Understanding Student Loan Forgiveness
If you have heard of student loan forgiveness but don’t quite understand what it is, you will want to read this. We are going to discuss the most frequently asked questions about student loan forgiveness. When you are done reading, you should have a good idea how student loan forgiveness works and if it is a good choice for you.
What is Student Loan Forgiveness?
Loan forgiveness began in October of 2007 with the passage of the College Cost Reduction and Access Act. It allows for the remaining balance of student loans to be forgiven after 120 payments are made on time provided certain conditions are met.
Are all student loans eligible for forgiveness?
No! Only loans that are under the Direct Loan Program qualify. If your loan was not made under the direct loan program, you will need to consolidate your existing loans into the program.
I am five years into my loan. Does this mean that I will be eligible for forgiveness in 5 years?
No! The Act stipulates that 120 payments must be made after CCRA passed. This means that the earliest that any loans will be eligible for forgiveness is 2017.
What do you have to do to qualify for forgiveness?
You must work in a public service profession for the entire 120 months that payments are being made, including when you apply for forgiveness.
Can anyone who works in public service qualify?
No. The program is designed to reward those who dedicate their professional lives to public service and by doing so accept a very low salary. Because the term of student loans is 120 months and the program only offers forgiveness after 120 months, only people that qualify for Income Based Repayment plans will benefit from it. This means that you have to have a low income and relatively high debt level to qualify.
Are there any other conditions?
Yes, your student loans must be in good standing and may not be in default.
What type of jobs qualifies as public service?
Jobs that qualify you for the program include: policemen, firemen, government, military, public education, public health, public library, public child care, public law and emergency management. Pretty much any public service career qualifies.
Hopefully by now, you have a good idea of what loan forgiveness is, and if it is a program that you may be able to benefit from.
Wendy Black Polisi is the founder of creditrepaircollege.com. To learn more about credit repair, credit restoration, Christian debt reduction and how to get a bad credit mortgage please visit her on the web.
