May 16, 2021

What Is Student Loan Forgiveness?

Forgiveness

About 44 million Americans are saddled with student loan debt, which has risen to $1.7 trillion. This issue will continue to plague many for decades to come. Fortunately, there is a way to get rid of student loan debt: student loan forgiveness. If you are one of the millions of Americans still suffering from the burden of student debt, keep reading! This article will discuss what it means to forgive student loans and how it can be earned.

What Does It Mean to Forgive Student Loans?

Student loan forgiveness relieves you of the responsibility of repaying a portion or more of the federal student loan debt that was lent to fund your post-secondary education.

While debt forgiveness, cancellation, and discharge may sound similar, they refer to different things. Forgiveness or cancellation refers to when you are no longer expected to make payments on your debts due to your employment. On the other hand, discharge refers to when you are no longer obligated to make payments on your loans due to a total and permanent disability or the closure of the school where you got your loans.

Student loan forgiveness is the most effective way to get rid of student loan debt, but it is not easy to earn and only applies to federal direct loans.

How Do You Earn Student Loan Forgiveness?

Loan forgiveness is available in several ways. Serving in the public sector or having an income-contingent repayment plan are the two main ways to receive student loan forgiveness, each with its own set of conditions and restrictions.

Public Service Loan Forgiveness

If you work in public service, whether for the government or a nonprofit organization, the Public Service Loan Forgiveness Program (PSLF) might be right for you. Those working in nursing, government, police, fire departments, and social work are all possible candidates. Other forms of voluntary work, military service, or medical practice can also allow you to have all or part of your loans forgiven.

A requirement of 120 qualifying payments needs to be made to be eligible for loan forgiveness. To make a qualifying payment, you must pay the loans' minimum charge on time while employed by an authorized organization, which is typically the federal, state, or local government or a tax-exempt charitable agency. As such, you will be considered eligible after ten years on the job and ten years of monthly payments.

Repayment Plans With Loan Forgiveness

You will still be eligible for a part of your student loans to be forgiven if you are not employed in the public sector, but the process may be longer. Income-driven repayment programs intended to assist graduates who struggle to make payments during the normal 10-year repayment period often allow for certain debt forgiveness over a specific time frame. Among these repayment plans are Income-Based Repayment (IBR), Income-Contingent Repayment, Pay As You Earn (PAYE), and Revised Pay As You Earn (REPAYE).

Disadvantages of Student Loan Forgiveness

The IRS enjoys taxing everything, including forgiven debt. Loan forgiveness provided by the government is tax-free. Any remaining balance eradicated by an income-driven repayment plan, on the other hand, is taxable and can be classified as income. As such, it's essential to plan ahead of time for the looming tax bill. Consider opening a separate savings account for your money.

Takeaway Points

Student loan debt can be crippling, and student loan repayment is difficult to achieve no matter which path you take. It takes a long time to pay off and may not be worth it in the end. One way to work around this burden is through student loan forgiveness. Student loan forgiveness frees you from the obligation to repay a part or more of the federal student loan debt used to finance your post-secondary education.

Every student loan repayment program has its own set of terms, standards, and restrictions. To be eligible, you need to meet all the requirements. If you're already in over your head, forgiveness may be the most attractive option to get rid of your student debt.

Use Chipper for Lower Payments

Chipper can help you find a student loan repayment plan that actually fits into your budget. You simply fill out your information and link your student loan account for us to generate your options in seconds. We help the average student loan borrower save over $300 a month off their student loan monthly payment. Lowering your monthly payment plan can game changing for your personal finance and can be done in minutes! Sign up for Chipper today to get on track with your student loans.

Use Chipper for The Best Path to Forgiveness

Finding your path to student loan forgiveness is easier than ever before. Chipper helps members find better Income-Driven Repayment (IDR) plans every day. Once enrolled in an eligible repayment plan, we can help you explore your forgiveness options and understand your path towards forgiveness. Sign up with Chipper today and get on track with your student loans.

Use Chipper for Round-Ups

Paying off your student loans doesn’t have to be a long and painful journey. Round-Ups are a way to directly pay off your loans with your everyday spending! By tracking your linked spending account(s), we will calculate the rounded up amount from each transaction in a week (IE spending $4.28 would add $0.72 to the weekly amount). We then initiate a payment towards your student loan for the weekly amount. Get chipping away on your student loans with Chipper today.

Use Chipper for Public Service Loan Forgiveness (PSLF)

The Public Service Loan Forgiveness (PSLF) program was created to provide relief to borrowers aiding the public sector. Unfortunately, 30% of applicants are denied due to incorrect paperwork. We can help! Chipper was created to solve this issue by assisting borrowers in understanding their options as well as allowing forgiveness eligible users enroll into the best forgiveness program available. Sign up for Chipper today to see your student loan forgiveness options and get the forgiveness you deserve.

Use Chipper for Teacher Loan Forgiveness (TLF)

The Teacher Loan Forgiveness (TLF) program was created to enable teachers working in Title 1 schools to receive student loan forgiveness of up to $17,500 (depending on their teaching subject). Chipper has helped teachers from all over the country qualify for TLF program and can help you get the forgiveness you deserve today. Find out if you qualify for forgiveness in minutes with our employer search tool.

See How Much You Can Save with Round-Ups

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