Are you interested in learning the facts about student loan forgiveness?
Student loan forgiveness has become such a hot topic for most people.
Back when you were in high school, when you were trying to figure out your next steps in life, you might have been told that student loans were the only way to pay for college.
And now that you're out of college with a large amount of student debt, you're probably wishing you would've found other options. We are right there with you!
Student loan debt is a complete disaster and the government appears to have no plans to stop adding to the debt total.
That is to say, it may appear that the government created student loan forgiveness programs to actually help reduce the stress of those faced with student loan debt. Think again.
So, let's talk about the reality of student loan forgiveness and if it's a good strategy.
What is student loan forgiveness?
A student loan forgiveness program is a government program that will forgive or cancel the remaining balance of a borrower's student loans.
However, this requires that certain conditions and qualifications be met. Sounds awesome, right? Well, not so quick.
As a result, a lot of people apply for student loan forgiveness hoping they're approved and won't have to pay part or any of their student loans back.
Certainly, we've all had the thought of taking out loans and get them forgiven later.
On the other hand, getting approved for student loan forgiveness is almost as rare as winning the lottery.
Ultimately, the U.S. Department of Education has very strict requirements and depends on a lot of different factors such as how many qualifying payments you've made, where you work, etc.
Student loan forgiveness programs
First off, there are multiple options for student loan forgiveness. However, the most common ones are Public Service Loan Forgiveness (PSLF), Disability Discharge Forgiveness, and Teacher Loan Forgiveness.
That is to say, these are all different programs with different criteria.
1. Public Service Loan Forgiveness
This is one of the most talked-about programs out there. To get approved, you'll need to:
- Work full-time for a qualifying employer (non-profit or government).
- Have Direct Loans.
- Make on-time payments for 10 years and have proof.
- Have an income-driven repayment plan (meaning your payment is based on your income).
This program was first launched in 2007 and as of March 2020, 188,396 applications have been submitted. Out of those applications, only 3,174 were actually approved. In addition, only 1,831 people were granted student loan forgiveness. That's only 1.3%! According to Forbes, 55% of people were rejected for not having qualified payments, 24% for not completing the form correctly, and 15% for not having eligible loans. In fact, if you're one of the lucky ones who were approved, proceed with caution. In 2017, some borrowers, who were previously qualified, received letters of denial years later. Good, right? Ultimately, this means someone spent 10 years trying to qualify for loan forgiveness while at a low-paying job, only to find out they wasted their time. Just awful! On the other hand, they could have simply paid off their loans and became debt-free a lot faster instead of waiting around. Related content:
2. Disability Discharge Forgiveness
Being totally or permanently disabled, you could qualify for this program. Therefore, your federal student loans or Teacher Education Assistance for College and Higher Education Grants (TEACH) could be discharged.
But, you must prove through one of the following to qualify:
- Your physician
- Veterans Affairs
- The Social Security Administration
Another key point, if your loans are actually approved for discharge, you must be checked for 3 years to make sure you're truly disabled. As a result, if you're found to not be disabled, you'll have to start making those payments again.
3. Teacher Loan Forgiveness
A perk of being a teacher is having the ability to get rid of up to $17,500 of federal student loans. However, there are requirements you must meet, and here are a few of them:
- Teach full-time for five academic years in a row.
- Your loans must be taken out before the end of your five years of teaching.
- Teach low-income students at an elementary or high school level or an educational service agency.
- Make sure you've never had an outstanding balance on your loans.
This program can be helpful for those in the education field. Be certain you understand the program and the requirements you must meet to be approved.
Should I apply? And, is there a better way?
To be honest, the student loan forgiveness plans aren't really the best plan for financial freedom. To clarify, most of these programs have strict requirements that can be changed in a second.
Most importantly, it's not the best idea to stay in a low-paying job with the hopes of receiving loan forgiveness in 10 years. These programs are good as a safety net but not as Plan A.
The best way to approach your loans is by paying them off as fast as possible. Morally, you borrowed the money and should pay it back. Take control of your financial future rather than depending on the government.
1. Get on a budget
Certainly, you may often feel that your paycheck can't cover your bills each month. We get it. However, you need to be on a strict budget and cut your expenses where you can.
Take control of your budget using a budgeting method that works for you and your situation.
Most importantly, cutting your expenses and getting on a budget will make you feel like you gave yourself a raise. But, don't go spend it all on things you don't need. Throw it at debt!
In addition, consider refinancing your student loans for a lower interest rate. LendKey is a great option to use and you can find the best student loan refinancing rates and save money over time.
Therefore, use our link to get the best rates by click here.
2. Make a decision to change your life Important to realize, your future depends on what decisions you make today. That is to say, getting out of debt fast means you need to stop taking out more debt. Also, find ways to increase your income to speed up your financial plans. Consider side hustles or starting a business. For example, here are a few of our favorite side hustles:
- Start a blog on Bluehost in less than 15 minutes.
- Save money on shopping with Ibotta
- Use Swagbucks to save money while you shop
To emphasize, your student loans don't have to be around forever. Certainly, you've heard someone say "I'll never pay off my student loans." This creates a sense of doubt and will have you looking for a shortcut to getting out of debt.
Final words - the facts about student loan forgiveness
To sum it up, we had the same thought thinking we could get our loans forgiven by working in public service.
But, once we researched the programs and saw the odds of actually getting approved, we decided to attack our loans and just pay them off.
In other words, you don't have to be in debt forever. And, no student loan forgiveness plan is a guarantee. As stated earlier, you don't want to be in a position where you make minimum payments for 10 years hoping you get approved and then don't.
Above all, forgive yourself and create your own forgiveness plan. Most importantly, find ways to get out of debt as fast as possible.
Have you applied for a student loan forgiveness plan?
How much student loan debt do you have or plan to pay off?
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