Do you qualify for student loan forgiveness?
The Student Loan Forgiveness Program is a great boon for anyone who is struggling to pay off their student loans. But this only applies to eligible borrowers who meet certain criteria. Do you meet these criteria and are you eligible for student loan forgiveness?
Do you meet the criteria for student loan forgiveness?
To qualify for a waiver, you must meet two requirements:
You must have a federal student loan. This includes college loans, graduate loans, graduate loans, parental loans, and spousal loans.
Your annual income must be less than $125,000 as an individual borrower or less than $250,000 if you are married. Annual income refers to your adjusted gross income, or AGI, on your 2020 or 2021 tax return.
If you meet both criteria, you qualify for up to $10,000 in forgiveness.
If you received a Pell Grant, you may be eligible for cancellation of a loan of up to $20,000. Not sure if you have received a Pell Scholarship. It's easy to find by logging into your FSA account. Any Peel grants you receive will appear on the Assistance Summary page, which highlights all of your loans and grants. Remember, the size or frequency of Pell Grants does not matter for forgiveness. You are eligible for up to $20,000 in debt relief even if you have only had a Pell Grant for one year or received only a partial Pell Grant.
One important thing to know is that forgiveness is applied to every borrower. This is not a loan in itself. This means that your debt relief is limited to $10,000 or $20,000 regardless of how many loans you have or what your loan balance is.
How to get loan forgiveness if you qualify
You have reviewed the criteria and have determined that you qualify. The next step is to learn how to cancel your loans. This process is relatively straightforward.
The Department of Education has income data on file for millions of borrowers. They will use this to determine who qualifies and automatically forgive their loan. If your income data is on file with the Ministry of Education, loan cancellation will be automatically applied to your account. You should receive notice of the cancellation. Don't take this for granted though. You should check and ensure that the loan cancellation has been applied and that your stock mixing account has not been overlooked.
If your income information is not on file, you will need to fill out and submit an application online. You can find them at studentaid.gov. This app requests your personal and financial data to determine eligibility.
After applying, processing takes some time. Once your application is approved, you should receive a notification from the Ministry of Education. You should receive another update from the loan service after you apply for loan cancellation. Watch for any emails or other communications from your loan servicer letting you know the information.
What to do if you don't qualify for student loan forgiveness
If you don't qualify for debt forgiveness or you still have a large amount of debt after canceling, you need to explore other options.
The first thing to consider is an income-based payment plan. You can choose multiple plans depending on your financial goals. The advantage of these plans is that they allow you to adjust your monthly payments to your income. This always makes payments affordable so there is no risk of default. Another advantage is that the income-based repayment program is offered by the federal government so you still have all the federal loan guarantees. The downside is that you will owe more interest in the long run of the loan.
Another option is to refinance your student loans. This includes trading your existing loans for a new one with a new interest rate and new terms. Choosing a longer loan term when refinancing will lower your monthly payments and make it more manageable. If you have good credit, you will qualify for a lower interest rate, so you will also save money.
Don't forget to check out our other federal student loan forgiveness programs, too.
You may qualify for public service loan forgiveness if you work full time for a government or nonprofit organization and have made at least 120 qualifying payments.
The Teacher Loan Forgiveness Program forgives student loans to teachers who have completed 5 consecutive years of teaching in low-income schools.
Eligible members of the US Armed Forces may also be eligible for exemption from military service.
You may also be eligible for a waiver if you have completed an approved AmeriCorps program.
Take the time to look at the criteria and requirements for each of these federal programs to determine if you qualify for student loan forgiveness.