While it might sound too good to be true, you really can have your student loans forgiven. That is, assuming you meet a certain set of qualifications.
So yes, student loan forgiveness is a real thing.
What Does It Mean to Have a Student Loan Forgiven?
Some people qualify to have part or all of their student loans forgiven, meaning they no longer have to pay on that portion of the balance. This is also referred to as having a student loan cancelled or discharged. These things have almost the same definition; the only difference being student loan forgiveness usually coincides with meeting employment requirements, while discharge is for outside causes, such as a permanent disability.
It’s important to know your student loans will only be forgiven or discharged if you meet certain standards necessary for receiving that aid. Students and potential students should also acknowledge they won’t have their student loans forgiven if they don’t finish school. You still have to pay for an uncompleted degree.
And, those loans will continue racking up interest until they’re paid off.
One exception to this is if a school closes down permanently before you can complete your degree. Make sure you understand the ins and outs of student loans before you sign up for them at all. Life can take many unexpected turns. Taking out a lot of loans when you’re young can limit your ability to make larger financial moves down the line, especially if you don’t end up finishing school.
What Are Your Options for Reducing Student Loan Debt?
As you can probably imagine, there’s a lot to learn when it comes to applying for and receiving student loan forgiveness. The Federal Student Aid website has an exhaustive list of the different ways you can have your student loans forgiven.
Let’s look at a few of the more common scenarios:
Public Service Loan Forgiveness: People who work for the government or a non-profit might be able to get this type of loan forgiveness. PSLF forgives your remaining balance on Direct Loans if you’re working for a qualifying employer and have made 10 years of payments.
- Teacher Loan Forgiveness: This is another type of loan forgiveness based on your employer. Individuals who teach at a low-income school for five years in a row can potentially have up to $17,500 forgiven.
- Loan Discharge: You can have loans discharged for a variety of reasons, including school closure, permanent disability, or death. It’s sometimes possible to discharge a loan in bankruptcy. But this isn’t always the case with student loans.
- Debt Relief Programs: If none of the above options are available to you, it’s possible a debt relief program is your best bet for making your unsecured debts more manageable. Organizations such as Freedom Debt Relief can offer solutions for reestablishing your financial life.
How to Spot Student Loan Forgiveness Scams
There are all kinds of financial scams out there. If money is involved, someone is going to find a way to commit fraud around it. This is why you need to be on the lookout when seeking student loan forgiveness. Yes, there are certainly legitimate programs out there; but there are fake ones as well.
One of the best ways to spot a student loan forgiveness scam — and this applies to financial scams in general — is if the organization is making a guarantee. There’s no guarantee you’re going to get your student loans forgiven. There are always certain criteria you need to meet to qualify for various kinds of aid. If someone is saying you’re going to get it without even knowing the basic details of your situation, it’s safe to say they’re not legitimate.
Student loan forgiveness is a great way for those who qualify to get out of debt much sooner than what would otherwise be possible and it is doable under the right circumstances — as highlighted above.