Sometimes, managing student debt can be overwhelming. Refinancing is an option for some but there is also an alternative that can be even better. Student loans can be forgiven under certain circumstances and four main categories are eligible for such programs.
- Public Service Loan Forgiveness
The public service loan forgiveness only applies to individuals that work in public service or for a non-profit organization. Some paperwork needs to be filed and can grand student loan forgiveness for all your federal student loans. The amount of student loan debt deleted or forgiven is not taxable thus you do not have to pay any extra taxes. To qualify for this forgiveness program you need to have at least 120 on-time monthly payments.
2. Teacher Loan Forgiveness
Another category of adults that qualify for student loan forgiveness is teachers. To be eligible for the program, you need to have practiced full-time for five consecutive years. You must have a low-income and if you qualify, you can receive up to $17,500 of your debt forgiven. The only exception for this program is PLUS Loans and Perkins loans.
3. Disability Loan Forgiveness
This loan forgiveness program makes everyone that suffered from total and permanent disability eligible. If you apply for the loan forgiveness and get approved, all your student loans are forgiven and you do not have to pay back anything.
4. Bankruptcy Student Loan Forgiveness
Bankruptcy is the result of financial hardship and nobody should find themselves in this position. When filing for bankruptcy, you can apply for student loan forgiveness. This type of forgiveness does not completely remove the debt. Instead, you are requested to make payments to the best of your ability given your situation. You are expected to find a workable payment plan. You will also be required to provide proof of your financial hardship and show good faith attempts to repay your student loans.