If most people were asked, they would wish their student loans be scrapped off as they are normally a huge burden to them. This no longer has to be a wish as Student Loan Forgiveness Programs makes this possible. Do not be fooled however as this is not a quick fix solution as it works in such a way that borrowers are able to erase what remains of their loan after paying for a number of years. Most of the programs are also linked to low paying professions such as public defenders and teachers. On the other hand, other has certain restrictions. Below you will find some of the options you can work with:
Public service program- this is a student loan forgiveness program that is specifically designed for individuals who work for local, state or federal government jobs or at non-profit organization that have been designated for tax exemption 501(c)(3). The program works in a way that if anyone manages to make 120 on time payments monthly on the student loans and also works towards qualifying job for a decade they can apply to have the balance of the loan forgiven. The amount that is forgiven is usually not taxed. Only those dealing with federal Direct Loans can qualify. However, some loans like Perkins Loan and Federal Family Education loan can be consolidated to become a Direct Loan. No one has benefited from the program as it was only established in 2007.
Income based repayment
Under this student loan forgiveness program, borrowers can qualify to get reduced monthly payments. After paying the loan for 25 months, the remaining balance can be forgiven. It is however important to note that the forgiven amount is normally taxed like income. This means that you might have to pay an amount to IRS that is lower that the total amount that has been forgiven. The program is designed for individuals whose federal loan dent is relatively high when compared to family size and income. The lender is the one who determines whether you are qualified for this.
Pay as you earn plan
This is another option people have when looking for student loan forgiveness programs. Borrowers can apply to have their monthly payments reduced and after they have paid for a total of 20 months, what remains can be forgiven. The amount that remains is taxed like income. The program is ideal for persons who have high level of federal student loans when compared to their income. Only people who took their first loan after 1st October 2007 can qualify for the loan. You can use an online calculator from the Department of Education to find out if you qualify.
There are also other student loan forgiveness programs you can take advantage of depending on the type of job you have. For instance, teachers can find out if they can apply for teacher loan forgiveness. Most of the time, they have to have worked in the institution for 5 consecutive years to receive forgiveness of up to $ 17, 500 on some of the federal loans.