Depending on how you want to go about paying off your student loan debt, you might be able to get student loan forgiveness in 2019. There are some good options out there, including income-based repayment plans and Public Service Loan Forgiveness. There are also some scams you should be aware of.
Public Service Loan Forgiveness
Using a PSLF application, borrowers may be able to get the remaining balance of their Direct Loans forgiven after making at least 120 qualifying monthly payments. The amount of debt is forgiven and is not considered taxable income on a federal tax return. However, the amount may be included in state tax returns in some states.
The government created this program to help encourage qualified college graduates to pursue public sector jobs. These jobs include teachers, firefighters, nurses, social workers and health care professionals. If you are working in these fields, you may qualify for student loan forgiveness.
According to the Department of Education, 88,334 PSLF applications were pending at the end of September 2018. The program is designed to help public service workers lower their debt.
PSLF requires you to work for a government or nonprofit organization. You must be employed for a minimum of eight months, and you must make at least 60 qualifying payments. You can make multiple qualifying payments in a single month, but you can’t make them consecutively.
You will have to submit an Employment Certification Form to the Office of Human Resources Records in order to be considered for forgiveness. The form must be completed annually. If you change employers, you must also submit the form.
A qualified repayment plan is also required. This includes all income-driven repayment plans, except the standard plan. However, a graduated repayment plan or extended repayment plan is not qualified.
The Department of Education introduced a PSLF Help Tool in 2018. It is a website that answers questions about the program. It is also a database of qualifying employers.
While this is not the only student loan forgiveness program, the Public Service Loan Forgiveness is the most popular one. It is also the program that enables late payments to count toward forgiveness.
While many applicants are making the wrong payments or submitting incorrect paperwork, there are still several borrowers who qualify for this program. A coalition of 18 unions representing more than 10 million public-service workers recently called on Cardona to audit records of all potentially eligible borrowers.
Income-based repayment plan
Whether you’re considering taking out loans or already have them, you need to be aware of the income-based repayment plan for student loans. The program is offered through the Federal Family Education Loan Program (FFELP) and the Direct Loan Program (DLP). Designed to help lower student loan payments, the plan offers a way to avoid default and repay your student loans. However, the plan has some pros and cons.
In its simplest form, the income-based repayment plan offers a monthly payment that is based on the amount of money you earn. The payment is capped at 15% of your discretionary income. However, the actual amount of your payment will vary based on your income, family size, and state of residence.
There are also different payment formulas available. One payment plan will allow you to pay off your loan in 20 years while another plan will allow you to pay off your loan over 25 years. These plans also differ in eligibility requirements and payment formulas.
The White House recently announced a new income-based repayment plan for student loans. This plan will allow undergraduate borrowers to make payments of half of their current monthly payment. However, the new plan is still in the works.
The White House plan adjusts for family size, state of residence, and the borrower’s adjusted gross income. The plan also increases the amount of income that’s exempted from the payment calculation. It also allows for some loan forgiveness in the process.
One of the most common issues with the income-based repayment plan is that it can be confusing to figure out. In order to figure out how much you’ll pay, you’ll need to check with your loan servicer to determine whether or not you qualify. If you do qualify, you’ll need to recertify your income on a regular basis. If you don’t recertify your income in time, you may not be able to reenroll in an income-based repayment plan before its annual deadline.
While the income-based repayment plan for student loans is a good option, it’s not right for everyone. You may not qualify for the new plan, and you may find that your payment is higher than under the standard 10-year repayment plan. However, you can always switch to a different plan.
Moratorium on loan repayments
During the COVID-19 pandemic, many Federal student loan borrowers were not required to make payments. Instead, they were given a grace period that would allow them to find jobs, and choose a repayment plan. Interest was also waived for the borrowers who were not paying.
The original emergency moratorium on student loan payments was set to last six months, but was extended several times as the pandemic dragged on. When the moratorium was finally ended, the federal government had spent more than $100 billion to pause loan payments.
Last year, President Joe Biden extended the moratorium on payments to August 31, 2022. However, it is likely that the moratorium will be extended until early 2023.
According to a Morning Consult survey, nearly half of borrowers will not be able to afford payments when the moratorium expires in 2023. During the initial moratorium, the interest rate was set to 0%. This was a break from regular payments, and it was also an important step to fight inflation.
The administration is looking for ways to ease the blow of payments returning to struggling borrowers. However, this will only help borrowers in the short term. It will not have a large impact on the economy. The federal government is struggling to contain inflation.
The Congressional Budget Office estimates that the policy will cost $4.3 billion a month. This will mean that borrowers are likely to make only half of their monthly payments.
Rather than extending the moratorium indefinitely, the federal government should focus on more targeted efforts. It should also offer debt restructuring to people who cannot repay their loans. The government should use other offsets to help cover the costs.
The student loan moratorium was originally designed to help borrowers who were suffering due to the COVID-19 pandemic. However, it has disproportionately benefited highly-educated and high-income borrowers.
President Biden has made it clear that the government has a responsibility to respond to the pandemic. However, the Moratorium on 2019 student loan repayments is not a good way to respond. It will cost the federal government needlessly.
Scams surrounding student loan forgiveness
Several student loan forgiveness scams have circulated lately. They target people who are struggling with repayment and are seeking ways to get out of debt. Several companies promise to combine loans and reduce payments, but many of them charge an up-front fee before they even provide services.
These scams often use a sense of urgency to entice borrowers to enroll in programs that may or may not be legitimate. Some borrowers are told that they will be entitled to student loan forgiveness after paying an up-front fee, while others are promised that their debt will be forgiven immediately.
These scams are taking advantage of confusion about student loan forgiveness and Joe Biden’s plan for debt forgiveness. A number of students have complained to the Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC) about these scams.
These companies often request personal information from borrowers, like their FSA ID. Some may also claim that they can negotiate with lenders to lower interest rates or improve credit scores. These companies may also claim to be able to settle debt with loan servicers, but they do not.
Many of these companies ask borrowers for a fee, which is illegal. The Federal Trade Commission advises that borrowers contact the agency if they receive a check that claims to be from the government and want it to be verified.
The CFPB investigates companies that promise loan forgiveness. Many people report receiving phone calls, letters, texts, or emails offering quick relief. It’s important to assume these are scams and hang up.
The CFPB is examining companies that promise student loan forgiveness, loan forbearance, or other relief programs. They also investigate companies that promise to consolidate loans or improve credit scores.
Many people report receiving voicemails, texts, or emails that offer fast relief. However, it’s important to remember that these programs are only temporary and will be gone by January 31, 2022. Those who qualify will be forgiven their loans automatically.
If you suspect a student loan forgiveness scam, report it to the U.S. Department of Education. It may also help to subscribe to updates from the ED.
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