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Student Loan Forgiveness

Various programs and methods for repaying your student debts and achieving loan forgiveness.

Income Based Repayment (IBR)

Designed to reduce monthly payments to assist with making your student loan debt manageable. If you need to make lower monthly payments, this     plan may be for you.

Advantages:

  • Pay based on what you earn (about 10-15% of discretionary income)

  •   If IBR payment amount doesn’t cover interest that accrues on loans each month, the government will pay the unpaid interest on Direct Subsidized Loans or Subsidized Federal Stafford Loans for up to 3 consecutive years from date you began IBR.

  • While you have a partial financial hardship, interest that accrues but isn’t covered by loan payments will not be capitalized.
  •  If you repay under IBR and meet other requirements, any remaining balance will be forgiven after 20 years of qualifying repayment.
  • Loan forgiveness after full-time employment at a public service organization while making 120 (10 years) on-time and full monthly payments under IBR—through the PSLF.  
To qualify, you must have a partial financial hardship. You have a partial financial hardship if the monthly amount you would be required to pay on your IBR-eligible federal student loans under a 10-year Standard Repayment Plan is higher than the monthly amount you would be required to repay under IBR. 

Your payment amount may increase or decrease each year based on your income and family size. Once you've initially qualified for IBR, you may continue to make payments under the plan even if you later no longer have a partial financial hardship.

PLUS loans made to parents, consolidation Loans that include underlying PLUS loans made to parents, and private education loans are not eligible for repayment under IBR.

Contact your loan servicer to learn when you can apply and if you are eligible for IBR.  Your loan servicer will answer your questions about the IBR plan and help you to decide whether IBR is the right plan for your situation.

If you are ready to apply for IBR, go to StudentLoans.gov, sign in, and complete the electronic Income-Based (IBR)/Pay As You Earn/Income-Contingent (ICR) Repayment Plan Request.

More information about IBR

Public Service Loan Forgiveness Program (PSLF)

The PSLF Program is intended to encourage individuals to enter and continue to work full-time in public service jobs.

Requirements:
  • Borrowers may qualify for forgiveness of the remaining balance of their Direct Loans after they have made 120 qualifying payments on those loans while employed full time by certain public service employers.
  • You must make 120 on-time, full, scheduled, monthly payments on your Direct Loans.
  • You must make those payments under a qualifying repayment plan. When you make each of those payments, you must be working full-time at a qualifying public service organization.
Qualifying employment:

    Qualifying employment is any employment with a federal, state, or local government agency, entity, or organization or a not-for-profit organization     that has been designated as tax-exempt by the Internal Revenue Service (IRS) under Section 501(c)(3) of the Internal Revenue Code (IRC). The organization must not be a labor union or a partisan political organization.Emergency management
  • Military service
  • Public safety or law enforcement services
  • Public health services
  • Public education or public library services
  • School library and other school-based services
  • Public interest law services
  • Early childhood education
  • Public service for individuals with disabilities and the elderly

You must meet your employer's definition of full-time. For PSLF purposes, that definition must be at least an annual average of 30 hours per week. If you are a teacher, or other employee of a public service organization, under contract for at least eight out of 12 months, you meet the full-time standard if you work an average of at least 30 hours per week during the contractual period and receive credit by your employer for a full year's worth of employment. If you are employed in more than one qualifying part-time job simultaneously, you may meet the full-time employment requirement if you work a combined average of at least 30 hours per week with your employers. For a payment to count as one of the required 120 qualifying payments, you must be a full-time employee at a qualifying public service organization on the date that your federal loan servicer receives your monthly Direct Loan payment. 

More information about PSLF

Teacher Loan Forgiveness

If you are a teacher and have been teaching full-time in a low-income elementary or secondary school or educational service agency for five consecutive years, you may be able to have as much as $17,500 of your subsidized or unsubsidized loans forgiven. 

The Federal Perkins Loan Program has a provision that allows certain teachers to be eligible for loan cancellation of up to 100% if they teach at a low-income school or in certain high-need subject areas. Likewise, teachers with Stafford loans who teach full-time for five consecutive years at a low-income school may also be eligible to have up to $17,500 in loans cancelled.

More information about Teacher Loan Forgiveness

TEACH Grant

It's geared towards teachers who commit to teaching in a public or private elementary or secondary school that serves students from low-income families, enabling participants to earn up to $4,000 a year in grants that can be applied to student loan debt. It requires a four-year commitment and if participants don't complete the program, the grants get converted into a Federal Direct Unsubsidized Stafford Loan—increasing the participant's total debt load instead of decreasing it.

More information about TEACH Grants

Teach For America

This year Teach for America selected 4,100 recent college graduates for training to serve as teachers in urban and rural schools for a two-year period. Those chosen receive a salary and benefits, plus an education award of $4,725 for each year of service, which can be applied to student loans or future education.

More information about Teach for America

Perkins Loan Cancellation and Discharge

For each complete year of service, a percentage of your loan may be canceled. The total percentage of the loan that can be canceled depends on the type of service performed. Depending on the type of loan you have, and when that loan was taken out, you may be eligible to cancel part of or your entire loan if you have served as one of the following: 

  •  Volunteer in the Peace Corps or ACTION program (including VISTA)
  • Teacher
  • Member of the U.S. armed forces (serving in an area of hostilities)
  • Nurse or medical technician
  • Law enforcement or corrections officer
  • Head Start worker
  • Child or family services worker
  • Professional provider of early intervention services

There is no standard application form for Perkins Loan cancellations. Contact the school that you were attending when you received the loan.

More information about Perkins Loan Cancellation and Discharge

Pay As You Earn Plan (PAYE)

Borrowers can apply to have their monthly payments reduced, and after 20 years of payments, the balance is forgiven. Any forgiven amounts are     taxed as income. 

Monthly payments are capped at 10% of your discretionary income, and readjusted each year based on your income and family size. As with the IBR plan, you must qualify for a partial financial hardship to be eligible. Interest is not capitalized (added to your principle, therefore increasing the amount owed) unless you no longer have a partial financial hardship, in which case the amount of interest that may be capitalized is limited to 10% of your original principle when you began using PAYE.

More information about PAYE

State Specific Forgiveness Plans

You may be eligible for a program in a particular state if you are a legal resident in that state, work in one of the selected jobs, have a license for one of the jobs in the state, or went to school there. Search online to see what programs are available to you. Go to the state's website and search around. State specific programs can change or be eliminated based on budget, so keep an eye out.

More information about state repayment programs

Student Loan Reductions by City of Residence

A number of areas of the U.S. have begun to offer student loan reductions as an incentive for educated, young people to move to the community and help revitalize the local economy.

In Kansas, in exchange for establishing residency in one of 73 designated counties, grads receive a tax waver for up to five years and/or cash student loans payments of up to $15,000. To qualify for student loan repayments, you must establish residency in a Rural Opportunity Zone county, hold an associate’s, bachelor’s, or post-graduate degree, and have outstanding student loan balance after living outside Kansas for five or more years prior. A similar program is taking place in Niagara Falls, NY.

More information about loan forgiveness in Kansas

AmeriCorps

Upon successful completion each year as an AmeriCorps member, most corps members are eligible to receive an education award, the maximum amount of which is $5,550 per year (totaling $11,100).  AmeriCorps education awards can only be used toward:

  • Repayment of qualified student loans (a loan in your name provided by a federal or state agency) and/or 
  • Payment of current or future educational expenses at a Title IV institution of higher education (includes most colleges and universities)

AmeriCorps' loan forbearance benefit provides the opportunity for corps members to postpone regular monthly loan payments while serving as an AmeriCorps member. You can use loan forbearance to save for a major expense (car, grad school, etc.), pay off loans more efficiently, or put money toward other responsibilities.

Loans that are in forbearance still continue to accrue interest. AmeriCorps will pay up to 100% of the interest that accrues on your qualified student loans (those provided through a federal or state agency) after each successful year serving as an AmeriCorps member. Interest payments will not be deducted from your AmeriCorps education award.

More information about AmeriCorps Loan Forgiveness

Peace Corps

Volunteers who have outstanding debts under one of the federally administered or guaranteed student loan programs qualify for certain relief during their Peace Corps service. Student loans may be deferred for the full period of your Volunteer service, up to 27 months.

Even though your principal payment is deferred, you must make interest payments on the following unsubsidized loans during your Peace Corps Service: Stafford Loans, Federal Consolidation Loans that include unsubsidized loans, and Federal Direct Loans. You may opt to apply to your lender for forbearance on the interest payment for these loans. The Department of Education pays the interest during the period of deferment for subsidized Stafford Loans and subsidized Federal Consolidation Loans.

More information about Peace Corps loan forgiveness

Zero Bound

Sign up and pledge to perform volunteer community service and payments will be made directly to the loan company

More information about Zero Bound

Employer Benefits


Some companies, even in this economy, still will pay 100% of the cost of tuition and fees for graduate school for promising employees. For example, professional services firm KPMG, tech company IBM, and even the IRS are a few of the employers that will completely foot the bill for a graduate education. Other companies will often partially sponsor a student and partially reimburse some of their education costs. 

60 Ways to get rid of your student loans

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