Student Loan Forgiveness: What Does Not Qualify

This is a reasonably popular topic – student loan forgiveness can eliminate whatever is remaining on your federal student loan balance, meaning you no longer will have to pay.

However, student loan forgiveness will only apply in certain situations. It is primarily for those that work in specific fields, like medicine, teaching, and public service. Borrowers who find they are in tough situations, which includes total and permanent disability, may be able to have their federal student loans discharged as well.

Often we get asked if those who are struggling to make their payments or those who spent years paying their student loans might qualify for student loan forgiveness. Regrettably, neither of these situations is enough for your debt to be erased.

I am unable to afford to make my payments

Monthly loan payments can be a real burden on borrowers. For some, this requires to choose between pressing bills (rent/mortgage, car payment, etc.) and their student loans. Opting for the pressing bills is understandable.

However, these types of financial hardships are not going to qualify you for student loan forgiveness. That said, it could get you for a considerably lower payment, under the income-driven repayment plan. Each year, these repayment plans look at your family size, debt balance, and income in order to customize your payment, which could be as low as zero dollars per month.

Another benefit of the income-driven repayment option is that after 20 or 25 years of eligible payments, they forgive your balance, depending on the plan you qualify for. While this is not the instant reprieve borrowers are looking for, and it won’t be full forgiveness, it is something.

If you cannot afford your payments under an income-driven repayment plan, you could possibly pause your federal loan payments with a forbearance or deferment. While these options could increase the total amount you owe, they could also help you avoid an even more expensive outcome should you default on your student loans.

Anytime you have trouble making your monthly payments, contact your loan holder and discuss the options available to you.

I have paid long enough

While some may be hoping for a debt-forgiveness bailout, we also receive a number of questions from borrowers who have been repaying their student loan debt for years, even decades.

Some have already paid back the original amount they borrowed, while others have barely made a dent, as a result of accrued interest. Despite their path, these borrowers have landed up in a similar place. They want to know if they have paid long enough to qualify for student loan forgiveness.

Regrettably, this is not the case. When you get a student loan, you agree to pay the amount you borrowed plus interest, regardless of the length of time that it takes. As we previously mentioned, some repayment plans may forgive your remaining balance after a specific number of years of eligible payments, but it is possible for you to repay your loan in full before you reach that point.

If you find yourself in this situation, and you struggle with your payments, you can use the options we talked about. If you are in a good financial shape, think about insistently pre-paying your student loan. Although you cannot directly pay a large sum on your principal balance, you can overpay on your monthly amount which will limit your interest costs and shrink what you owe more quickly.

As alluring as student loan forgiveness is, you must keep in mind that it is both regulated and restricted. There are other programs that can assist you in managing your payments, including paying off your remaining balance. Do your research and take advantage of any legitimate options that could assist you with your student loans.

Was this advice helpful to you? Tell us in the comments below and learn more about the pros and cons of refinancing your student loan and federal student loan repayment plans.