Six Key Questions You Need To Answer To Get Student Loan Cancellation
The Public Service Loan Forgiveness plan is a United States federal government program which was established under the Higher Education Act of 1965 to give indebted graduates a method out of their massive federal student loan debts by working full-time within the public service, for a specified number of years. This plan allows graduates to pay back their loans after serving the required number of years in such positions. There are certain eligibility requirements, which must be met by each individual who wants to apply for this program.
To find out if one may qualify for loan forgiveness or loan deferment, he or she must check with his or her lending agency. Federal Direct Loan (FFEL) programs are direct federal aid given directly by the U.S. government to eligible students. Loan forgiveness programs on the other hand are sponsored by private banks, credit unions, educational institutes, professional organizations and corporations. Loan deferment refers to wait before getting started on any college program while forgiveness delays payment. In most cases, federal student loans do not forgive the borrower.
First, a borrower must know what federal student loans he or she might qualify for. A borrower can check with his or her agency to see what federal programs he or she might qualify for. There are many federal forgiveness programs, which one might qualify for if he or she had to pay his or her loans while in college. One might also consider the lower interest rate of these loans. These lower interest rates would help pay off one’s debt in a much shorter period of time.
Second, is whether a borrower plans to go into teaching or public service after graduation. Federal loan forgiveness does not always apply to those who opt to become teachers or public servants. Some lenders require applicants to be employed in the public service or the equivalent field before qualifying for forgiveness. However, in some cases, such as with teacher cancellation, forgiveness does apply.
Third, is one’s current financial status. A borrower who intends to go into public service or the equivalent must have a steady source of income. He or she must also have a sufficient amount of saved money in a separate savings account. Public service or equivalent positions such as teachers generally require at least a bachelor’s degree; therefore, federal student loans that forgive student loan debts for those who are in the process of obtaining their graduate degrees often do not apply to those who hold degrees in public service fields.
Fourth, is one’s salary. Although there are many government employee loan forgiveness programs, some lenders require salary information such as salary in order to grant loan forgiveness. In order to qualify, the employee must provide documentation such as a current pay stub from his or her last job. If the lender requires salary information, then the borrower should be prepared to provide this information.
Fifth, is where the student borrower is employed or currently employed. There are many government student loan forgiveness programs that do not require a borrower to be employed at the time he or she receives his or her forgiveness award. These loans are called “non-payment forgiveness” loans because the borrower has been unable to make payment on time and is being granted relief from repayment. For students with federal student loans, this can be critical to get student loan cancellation. However, the federal government does not forgive student loans just because a borrower is unemployed.
Sixth, does state-based student loan forgiveness exist? Student loan cancellation is not as widely available as federal loans. Most states do not have non-payment forgiveness programs, and many states do not allow loan forgiveness if a borrower has already enrolled in a school. Some states do allow some forgiveness if a borrower is in the service during a grace period, but repayment must begin within this period.