance your loans with a private lender.
Along the way, be on the lookout for student loan forgiveness scams that are after your money, not your well-being.
Whatever you do, don’t ignore your loans. Because that’s the one way to ensure they never disappear.
Interested in refinancing student loans?Here are the top 9 lenders of 2021!
|Lender||Variable APR||Eligible Degrees|
|1.88% – 6.15%1||Undergrad & Graduate|
|1.88% – 5.64%2||Undergrad & Graduate|
|2.50% – 6.85%3||Undergrad & Graduate|
|1.89% – 5.90%4||Undergrad & Graduate|
|2.25% – 6.39%5||Undergrad & Graduate|
|1.88% – 5.64%6||Undergrad & Graduate|
|1.90% – 5.25%7||Undergrad & Graduate|
|2.39% – 6.01%||Undergrad |
|2.13% – 5.25%8||Undergrad & Graduate|
|Check out the testimonials and our in-depth reviews!
1 Important Disclosures for Splash Financial.
Splash Financial Disclosures
Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet applicable underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates are reserved for the highest qualified borrowers. If approved, your actual rate will be within a range of rates and will depend on a variety of factors, including term of loan, a responsible financial history, income and other factors. Refinancing or consolidating private and federal student loans may not be the right decision for everyone. Federal loans carry special benefits not available for loans made through Splash Financial, for example, public service loan forgiveness and economic hardship programs, fee waivers and rebates on the principal, which may not be accessible to you after you refinance. The rates displayed may include a 0.25% autopay discount
The information you provide to us is an inquiry to determine whether we or our lenders can make a loan offer that meets your needs. If we or any of our lending partners has an available loan offer for you, you will be invited to submit a loan application to the lender for its review. We do not guarantee that you will receive any loan offers or that your loan application will be approved. Offers are subject to credit approval and are available only to U.S. citizens or permanent residents who meet applicable underwriting requirements. Not all borrowers will receive the lowest rates, which are available to the most qualified borrowers. Participating lenders, rates and terms are subject to change at any time without notice.
To check the rates and terms you qualify for, Splash Financial conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, the lender will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
Splash Financial and our lending partners reserve the right to modify or discontinue products and benefits at any time without notice. To qualify, a borrower must be a U.S. citizen and meet our lending partner’s underwriting requirements. Lowest rates are reserved for the highest qualified borrowers. This information is current as of June 1, 2021.
2 Rate range above includes optional 0.25% Auto Pay discount. Important Disclosures for Earnest.
Interest Rate Disclosure
Actual rate and available repayment terms will vary based on your income. Fixed rates range from 2.59% APR to 5.79% APR (excludes 0.25% Auto Pay discount). Variable rates range from 1.88% APR to 5.64% APR (excludes 0.25% Auto Pay discount). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 36% (the maximum allowable for these loans). Earnest variable interest rate student loan refinance loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 2.04% and 5.8% to the one month LIBOR. Earnest rate ranges are current as of 6/8/2021, and are subject to change based on market conditions.
Auto Pay Discount Disclosure
You can take advantage of the Auto Pay interest rate reduction by setting up and maintaining active and automatic ACH withdrawal of your loan payment. The interest rate reduction for Auto Pay will be available only while your loan is enrolled in Auto Pay. Interest rate incentives for utilizing Auto Pay may not be combined with certain private student loan repayment programs that also offer an interest rate reduction. For multi-party loans, only one party may enroll in Auto Pay.
Student Loan Refinancing Loan Cost Examples
These examples provide estimates based on payments beginning immediately upon loan disbursement. Variable APR: A $10,000 loan with a 20-year term (240 monthly payments of $72) and a 5.89% APR would result in a total estimated payment amount of $17,042.39. For a variable loan, after your starting rate is set, your rate will then vary with the market. Fixed APR: A $10,000 loan with a 20-year term (240 monthly payments of $72) and a 6.04% APR would result in a total estimated payment amount of $17,249.77. Your actual repayment terms may vary.Terms and Conditions apply. Visit https://www.earnest. com/terms-of-service, e-mail us at [email protected], or call 888-601-2801 for more information on our student loan refinance product.
Earnest Loans are made by Earnest Operations LLC or One American Bank, Member FDIC. Earnest Operations LLC, NMLS #1204917. 535 Mission St., Suite 1663, San Francisco, CA 94105. California Financing Law License 6054788. Visit earnest.com/licenses for a full list of licensed states. For California residents (Student Loan Refinance Only): Loans will be arranged or made pursuant to a California Financing Law License.
One American Bank, 515 S. Minnesota Ave, Sioux Falls, SD 57104. Earnest loans are serviced by Earnest Operations LLC with support from Navient Solutions LLC (NMLS #212430). One American Bank and Earnest LLC and its subsidiaries are not sponsored by or agencies of the United States of America.
© 2021 Earnest LLC. All rights reserved.
3 Important Disclosures for CommonBond.
Offered terms are subject to change and state law restriction. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900), NMLS Consumer Access. If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown. All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 0.15% effective Jan 1, 2021 and may increase after consummation.
4 Important Disclosures for Laurel Road.
Laurel Road Disclosures
All credit products are subject to credit approval.
Laurel Road began originating student loans in 2013 and has since helped thousands of professionals with undergraduate and postgraduate degrees consolidate and refinance more than $4 billion in federal and private school loans. Laurel Road also offers a suite of online graduate school loan products and personal loans that help simplify lending through customized technology and personalized service. In April 2019, Laurel Road was acquired by KeyBank, one of the nation’s largest bank-based financial services companies. Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. All loans are provided by KeyBank National Association, a nationally chartered bank. Member FDIC. For more information, visit www.laurelroad.com.
As used throughout these Terms & Conditions, the term “Lender” refers to KeyBank National Association and its affiliates, agents, guaranty insurers, investors, assigns, and successors in interest.
Assumptions: Repayment examples above assume a loan amount of $10,000 with repayment beginning immediately following disbursement. Repayment examples do not include the 0.25% AutoPay Discount.
Annual Percentage Rate (“APR”): This term represents the actual cost of financing to the borrower over the life of the loan expressed as a yearly rate.
Interest Rate: A simple annual rate that is applied to an unpaid balance.
Variable Rates: The current index for variable rate loans is derived from the one-month London Interbank Offered Rate (“LIBOR”) and changes in the LIBOR index may cause your monthly payment to increase. Borrowers who take out a term of 5, 7, or 10 years will have a maximum interest rate of 9%, those who take out a 15 or 20-year variable loan will have a maximum interest rate of 10%.
KEYBANK NATIONAL ASSOCIATION RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.
This information is current as of April 29, 2021. Information and rates are subject to change without notice.
5 Important Disclosures for SoFi.
Fixed rates from 2.74% APR to 6.74% APR (with autopay). Variable rates from 2.25% APR to 6.39% APR (with autopay). All variable rates are based on the 1-month LIBOR and may increase after consummation if LIBOR increases; see more at SoFi.com/legal/#1. If approved for a loan your rate will depend on a variety of factors such as your credit profile, your application and your selected loan terms. Your rate will be within the ranges of rates listed above. Lowest rates reserved for the most creditworthy borrowers. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Income Based Repayment or Income Contingent Repayment or PAYE. SoFi loans are originated by SoFi Lending Corp. or an affiliate (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license #6054612; NMLS #1121636 (www.nmlsconsumeraccess.org). Additional terms and conditions apply; see SoFi.com/eligibility for details. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.
6 Important Disclosures for Navient.
7 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments. The lowest advertised variable APR is only available for loan terms of 5 years and is reserved for applicants with FICO scores of at least 810.
As of 04/07/2021 student loan refinancing rates range from 1.90% APR – 5.25% Variable APR with AutoPay and 2.95% APR – 7.63% Fixed APR with AutoPay.
8 Important Disclosures for PenFed.
Annual Percentage Rate (APR) is the cost of credit calculating the interest rate, loan amount, repayment term and the timing of payments. Fixed Rates range from 2.89%-4.78% APR and Variable Rates range from 2.13%-5.25% APR. Both Fixed and Variable Rates will vary based on application terms, level of degree and presence of a co-signer. These rates are subject to additional terms and conditions and rates are subject to change at any time without notice. For Variable Rate student loans, the rate will never exceed 9.00% for 5 year and 8 year loans and 10.00% for 12 and 15 years loans (the maximum allowable for this loan). Minimum variable rate will be 2.00%. These rates are subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.