Explore your many options for easing the burden of student debt from federal student loan forgiveness programs to restructuring your payment plan.
The end of one’s studies should be the start of an exciting new time in life, full of possibilities. For many students, however, it is the beginning of a long period of struggling to make student loan payments. Student debt can be a real burden. More than half of American students have borrowed money to finance their education and the average graduate of the Class of 2016 carries $37,172 in student debt.
As public awareness of this debt crisis grows, many students are exploring far more affordable options–such as the University of the People. But for those who already have student loan debt, it’s crucial to explore all options for easing this burden.
Here’s a breakdown of different strategies for dealing with student debt, from federal loan forgiveness programs to refinancing:
There are two main categories of federal student loans: Perkins Loans and Direct Loans/FFEL Program Loans.
These types of loans differ both in terms of eligibility requirements and interest rates. If you’re trying to understand the differences, or to determine which type of loan is right for you, check out Investopedia’s helpful compare and contrast here.
Each type of federal loan program has its own forgiveness policies and programs. Let’s take a look at how these options break down by type of loan.
How to apply:
In order to apply for federal student loan forgiveness, you must contact your student loan servicer, which is the company managing your loans.
They will inform you of the next steps you need to take and provide you with the paperwork and forms needed to proceed. For more information about student loan servicers and how you can get in touch with yours, click here.
Federal Perkins Loans Forgiveness Programs
If you took out a Federal Perkins Loan you’re eligible for a host of student loan forgiveness programs.
Who is Eligible?
NURSING: Individuals working as full-time nurses are eligible to apply for loan forgiveness for their Federal Perkins Loans up to 100%.
LIBRARIANS: Master’s degree holders working as librarians in Title I-eligible elementary or secondary schools, as well as in public libraries serving Title I-eligible schools, can apply for student loan forgiveness for up to 100% of their Perkins loans.
HEAD START EMPLOYEES: Full-time Head Start program staffers working in the educational component of the program can apply for forgiveness for up to 100% their loans.
PRESCHOOL TEACHERS: Full-time staff members of a prekindergarten program or child care program can apply for loan forgiveness so long as the program is licensed or regulated by a state.
SPEECH PATHOLOGISTS: Full-time speech pathologists with a master’s degree are eligible to have up to 100% of their loans forgiven so long as they work in a Title I-eligible elementary or secondary school.
SPECIAL EDUCATORS: Full-time special education teachers working with children with disabilities can apply for up to 100% student loan forgiveness so long as they work in a public or other non-profit elementary or secondary school. Special educators working within an educational service agency are also eligible.
TEACHERS WORKING IN SHORTAGE AREAS: Full-time teachers in fields designated at shortage areas such as math, science, and bilingual education (full list of shortage areas can be downloaded here) are eligible for up to 100% percent student loan forgiveness.
EDUCATORS SERVING LOW-INCOME FAMILIES: Full-time teachers working in educational service agencies serving low-income families can apply for up to 100% student loan forgiveness.
EDUCATORS AT TRIBAL COLLEGE OR UNIVERSITY: Full-time members of the faculty at tribal colleges or universities can apply for up to 100% forgiveness.
ARMED FORCES: Individuals who served in the U.S. armed forces in a hostile fire or imminent danger pay area are eligible for up to 50% student loan forgiveness for borrowers whose active service ended on August 14th, 2008. Borrowers whose active service includes or began on August 14th, 2008, are eligible for up to 100%.
FIREFIGHTERS: Full-time firefighters whose service includes or began on or after August 14th, 2008, are eligible for up to 100% student loan forgiveness.
LAW ENFORCEMENT: Full-time law enforcement or corrections officers are eligible for up to 100% student loan forgiveness.
ATTORNEYS: Full-time attorneys working in a federal public organization or as community defenders (for service that includes, began or, or after August 14th, 2008) are eligible for up to 100% student loan forgiveness.
FAMILY SERVICES EMPLOYEES: Full-time employees of a public and non-profit child or family services agencies working with high-risk children and low-income families are eligible for up to 100% student loan forgiveness.
Direct Loan and FFEL Program Loans
Who is Eligible?
TEACHERS: Full-time teachers working for five consecutive years in a designated elementary school or secondary school (or educational services agency) can qualify for up to $5,000 of loan forgiveness. The school or agency must serve students from low-income families, and other eligibility requirements apply.
SPECIAL EDUCATION: Full-time special education teachers working for five consecutive years in a designated elementary school or secondary school (or educational services agency) can qualify for up to $17,000. The school or agency must serve students from low-income families, and other eligibility requirements apply.
PUBLIC SERVICE EMPLOYEES: Borrowers of the Direct Loan Program who are employed as public servants can apply for up to 100% forgiveness of their student loans after having made all the required 120 qualifying monthly payments. More details here.
State Forgiveness Programs
In addition to the above federal student loan forgiveness programs, there are countless state sponsored student loan forgiveness programs. They are too numerous to list here, but the College Investor has published a helpful map showing programs available by state. Select your state and start browsing through the programs to see which ones apply to you.
Dealing with Private Loans – Talk to Your Lender
There are no official private student loan forgiveness programs like there are for federal student loan debt. That said, there are ways to get your private loan debt forgiven – but you may have to get more creative.
The first thing to do if you are struggling with your private student loan payments is to schedule a conversation with your lender. It’s in their best interest that you are able to make your payments, and you may be able to work out an alternative payment plan that works better for you. A guide to alternative payment plans can be found here.
Deferments and Forbearance
Deferment is an option to explore for individuals going back to school or entering the military. This allows you to put off the start date of your loan payments until you finish your degree or service.
In addition to offering deferment plans, many lenders also offer forbearance to borrowers if they are struggling with their loans due to unforeseen circumstances such as illness or loss of employment.
It’s important to note that while both of the above options will buy you some time in paying your loans, interest will still be accruing during the time of the deferment or forbearance.
One can also seek a federal loan deferral – for which interest won’t accrue for borrowers with subsidized loans. Read more info on this here.
Other Ways to Ease Student Loan Debt
If none of the above methods and programs are sufficient, there are a few more avenues you can pursue. The College Investor published a great list of “secret” student loan forgiveness options that you may not have heard of before.
Check out the full list, which includes helpful info on refinancing your loan, restructuring your payment plan, and more.