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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
Yes, student loan forgiveness is real, but…
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.
Where to get legitimate student loan forgiveness
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
1. Income-driven repayment
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
2. Public Service Loan Forgiveness
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
3. Teacher Loan Forgiveness
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
4. Total and Permanent Disability Discharge
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
5. Perkins Loan cancellation
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
6. Student loan forgiveness or cancellation by profession
Lastly, you’ll find other forgiveness programs for particular professions. Here are comprehensive student loan forgiveness guides for:
- Military
- Law enforcement
- Doctors, nurses and physician assistants
- Dentists
- Professors and teachers
- Lawyers
- Pharmacists
- Veterinarians
- Accountants
- Psychologists
4 things you need to know about student loan forgiveness
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.
Watch out for these student loan forgiveness scams
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.
How to seek student loan forgiveness
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.
Rebecca Safier and Andrew Pentis contributed to this post.
Interested in refinancing student loans?
Here are the top 6 lenders of 2021!Lender | Variable APR | Eligible Degrees | |
---|---|---|---|
1.89% – 6.66%1 | Undergrad & Graduate | ||
1.99% – 5.64%2 | Undergrad & Graduate | ||
1.89% – 5.90%3 | Undergrad & Graduate | ||
2.25% – 6.43%4 | Undergrad & Graduate | ||
1.99% – 8.56%5 | Undergrad & Graduate | ||
2.39% – 6.01% | Undergrad & Graduate | ||
Check out the testimonials and our in-depth reviews! 1 Important Disclosures for Splash Financial. Splash Financial DisclosuresTerms 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. 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Earnest DisclosuresTo qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application. Earnest fixed rate loan rates range from 2.98% APR (with Auto Pay) to 5.49% APR (with Auto Pay). Variable rate loan rates range from 1.99% APR (with Auto Pay) to 5.34% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. 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5 Important Disclosures for LendKey. LendKey DisclosuresRefinancing 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 12/07/2020 student loan refinancing rates range from 1.99% to 8.56% Variable APR with AutoPay and 2.95% to 8.77% Fixed APR with AutoPay. |