The number of student loan debts is at an all-time high with 44 million Americans having $1.5 trillion in student loans. You’re not the only one who has struggled with student loan payments and paying rent on time. There may be student loan relief available for you. It doesn’t require you to rob a bank.
Options that Help You Pay Off Student Loans
These are seven legal options to help you pay off student loans.
1. Public Service Loan Forgiveness
Public sector employees may be eligible for loan forgiveness through the Public Service Loan Forgiveness Program. You must make monthly payments of at least 10 years in a qualifying repayment plan while working full-time for a public employer or volunteering with AmeriCorps and Peace Corps. These are qualified employers:
- Federal, state, local, and tribal government organizations.
- Non-profit organizations exempt from tax 501(c),(3) are listed under the tax code.
- Non-profit organizations that have not been designated as 501 (c)(3) but serve a primary purpose of providing public services (emergency management and public safety), public education, and public health.
This sounds easy, but early data has shown that 99% of Public Service Loan Forgiveness Program applications were denied. Rejected applicants often had non-qualifying repayment plans, were not eligible for student loans, or worked for non-qualifying employers.
Before you sign up for this forgiveness program, ensure it is the right option for your situation. Although your loans will be forgiven after 10 years, you may still be able to repay your loans sooner if you choose a higher-paying job or a plan with lower monthly payments.
2. Teacher Loan Forgiveness
Teachers, rejoice! There are many requirements that must be met, but you must have taught low-income students for at least five years consecutively to qualify. You will be eligible for forgiveness depending on what subject you taught. Loan forgiveness is available for most subjects up to $5,000 You may be eligible for $17,500 in student loan relief if you are a teacher of mathematics, science, or special education.
3. Find an Employer that will Repay Your Loans
You can discuss repayment options with your employer if you aren’t eligible for government student loan relief programs. In an effort to retain and attract recent graduates, many companies offer student loan assistance as a benefit for their employees. Although they won’t be able to pay your entire student loan debt off, they can make a difference in your overall total.
Every company decides how it will repay its debts, from the amount and duration of the program to the monthly payments. May companies offer tier student loan repayment programs. This means that you will receive more money for the time you have been with the company.
To determine if you are eligible, it is worth taking the time to research each student loan relief program. It may take some paperwork depending on which program you choose, but it might be worth it if it allows you to avoid paying student loans.
4. Perkins Loan Cancellation
Your eligibility for partial or complete cancellation of federal Perkins Loans depends on the nature of your work or volunteer experience. Loan cancellation may be available to those who, amongst other service occupations, have been firefighters, nurses, soldiers, or volunteers with the Peace Corps. If you were a teacher in a low-income public or non-profit elementary or secondary school, the Teacher Cancellation program can cancel your Perkins Loans up to 100%.
5. Income-driven Repayment Plans
Income-driven repayment plans work exactly as they sound. Your monthly payment is determined by a percentage of your discretionary income. This makes payments more affordable and allows you to forgive the balance at the end. Repayment periods are typically between 20 and 25 years. As income documentation is required each year, your monthly payments will change throughout the loan term.
Although this will lower your monthly payments it is not the best way of saving money over the loan’s life or paying off student loans early. This repayment plan is best for those who are unable to make the minimum payment.
6. Disability Discharge
You may be eligible to have your federal student loan debts discharged if you are suffering from a permanent and total disability. You must submit documentation of your TPD from either the U.S. Department of Veterans Affairs or the Social Security Administration (SSA), as well as a doctor, to be eligible for a discharge.
Both the VA and SSA have their own internal procedures for determining disability. You can still be eligible for TPD discharge if your doctor certifies that you are unable to work due to a mental or physical impairment.
7. Bankruptcy Discharge
You can discharge from your federal loan if you file for Chapter 7 or Chapter 13 bankruptcy. Your family must be able to prove that student loan payments are not causing undue hardship. It is not possible to determine undue hardship by using a single test, making it even harder for you to qualify.
This relief option is very rare. If the court does not discharge your loan, you will need to look for other options or switch repayment plans.