By Nathan Carmany
As a college graduate from the class of 2000, I was fortunate enough to limit my total student loan borrowing to $2500 through a combination of grants, and academic scholarships, and living at home. Today, the average student is not the benefactor of similar circumstances. If fact, the total amount in student loans in 2004 was $260 billion (1). A rather large number, but the amount of 2004 is still small in comparison to the $1.2 trillion in outstanding loan debt as of 2014, with average graduate borrowings of $33,000 (1.) Personally, we all know or have heard stories of young workers trying to figure out how to find their way out of the crater created by their student loan borrowings. Here, I will outline a few options for student loan debt forgiveness, starting with the two most popular programs.
Public Service Loan Forgiveness
In order to qualify for this program, a person needs to be on a qualifying repayment plan, work at an approved service organization for ten years while making student loan payments, and will need to submit paperwork annually to the student loan provider (2.)
A qualifying employer is almost any level of government, 501 (c) 3 organization, or private company that provides public services. Additionally, the loans need to be issued through the Direct Loans Program. Federal loans through Perkins, FFEL (prior to 2010), Parent PLUS, and private loans do not qualify. However, one can consolidate FFEL and Perkins may be consolidated into the Direct Loan Program (3.)
Teacher Student Loan Forgiveness
This program states the person needs to teach for a minimum of five years and teach at a Title 1 school where 30% of the students are classified under Title 1 (2.). (Title 1 passed in 1965 as a means to reduce “students at risk of failure and living at or near poverty.” (4.)) This plan will only forgive up to $17,500 and the loans cannot have a default status (2.) As a side note, Perkins loans under this structure are treated differently.
State Level Forgiveness Programs
Some states offer an annual debt reduction amount to borrowers employed in specific jobs. Typically, these areas include health services, social work, veterinary services, and legal work (3.)
These are loans normally made by colleges and universities for students in financial need. Cancellation of the debt may take place if you are employed in education, on active military duty, health services, or public safety (3.) As noted earlier, these loans may be consolidated to the Direct Loans Programs which may increase the options for student loan forgiveness.
Individuals in the National Guard, Army, Air Force, and Navy may be covered if serving and holding student loans. Even former military service persons may see relief if there was a transition to the health services field.
After 20-25 years of making on time payments on an income repayment plan, students can get the remaining balances of their student loans forgiven.
The programs listed above may be helpful if you qualify, however, most student loan borrowers will see minimal if any benefit. Each of the programs have numerous details, and the intent of this post is to share the information on a high level.
While completing the research for this post, Gradible.com was found. It is a site that walks someone through the debt relief programs by having one fill out a profile and answering questions.
For those looking seek assistance, the website mentioned above may provide a starting point. It may also help to discuss your details with an advisor, who is knowledgeable about student loans and repayment programs.
Here is an article for Indiana residents