Understanding Student Loan Forgiveness
Understanding Student Loan Forgiveness: The Complete Guide to Unpaid Interest, Deferment, and Repayment Plans
Student loan forgiveness is a government program that forgives the remaining balance on federal student loans for students who meet certain eligibility requirements. The program was created in 2007 with the passage of the College Cost Reduction and Access Act.
In order to be eligible for student loan forgiveness, a borrower must have worked for 10 years in a public service or nonprofit job and have made 120 monthly payments on their loans. They also must have had an undergraduate degree or graduate degree from an institution of higher education which participates in the Direct Loan program.
The public service jobs are those that are:
1) full-time positions; 2) with federal, state, local, or tribal government entities; 3) with 501(c)(3) nonprofit organizations; 4) with AmeriCorps programs; 5) Peace Corps volunteers; 6) full-time teachers at elementary schools and secondary schools that serve low-income families; 7) healthcare providers providing care to low-income
How to Apply for Income-Based Repayment or Income-Contingent Repayment Plans
The Department of Education has introduced a new repayment plan called the “Based Repayment.” This new plan is a more affordable option for borrowers who are not eligible for income-driven repayment plans.
The Based Repayment is available to all federal student loan borrowers and offers a set monthly payment amount that is based on the borrower’s income and family size. The monthly payment amount can be adjusted annually, with an increase in payment if the borrower’s income increases or decreases.
The Department of Education estimates that more than 70% of borrowers will qualify for this plan, which could save them up to $50,000 over the life of their loans.
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