What to Know About Student Loan Forgiveness


Student loans can prove to be a heavy burden once a student enters the workforce. Forbes contributor Zack Friedman points out that student debt ranks higher than even credit card debt. Luckily for some former students, forgiveness programs are available to discharge part or all of their schooling debts.

Loan forgiveness based on occupation

One of the most common and varied methods of loan forgiveness is based on one’s occupation. However, this isn’t applied to every field. According to Melanie Lockert of Student Loan Hero, these programs are usually restricted to medical professions, lawyers, teachers, public servants and members of the armed forces.

Within those groups, certain restrictions apply. For nurses to qualify for the NURSE Corps Loan Repayment Program, for example, nurses must work as a registered nurse, nurse practitioner or nurse faculty member at an accredited school of nursing, and must serve in a critical shortage area with a high-needs population. For doctors, loan forgiveness programs generally are offered in exchange for the doctor working at an approved site for a certain amount of time. Lawyer loan repayment programs are offered mostly to those who work for the Department of Justice or as a public defender. These above programs are offered through third-party organizations.

For federal programs, according to the Federal Student Aid Office, teacher loan repayment is contingent on the location of the teaching position, with a federal program offering help to teachers at low-income schools. Also, the government offers loan forgiveness to those who work full-time for a qualified public-service employer (such as government organizations and not-for-profit organizations) while making income-based loan payments for 10 years.

For military personnel, Lockert points out that the Army, Navy, Air Force, and National Guard all offer their own forms of loan repayment programs for federal loans. Most of these, however, have a maximum repayment cap of about $50,000-65,000, unless the debt-holder is a doctor, in which case that cap rises to $120,000.

Loan forgiveness based on life events

In addition to occupational repayment or forgiveness programs, student loans may also be removed due to certain negative life events.

According to the Great Lakes Higher Education Corporation, which services student loans, some debts may be discharged if the school the student is attending closes while they are enrolled or shortly after the student withdraws. According to the Federal Student Aid Office, though, this does not apply for students who withdrew more than 120 days before the school closed, who transferred their credits to another school to finish a comparable program or who have completed all coursework for the program already.

The Federal Student Aid Office also outlines a few more special circumstances that would result in remaining debts being discharged. Two of these programs involve the student’s health. First, in the event of the former student’s death, all student loan debt is discharged. Second, the person can have their debts discharged if they become totally and permanently disabled and can show proper documentation.

If the loan was taken out fraudulently, either due to the student’s identity being stolen or the school approving the loan when the student is ineligible for the program, the debt can be discharged.

Loans may be discharged in whole or in part due to a bankruptcy, but the Federal Student Aid Office lists bankruptcy discharges as only happening “in rare cases,” when the student can prove that the loans would impose “undue hardship” upon the person and their dependents.

These loan forgiveness programs are certainly helpful to those who qualify. Those who don’t, though, should consider alternative income-based repayment options, or loan consolidation with lower interest rates or monthly payment amounts.

 

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