Students’ loan forgiveness, cancellation and discharge
In America primary and secondary school education is offered for free to all students. After graduating from high school, learners have an option to join post-secondary institutions where both the state and the federal government assist in paying college fees by giving loans to students. Statistics show that students who graduated in 2017 came out with an average loan debt of $39400. A significant number of graduates use income driven repayment technique to pay their loans. However due to various circumstances some are unable to pay their loans. The federal government has established loan forgiveness, cancellation and discharge programs for such people. Loan forgiveness, discharge and cancellation are terms that can be used interchangeably however they are used in different ways. Outlined below are various student debt revocations programs.
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Students loan forgiveness programs
Income based repayment forgiveness
The federal government gives graduates four options on how to pay their loan depending on their income. when you are enrolled to such a plan your remaining loan balance after 20-25 years(depending on the program) will be forgiven. Meaning that you will not be required to pay the loan.
Public service loan forgiveness
The program is eligible to qualifying civil servants who have federal student loans. The loan forgiveness comes after one have made 120 loan payments
Teacher’s loan forgiveness
The program is specifically designed for teachers working full time in low income secondary and elementary schools. To be eligible for loan forgiveness they must have worked for five consecutive years and must have taken the federal loan after first October 1998.
State sponsored loan assistance programs
Some states offer loan payment assistance to teachers, lawyers, nurses, and military personnel.
Students loan cancellation programs
Perkins loan cancellation
The program is meant for people who borrow from federal Perkins loan. The borrowers can have up to 100% of their loan being cancelled if you work as civil servants for five consecutive years. In many instances a certain percentage of the loan is discharged for every year worked.
Students loan discharge programs
You become eligible for student loan discharge if the institution you were schooling closes. You must have been left with no less those 120 days to graduate. After you have applied for a loan discharge you will be required to continue paying the loan as your application in being processed, upon application approval you will not be required to continue paying the loan. In some instances you might receive a refund for the past loan payments.
Borrower defense to repayment discharge
Borrowers who are eligible for this type of loan discharge are those affected by school’s fraud or mispresentation. The effect of the school misconduct must have an impacted a large group of learners. Learners who qualify must fill the borrower’s defense to repayment claim form and submit it to the ministry of education.
Permanent disability
If you get a permanent disability either mentally or physically you automatically become eligible for the student loan discharge. However you must provide a documentation of your disability. on the same note the government will monitor your finances for three years and if you do not meet the required specifications you might be reinstated.
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Discharge due to death
If you die your student's loan will automatically be discharged, once a death certificate is submitted to the lender. If you parent or guardian had borrowed a PLUS loan then they die the loan will also be discharged.