Can You Double Up on Student Loan Forgiveness Programs?

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If you have 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.

There are multiple student loan forgiveness programs, including Public Service Loan Forgiveness (PSLF) and Teacher Loan Forgiveness. You could also have your loans forgiven through an income-driven repayment plan or a state-funded or career-specific program.

But with so many programs, you may be wondering: Can you double up on student loan forgiveness programs? We’ll talk about this and more.

Taking advantage of multiple student loan forgiveness programs

Take, for example, someone working as a teacher at an eligible public or private school. With that career, you could pursue Public Service Loan Forgiveness, but you could also be qualify for Teacher Loan Forgiveness.

Under the PSLF program, your remaining student loan balance is forgiven after making 120 qualifying payments while working for an eligible government agency or nonprofit for 10 years.

But a lot could happen in that time. Can you apply for Teacher Loan Forgiveness while also pursuing PSLF?

Good question. The answer? Sort of.

You can pursue one or more student loan forgiveness programs, but when it comes time to forgive your loans, the qualifying payments will only count toward one program.

Many of the student loan forgiveness programs have different qualifications, requirements and timelines, meaning it’s not possible to double dip at the same time.

To see if your loans qualify for PSLF, check out this help tool from Federal Student Aid.

Can you get student loan forgiveness twice?

As noted, while you may technically qualify for both PSLF and Teacher Loan Forgiveness, you can only take advantage of one program at any given point.

But there is an exception if you handle it consecutively. If you are approved for Teacher Loan Forgiveness after five years, you could start making another 120 payments to qualify for PSLF.

This comes with obvious caveats since it would take at least 15 years. But if you qualify for PSLF and are on an affordable income-based repayment plan after having certain loans forgiven through Teacher Loan Forgiveness, it’s a possibility for you.

Still, as discussed, many student loan forgiveness programs have qualifications that cancel each other out. For example, the Teacher Loan Forgiveness program is for student loan borrowers who took out subsidized or unsubsidized student loans. Under this program, qualified teachers can get up $17,500 of their loans forgiven after five years.

But Perkins loans are not eligible under this program or PSLF. If you have older Perkins loans — no new loans were provided after September 2017 — you could consider a direct consolidation loan to be eligible for PSLF, but only the payments you make under consolidation qualify for the 120 payments needed.

What teachers should do next

If you’re a teacher and think you’re going to work in education for 10 years, you can fill out the PSLF Employment Certification Form each year that you work or if you change employers. (You’re 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 10 years — at that point, you submit an application for loan forgiveness. It’s also important to know that a recent data from the U.S. Department of Education shows that less than 1% of PSLF applicants have had their loans wiped away.

What about if you’re eligible for Teacher Loan Forgiveness, too, because you work at a qualifying school? After three years of teaching, you realize that you aren’t willing to commit the next seven years to getting your loans forgiven through PSLF. At this point, you may want to take advantage of the five-year Teacher Loan Forgiveness program.

But to get forgiveness you’d need to fill out the Teacher Loan Forgiveness application to get a portion of your loans forgiven.

How marriage affects your student loan repayment options

Married couples face a choice when it comes to repaying student loans and deciding whether to pursue forgiveness: Should they file taxes jointly or separately? Both options have advantages, and both can affect your repayment strategy in different ways.

For example, filing separately can reduce your monthly payments, particularly if your spouse doesn’t have any student loan debt. The reason is simple: Filing as an individual makes it appear as though you have a smaller income, meaning you’ll owe less under an income-driven loan repayment plan. And if you’re paying less each month, that’s more money that can be forgiven once you hit the five- or 10-year forgiveness mark.

But this strategy has some downsides, too. Filing separately may mean paying higher taxes — especially if you earn more than your spouse. Depending on your income, you might end up paying more in higher taxes than you’re saving on your student loans. Also, this strategy is only helpful for people with a loan repayment plan that changes based on their income. So if your repayment plan is not based on income, or if you earn more than your spouse, you may want to consider filing jointly as a married couple.

But it’s impossible to know for sure until you crunch the numbers. Student Loan Hero offers calculators on everything from income-based repayment to Public Service Loan Forgiveness to consider your options.

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 at a time. 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 10 years required for Public Service Loan Forgiveness,” said student loan expert Mark Kantrowitz, publisher and vice president of research at Savingforcollege.com.

He added: “An upfront loan forgiveness program forgives a portion of your student loan debt each year you are in repayment.” An example would be federal Perkins loan cancellation.

On the other hand, there is back-end loan forgiveness, such as PSLF, which Kantrowitz said “requires completion of the service before forgiving the remaining debt.”

If you’re unsure you can commit to 10 years of service, opting for an upfront forgiveness plan may be best. Additionally, if your debt is less than your annual income, there is little benefit for you to pursue PSLF.

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 Teacher Loan Forgiveness, you can pursue a variety of jobs in the nonprofit or government sectors and still qualify for PSLF.

The secret to choosing the right student loan forgiveness program

There are many student loan forgiveness programs, and you may qualify for more than one. But to pick one, you need to consider a few things:

  • 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? (Consider time, location and employer.)

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 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.

Dillon Thompson contributed to this article.

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1 Important Disclosures for Earnest.

Earnest Disclosures

To 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 5.79% APR (with Auto Pay). Variable rate loan rates range from 1.99% APR (with Auto Pay) to 5.64% 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%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate 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 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of July 31, 2020, and are subject to change based on market conditions and borrower eligibility.

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2 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.

  1. Checking your rate with Laurel Road only requires a soft credit pull, which will not affect your credit score. To proceed with an application, a hard credit pull will be required, which may affect your credit score.
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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.

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This information is current as of September 9, 2020. Information and rates are subject to change without notice.
 


3 Important Disclosures for SoFi.

SoFi Disclosures

  1. Student loan Refinance: Fixed rates from 2.99% APR to 6.09% APR (with AutoPay). Variable rates from 2.25% APR to 6.09% APR (with AutoPay). Interest rates on variable rate loans are capped at either 8.95% or 9.95% depending on term of loan. See APR examples and terms. Lowest variable rate of 2.25% APR assumes current 1 month LIBOR rate of 0.18% plus 2.32% margin minus 0.25% ACH discount. Not all borrowers receive the lowest rate. If approved for a loan, the fixed or variable interest rate offered will depend on your creditworthiness, and the term of the loan and other factors, and will be within the ranges of rates listed above. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. See eligibility details. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. *To check the rates and terms you qualify for, SoFi conducts a soft credit inquiry. Unlike hard credit inquiries, soft credit inquiries (or soft credit pulls) do not impact your credit score. Soft credit inquiries allow SoFi to show you what rates and terms SoFi can offer you up front. After seeing your rates, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit inquiry. Hard credit inquiries (or hard credit pulls) are required for SoFi to be able to issue you a loan. In addition to requiring your explicit permission, these credit pulls may impact your credit score. Terms and Conditions Apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. 

4 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.

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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 September 10, 2020.


5 Important Disclosures for CommonBond.

CommonBond Disclosures

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 0.16% effective August 10, 2020.

Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print to help you understand what you are buying. Be sure to consult with a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time.