If you’re among the 70 percent of American college graduates with student loan debt, chances are, you’d do just about anything to reduce the number of monthly payments.
With student debt a growing problem, many Americans lose sleep over how they’re going to make this month’s payment, and grow increasingly frustrated with high interest rates.
Luckily, there are several debt relief programs out there that offer loan reduction and forgiveness.
Read on to learn more about how they can change your life.
1. Obama Student Loan Forgiveness
We know that the first option on our list of debt relief programs is a bit of a mouthful, but it’s also one of the most popular options out there.
These direct loans already come with “built-in” debt forgiveness that will come into play at the end of the term of the loan.
If you still have an unpaid balance at the end of your loan’s life, the Department of Education forgives the balance.
Keep in mind, however, that you will need to be able to show that you made a concerted effort to actually repay the loan. You will do this by taking part in the wide variety of repayment options available to you, such as standard or graduated repayment.
Additionally, you will usually have to wait 20-25 years before you’re eligible for this option. Be aware that you’ll be taxed on the amount of the loan you’re forgiven for.
2. Public Service Loan Forgiveness
Next up on our list of some of the top debt relief programs?
The concept of public service loan forgiveness.
This is available only to those who have full-time employment in a job classified as “public service.” Often, this means that you need to work with the government, or have a position at a 501(c)(3) nonprofit.
You’ll have to show that you’ve made a minimum of 120 repayments (usually about 10 years), but still weren’t able to fully repay the loan.
Then, you’ll be eligible for having the remaining balance of a federal student loan forgiven by the Department of Education. Beware that you will have to make payments within a direct loan program to be eligible.
The best part?
As of this writing, there is no cap on how much the Department of Education is willing to forgive. Additionally, you won’t be taxed on the forgiveness amount.
3. Loan Forgiveness for Teachers
If you’re a teacher, chances are that you’ve already looked into several student debt relief programs.
The good news?
You have some of the most comprehensive options out there, thanks to the Teacher Loan Forgiveness program. This is because you’ll be eligible for both a reduction in your principal amount and forgiveness.
Of course, as you might have guessed, there are some fairly specific rules you’ll need to follow before applying.
You’ll also need to choose between the two main options for teachers: Teacher Loan Forgiveness or Teacher Cancellation for Federal Perkins Loans.
In either option, your forgiveness amount is not subject to tax. Keep in mind, however, that you need to be teaching in a Low-Income School in order to be eligible.
Teacher Cancellation for Federal Perkins Loans
This second option is a little more complex, so let’s take a more detailed look at it.
You have the chance to have 100 percent of your loan forgiven, but only if you:
- Work as a teacher in a subject area that is currently experiencing a high vacancy
- Work full-time in Special Education with school-age children/toddlers
- Work at a public school
If you fall into these categories, get in touch with the school you took out loans to attend. Here you can file a request for the Perkins Loans Cancellation Forms.
It’s the school, not the Department of Education, that will decide if your loans are eligible to be forgiven.
You’ll need to stick with your teaching for a full five years in order for 100 percent of your loans to be forgiven.
4. Military College Loan Repayment Plan
Have you already taken on debt, but are now thinking about becoming a member of the military? Are you already an active duty military member, but now want to join the reserves?
If so, then you may be eligible for the Military College Loan Repayment Program.
Keep in mind that the process and the possible forgiveness amount will vary based on the specific branch of the military you’re in. You can only be forgiven for $65,000, and you’ll still need to pay your interest.
5. Total and Permanent Disability Discharge
If you’ve taken out federal student loans and have suddenly faced a devastating injury or accident that has left you unable to work, you’re likely eligible for the last option on our student debt relief programs.
The Total and Permanent Disability Discharge Program requires certification from a doctor plus an SSDI or SSA award. You might also need to bring documentation from the VA.
If you qualify for this program, you won’t be able to apply for student loans again. Additionally, you’ll be taxed on the forgiveness amount.
Need Further Help Understanding Student Debt Relief Programs?
Thanks to this post, you now have a much better understanding of the possible student debt relief programs out there.
As you see, there are various options available. Choosing one depends on your individual needs.
However, we know that applying for and proving eligibility for these programs can be a challenge to figure out on your own.
That’s where we come in.
Contact us today to learn more about how we can help you to eliminate your debt. Book a free consultation today, and get one step closer to becoming debt-free.