Student Loan Debt Forgiveness | Do You Qualify?

Getting Student Loan Debt Forgiveness Has Never Been This Easy

Have you tried student loan debt forgivenessFor various reasons, the delinquency rate today in student loans is quite high, plus the amounts outstanding are at an all-time high.  In addition, many students are experiencing very high levels of stress because of the amount of student loan debt they are carrying.

You can only imagine the relief a student feels when they are told about student loan debt forgiveness or other loan repayment programs. All of a sudden, he/she can now see the faint light at the end of the tunnel. And maybe all of their student loans will be repaid before they are considering retirement.

There are now several programs available that will eliminate some or possibly even a large portion of your student loans. The programs cover certain career choices, serving in the military, and also doing some type of volunteer work. The amounts of student loan forgiveness aren’t just token amounts either and can be in the area of a few thousand dollars with some in excess of $100,000.00.

When I discovered this in my research, I was astounded. There are many of these student loan debt forgiveness programs that only have a very small number of applicants. What is the problem? Don’t students know about these programs? Are the terms and conditions too stringent?

Loan Repayment or Loan Forgiveness – Is there a difference?

The programs for student loan debt forgiveness are those that are funded by the federal government. They are loans that are generally issued through the Stafford and Perkins loan programs.

Students that are participants in any of these loan programs, literally have certain portions or amounts of student loan debt erased from the ledgers of your lender. Wow, this will go a long way in reducing stress from any student. [bctt tweet=”Do you know the difference between student loan debt forgiveness and the loan repayment programs?” username=”HBSMoneyTips”]

The primary difference between student loan debt forgiveness and the loan repayment programs is that the repayment programs will cover any type of loan. It includes the government loan forgiveness programs as well as private loans that a student may be carrying.

This may be why the repayment programs are so much more popular than the forgiveness programs. The funds that are available under the repayment type programs sometimes go directly to the student to be used to repay the loan, or an employer might make the payment directly to the lender.

How About Income Taxes on These Benefits?

It’s sometimes possible that any loan amounts eliminated under the student loan debt forgiveness or loan repayment programs, may be taxable income. The following example shows what that means: suppose you had $10,000.00 in loans forgiven or repaid, this year. You would have to include that same amount as taxable income and pay federal and state tax on it.

It’s rare, however, when that happens, so don’t get discouraged and back off from using any of these programs. The benefits that you’ll receive will offset the cost involved, if any.

The primary way to avoid having your student loan debt forgiveness or employer repayment programs become taxable is to make sure that the loan documents have a clause that allows it to be forgiven. I would think that common sense would prevail and lenders would make certain that clause is in the documents.

There are other instances where the amount forgiven could become taxable, and one is not completing the required conditions. Some provisions of the terms could require that you work in a specific profession, and for a specific employer. There is always a minimum period of time that you are required to serve.

There are a few repayment programs that are always tax free. One is from the National Health Services Corp (NHSC) or any program from states that are eligible for funding from the Public health Services Act.

Directories of Student Loan Debt Forgiveness & Loan Repayment Programs

You can select the best program for your situation from the several hundred loan forgiveness programs that are available to graduating students.  In addition to those, various professional associations that cover different industries, maintain lists of student loan forgiveness & loan repayment programs that are applicable to their profession.

The following is a list of professions and a good start in locating places where you can get your student loan debt forgiveness or loans repaid:

Lawyers and Legal Profession

The American Bar Association

Volunteer Work

AmeriCorps

Peace Corps

Teachers

American Federation of Teachers

Medical, Nursing & Mental Health Professionals

The Association of Medical Colleges

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