In the previous post, there was discussion about what causes student loan debt and its staggering statistics. Now, that many of us have taken out student loans to finance our college education, we have to pay it back. As a result, there are ways on managing that student loan debt.
But how?
One way of managing your student loan debt is through student loan forgiveness programs. This way is not usually very easy to get, however, there are a few ways on getting your loans forgiven. First, it depends on which career path that you have taken, e.g. healthcare and lawyer, just to name a few. More ways of managing student loan debt are based on the number of years that you have made payments on time on a qualifying repayment plan and the ability to work steadily and to make your student loan obligations. The first two options that I mentioned can only be achieved with federal student loans and the last option can apply to those that have private student loans.
There are a few of these programs that are available for you to manage your student loan debt: Public Service Loan Forgiveness Program,or PSLE, Loan Forgiveness after twenty or twenty-five years of On-Time Payment, and of course, Student Loan Discharge.
Public Service Loan Forgiveness, or PSLE: This program was established for the purpose of encouraging qualified college graduates to pursue career in the public service sector and at the same time reducing their debt. However, to get this type of loan forgiveness, you must have employment in the public service sector, consolidate your federal student loans with a qualifying repayment plan, and be making on-time payments for ten years.
To meet the requirements for this loan forgiveness program, you have to be making payments either from the income-contingent, income-based, pay-as-you-earn, or the standard repayment plan. As of 2015, there has been no individual that has received loan forgiveness under this particular plan. The first batch of individuals that will qualify for the Public Service Loan Forgiveness program will meet these requirements will be a couple of years from now--in 2017--and is only available to federal student loans. This is not available to private student loans.
The following career paths that are eligible for the Public Service Loan Forgiveness program are: education, law enforcement, health, public law, and veterinary medicine.
Loan Forgiveness After 20 or 25 Years of On-Time Payments: This loan forgiveness programs also depends on the numbers of years that you have been making payments on time for over ten years under a qualifying repayment plan. In contrast to the Public Service Loan Forgiveness program, you are not required to work in a particular career field to meet the requirements for loan forgiveness based on your repayment history.
In order to meet the qualifications for this loan forgiveness program, you have to be part of the pay-as-you-earn repayment plan within your twenty years of payments and be enrolled in the income-contingent or income-based plans. Under this program, you will have the lowest monthly payments. However, you have to meet the requirements of financial hardship, such as unemployment. You can stay in this program even after your hardship situation has been resolved. Like the Public Service Loan Forgiveness program, this is only available to federal student loans. Private student loans are not eligible.
Student Loan Discharge: This is another way of getting student loan forgiveness. However, this is only used in special and really rare circumstances, as in if you are disabled permanently or death. This type of loan forgiveness is generally awarded by a judge. Federal student loans and private student loans can qualify.
Although many people that have borrowed student loans in the past feels like there is no hope for repay their student loans, now there is hope in repaying your student loans. One of these option are through student loan forgiveness programs. Best in luck for repaying those burdensome student loans!
I will talk to you later. Until then, Happy Savings! :-)
Next post: The Ugly Truth About Student Loans-Part 3-Student Loan Consolidation
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