If you’re in serious student loan debt, you may be considering student loan forgiveness. Through student loan forgiveness programs, you can get some or all of your federal student loans forgiven. (Sorry, private student loan borrowers.)
There are multiple student loan forgiveness programs, including Public Service Loan Forgiveness, Teacher Loan Forgiveness, student loan forgiveness through an income-driven plan, and other state-funded or career-specific forgiveness programs.
But with so many programs out there, you may be wondering: Can you double up on student loan forgiveness programs?
Taking advantage of multiple student loan forgiveness programs
Take, for example, someone working as a teacher. With that career, you could pursue Public Service Loan Forgiveness, but you would also be eligible for Teacher Loan Forgiveness.
Under the Public Service Loan Forgiveness program, 100 percent of your remaining student loan balance is forgiven after making 120 qualifying payments and working in public service for ten years.
But a lot could happen in ten years. Can you apply for Teacher Loan Forgiveness while also pursuing Public Service Loan Forgiveness?
Good question. The answer? Sort of.
You can pursue one or more student loan forgiveness programs, but when it comes time to actually forgive your loans, they’ll be forgiven under only one program.
Many of these programs have different qualifications, requirements, and timelines, meaning it’s not really possible to “double-dip,” so to speak.
For example, if you’re a teacher and think you’re going to work in education for ten years, you can fill out the Employment Certification for Public Service Loan Forgiveness form each year that you work. (You are not required to do this, but it’s helpful for you and your loan servicer to stay on top of your progress.)
In reality, though, you won’t be getting your loans forgiven until you make 120 payments and work for ten years — and at that point, you submit an application for loan forgiveness. In other words, nothing will be forgiven before ten years.
Let’s say you also are eligible for Teacher Loan Forgiveness as well, and that you work at a qualifying school. After three years of teaching, you realize that you aren’t willing to commit the next seven years of your life to get your loans forgiven through the Public Service Loan Forgiveness program.
At this point, you may want to take advantage of the Teacher Loan Forgiveness program, which forgives a portion of student loan debt after five years of qualifying service.
Through the Teacher Loan Forgiveness program, candidates may receive up to $17,500 in loan forgiveness. Once again, to actually get forgiveness you’d need to fill out the Teacher Loan Forgiveness application after five years of service in order to get a portion of your loans forgiven.
Can you double up?
While you may technically qualify for both, you really can only take advantage of one program.
“There are coordinating restrictions that prevent double dipping,” says student loan expert Mark Kantrowitz, publisher and vice president of strategy at Cappex.
Go after one student loan forgiveness program and stick with it, since many student loan forgiveness programs have qualifications that cancel each other out.
For example, the Teacher Cancellation loan program is for student loan borrowers who took out Federal Perkins loans before Perkins Loans closed to new borrowers on Sept. 30, 2017. Under this program, qualified teachers can get up to 100 percent of their loans forgiven.
If you read the fine print on the Public Service Loan Forgiveness program, you’ll notice that Federal Perkins loans are not eligible for the program.
The only way to get around this is to use a Direct Consolidation Loan, but only the payments you make under consolidation actually qualify for the 120 payments needed to receive Public Service Loan Forgiveness.
Which forgiveness program is right for you?
Even if you are technically eligible for multiple student loan forgiveness programs, you’ll only be able to take advantage of one. So how do you know which program to pursue?
“Upfront loan forgiveness is best if you are unsure whether you will be sticking with the career for the ten years required for Public Service Loan Forgiveness,” explains Kantrowitz.
He adds, “An upfront loan forgiveness program forgives a portion of your student loan debt each year you are in repayment.” An example would be the Teacher Cancellation for Federal Perkins Loan program, which forgives a percentage of your debt each year.
On the other hand, there is back-end loan forgiveness, which “requires completion of the service before forgiving the remaining debt.” Public Service Loan Forgiveness would fall under this category.
If you’re unsure you can commit to a full ten years of service, opting for an upfront forgiveness plan may be best. Additionally, if your debt is actually less than your annual income, there is little benefit for you to pursue Public Service Loan Forgiveness.
However, if your student loan debt far outweighs your annual salary and you are committed to a life of public service, the public service program may be a good fit. Unlike the Teacher Loan Forgiveness program, you can pursue a variety of jobs in the nonprofit or government sectors and still qualify for Public Service Loan Forgiveness.
The secret to choosing the right student loan forgiveness program
There are many student loan forgiveness programs out there and you may qualify for more than one. But in order to pick one, you need to consider a few things first:
- How much of your student loans will be forgiven?
- What are the eligibility requirements? (This is super important, as you may not qualify after you read the fine print.)
- What are the service requirements? (time, location, employer, etc.)
Maybe some upfront loan forgiveness programs will help you lower your debt in a shorter amount of time, whereas back-end loan forgiveness programs may be more time-intensive but forgive all of your federal student loans.
There’s no right or wrong answer, it just depends on how much time and service you are willing to commit in exchange for loan forgiveness.
One final note: Before pursuing student loan forgiveness, understand if the forgiven amount will be considered taxable income. If it is, you may be hit with a surprise tax bill.
Whatever you choose, make sure you qualify before committing to a certain path and ensure it’s worth the amount forgiven in exchange for your service.
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