Student Loan Forgiveness [What You Need To Know]

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People who are planning on going to college have a lot to consider. They have to decide on what college they should attend, what course they want to study, and what type of career they will get after their course has been completed.

This is a lot of pressure because these decisions that the person will make can change their entire life. 

On top of these difficult decisions, most young people in America apply for a student loan, which can take years to pay back. You, like many others, might have heard about student loan forgiveness, and you might be wondering whether or not it is the right road to go down.

During these unprecedented times, student forgiveness loans seem to be constantly changing, so getting your head around it can prove challenging. If you have built up a lot of debt while studying, it might be something that interests you. 

What is it?

Student loan debt is rising year by year. Unfortunately, with unemployment on the rise, graduates sometimes struggle to find work. Even if they do manage to find work, their wages might not be enough to pay their loan. To ease the burden, lots of Americans turn to student loan forgiveness. 

Student loan forgiveness has been around for over twenty years, and it is a government plan that was created to help people pay off college loans. However, not everyone is eligible for it, so if you don’t meet the specific requirements, you won’t be able to get it. It is the process of canceling the money you have borrowed while in college or discharging it.

One of the best things about the program is that it won’t affect your credit, so if you are applying for a mortgage or a loan, the lenders won’t consider the student loan. Many find the program a great way of paying back what they owe. 

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Paying back loans is never easy, especially if you have just graduated and you want to start your new life in the real world. Qualifying for a student loan forgiveness program can be life-changing. Even if it doesn’t help you pay off 90% of your loan, but it helps you pay off a small amount of what’s owed, it can make a big difference. 

Who Qualifies for Student Loan Forgiveness?

If you have borrowed money and you are wondering whether or not you qualify for student loan forgiveness, then you’re not alone. Lots of folks find out they could have qualified, but by the time they realize it’s already too late. These people often end up forking out a lot of their hard-earned money on loans when they don’t need to. It is one of the easiest ways to get out of debt, so borrowers should know if they qualify. 

  • Teachers: Teachers can qualify for a loan forgiveness program that has been developed specifically for teachers. Teachers who work in a school that qualifies might be eligible for the program. However, just because you have worked in a school for a few months don’t assume you will qualify. Most teachers will have to have worked in the school for an extended period, often for several years if they are to qualify. Also, only teachers who are working full time can take advantage of the program.
  • Soldiers: A lot of people join the military because it helps them pay for college. However, not every branch in the military is the same, so you might want to research the different options available before you apply. Different branches will have different loan programs, so speak to a financial advisor or someone who is already involved with the military before you decide on what to do.
  • Doctors: Training to become a doctor can take several years, so it is not surprising that doctors often owe a lot of cash. To help doctors eliminate debt, there are several different student loan forgiveness programs available to doctors, including repayment programs and grants. 
  • Public Workers: If you decided to go into public service, then you should qualify for the program. Those who work for non-profit organizations or for the government should apply for student loan forgiveness. 

These are just a few examples, but there are other programs in place to help nurses, civil servants, and social workers too. 

What you Need to Know Before Consolidating your Loans

It might make sense to consolidate all the loans you have taken out into one payment plan, but you might end up losing your credit for those payments. Paying back multiple loans can be frustrating, so to make it easier for yourself you might want to pay them together into one low payment, but if you have already made payments to Public Service Loan Forgiveness, you could lose your credit. 

Once you have graduated, you should consider consolidating. Each time you pay back your loan, it will be counted towards the loan forgiveness. If you are finding it difficult to pay back what you owe, consolidation might prove beneficial. It will help you pay back a figure you can afford. 

Pros: Student Loan Forgiveness

The government wants to encourage young people to start their own businesses, but becoming an entrepreneur isn’t easy, especially if you already owe a lot of money in student loans. The number of people starting their own businesses has declined over the past thirty years, and according to a recent survey, approximately fifty percent of respondents claimed their student debts affected their chances of starting a business from scratch.

Being debt-free gives young people a better chance of building a business, and creating jobs for others.

A lot of young people fail to enter the property market because of their student loans. Student loan forgiveness programs help them pay off the money they owe, making it easier for first-time buyers to invest. 

Getting rid of debt might seem impossible, but if you go ahead with the PSLF program, you can pay off your student debt in a short space of time. It gives you the opportunity to become debt-free so you can continue living your life without having to pay back large student loans. 

Borrowers will have to have made at least one hundred and twenty monthly payments over ten years if they hope to qualify. If these payments have been made over a decade, the rest of the loan will be forgiven. Plus, you won’t be forced to pay tax on the remaining amount that has been forgiven.

Cons: Student Loan Forgiveness

Although there are lots of borrowers who like the idea of these programs, it can have a negative financial impact on taxpayers. According to reports, Warren’s fifty thousand loan forgiveness proposal will end up costing American taxpayers around one trillion dollars.

America’s current president, Joe Biden, has also a proposal in place that will help pay off ten thousand dollars of each student’s loans, but it would end up costing the taxpayer almost four billion dollars. 

Although millions of students can benefit from these programs, attending college isn’t getting any cheaper. The rising college costs can put people off from going to college, even if they qualify for a student loan forgiveness program.

The cost of attending college to get a degree seems to be constantly rising, which makes eliminating student loans even more difficult.