For some, a path to student loan forgiveness
NEW YORK — Wish you could make your student loans disappear?
“There needs to be more awareness about these programs,” says Betsy Mayotte, director of regulatory compliance at American Student Assistance, a nonprofit that helps borrowers manage their student debt.
The organization released a loan forgiveness guide this year on its website. The Consumer Financial Protection Bureau, a government watchdog, released a guide over the summer to draw attention to programs.
The programs are not a quick fix. Instead, they enable borrowers to erase their remaining student debt after several years of payments. Most are tied to certain low-paid professions, such as teachers or public defenders, and have other restrictions. Here's a snapshot of several options.
This program is for those who work in federal, state or local government jobs, or at a nonprofit that's been designated as a 501(c)(3) tax-exempt organization. The CFPB estimates that a quarter of the country's workforce falls into those categories. Individuals must have high student loan balances relative to their income.
Anyone who makes 120 on-time monthly payments toward their student loans and works in a qualifying job for 10 years can apply to have the remaining balance forgiven. The amount of the loans forgiven is not taxed, under current tax law.
Only those with federal Direct Loans will qualify for this program, but some loans, such as the Federal Family Education Loan (known as FFEL) and the Perkins Loan can be consolidated into a Direct Loan. If you don't know what type of federal loan you have, you can find out at nslds.ed.gov.
The program was established in 2007, so no one has received loan forgiveness yet.
Borrowers can qualify for reduced monthly payments, and after 25 years the remaining balance is forgiven. The forgiven amount is taxed as income, which means you will likely have to pay a sum to the IRS that's lower than the amount forgiven.
The program is for those whose federal student loan debt is high relative to income and family size. Your lender will ultimately decide if you are qualified. There are other rules, such as which types of federal loans qualify.
Pay as you earn plan
Borrowers can apply to have their monthly payments reduced, and after 20 years of payments, the balance is forgiven. Any forgiven amounts are taxed as income. This program is for those with a high level of federal student loans compared to their income, and who took out their first federal student loan after Oct. 1, 2007.
Depending on your job, you may be able to get help with your loans.
Teachers, for example, should see if they're eligible for the teacher loan forgiveness program. They must work at a qualifying school for five consecutive years to receive up to $17,500 in forgiveness on certain federal loans.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Coal industry’s decline chokes Central Appalachian towns
- Shell closing Franklin Park office next year
- W.V. entrepreneurs offer hope as coal fades as economic engine
- Demand for surveillance systems boosts sales for Vector Security
- University of Pittsburgh researchers revisit war of electric currents
- Pennsylvania Game Commission reaps revenue from shale gas under game lands
- Many Black Friday deals not worth the hassle
- Cyber Monday increasingly a ‘blah-iday’ as deals rolled out earlier, longer
- As historic breakup nears, Alcoa works to redefine its ‘advantage’
- Distractions can help keep riders alert in self-driving cars, study finds
- Small stores take big gamble by not upgrading credit card readers