Odds of student loan forgiveness

Student loan debt is often a major financial burden that many young people face before they even graduate from college. A lot of them are forced to take out loans just to get through school, while others have their education paid for through grants or scholarships. Either way, these types of debt can be quite challenging to manage. Even if you pay back the entire amount owed, you may still end up owing more than what you originally borrowed! While some states offer programs that allow students to have their loans forgiven after certain amounts of time, some don’t. In fact, the number of forgivable student loan programs is rapidly shrinking. To learn more about the odds of getting student loan relief, read our guide below!

New Jersey recently joined the list of states that offer a program designed specifically to forgive student loan debt. This program was approved by Governor Phil Murphy and signed into law on September 13th, 2018. Under the new laws, borrowers who graduated high school between 2006 and 2016 and attended either Rutgers University, Montclair State University, Kean University, Stockton University, the College of Saint Elizabeth, Fairleigh Dickinson University, East Stroudsburg University, Ramapo College, Monmouth County Community College, Rowan University, or Bergen Community College, are eligible to receive a full waiver of their remaining balance. Borrowers must meet a few requirements to qualify, though. The first being that they must show proof of enrollment at a participating institution. Secondly, they must have completed 120 credit hours toward a degree or certificate program during the 2017–2018 academic year. Thirdly, they must make timely payments on their federal student loans since January 1, 2015. Lastly, they must not be delinquent on their federal student loans. As long as these conditions are met, then the borrower will be covered under this program.

California passed legislation in 2016 that provides a partial loan discharge for students who attend public universities in the state. Public community colleges are exempt from the law, however. If you live in California and wish to apply for loan cancellation, you should contact your local university directly. 4. Illinois

Illinois implemented a similar program in 2013 that allowed borrowers to apply for reduced interest rates, but only for those attending private schools. Borrowers could begin applying for loan discharges after two years. Unfortunately, this program did not extend to those attending public schools. However, in 2020, Illinois lawmakers were able to pass a bill that would provide partial loan discharges for certain borrowers who are studying nursing or teaching. This program will only cover those attending public schools in the state. The good news? Loan applicants will no longer need to wait until July 1st, 2022. They can start filing applications now!

1. What Exactly Is Student Loan Forgiveness?

Student loans have changed since their inception; they were once viewed as a way to fund the education of students who couldn’t afford it. However, over recent years, many borrowers have applied to receive some sort of financial relief in order to get out of debt sooner. There are a number of different types of student loan forgiveness programs offered by the federal government, including public service loan forgiveness, direct current loan forgiveness, income-based repayment plans, payment deferment, and extended repayment plans.

2. “Public Service Loan Forgiveness”

Public service loan forgiveness is a program offered by the U.S. Department of Education that allows eligible borrowers to have certain federally-backed student loans discharged after 120 payments (10 years). To qualify, borrowers must work in public service jobs that meet certain requirements, such as helping people at risk of homelessness, working with at-risk youth, or providing primary social services to vulnerable populations.

3. Direct Loans in the Present

Direct current loan forgiveness is similar to the public service loan forgiveness program, except instead of discharging the loan after 10 years (120 payments), borrowers will have the remaining balance forgiven after 20 years (15 years). Like the public service loan forgiveness, borrowers need to complete 120 consecutive monthly payments before having any portion of their balance forgiven.

4. Repayment Plan Based on Income

An income-based repayment plan allows borrowers to spread their loan repayments out over a longer period of time while still receiving lower interest rates. Under this type of plan, borrowers make smaller monthly payments each month than under traditional repayment plans. Borrowers can, however, limit the amount they pay back to no more than 12 percent of their discretionary income.Borrowers can switch between various repayment options whenever they want.

5. Payment Deferment

Payment deferrals allow borrowers to temporarily stop making payments on their federal student loans until further notice. If your school closes or ceases operations, you may be able to use a period of payment deferral to find somewhere else to attend college. Unlike standard deferments, payment deferrals do not count towards the 120-payment threshold necessary to receive loan forgiveness. However, borrowers should keep in mind that if they don’t begin making payments again, their loans will reappear on their credit reports and could negatively affect future borrowing.

6. Extended Repayment Terms

Extended repayment plans offer borrowers two major advantages: 1) borrowers will pay less money over a longer period of their lifetime; and 2) borrowers won’t have to worry about meeting the 120-payment threshold in order to receive loan forgiveness. As with regular repayment plans, the first year of payments under extended repayment plans begins immediately upon graduation. After that first year, borrowers have five additional years to pay off the remaining balance.

7. How Does One Qualify for Student Loan Forgiveness Programs?

The qualifying criteria for these three programs vary depending on whether the borrower is enrolled in an undergraduate, graduate, or professional degree program. Undergraduate degrees require the borrower to be enrolled full-time throughout the duration of the program; graduate degrees require a minimum total of 60 hours per semester or 30 hours per quarter; and professional degrees require a minimum of 45 units over the course of the program. In addition, only degrees awarded by postsecondary accreditation agencies recognized by the Secretary of Education’s Department of Education can be considered for forgiveness.

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