Student Loan Forgiveness Programs

22 April 2014 | Uncategorized | Tags:

The students who struggle with loan repayments can make the best use of loan forgiveness programs which are drafted to offer relief to the indebted students. To support the education of the students there are offers of financial support from the federal government and private lenders. Parent PLUS loans and Stafford Loans are some of the most preferred options of loans for making higher studies possible. Direct loans can be availed directly from the federal government. The offer of Federal Family Education Loan is offered by credit unions, banks and other lending companies that participate in FFEL program.


Different plans to support the student borrowers


The parents who intend to offer support to their children’s education can opt for Parent PLUS loans. Perkins loans are drafted to meet the cost due to the post secondary education. These loans are offered by the education institutions which participate in Federal Perkins loan program. The interest rates are low for these loans. Federal Perkins loans are those offered to eligible students who are not in a position to afford Stafford loans. The repayment options are quite flexible to make the process easy for the students. Though the repayment options are highly in favor of the students, the economic recession has led to a sag in the job market leading to default by many of the borrowers.


Due to this grave situation, the government has initiated student loan forgiveness program for ‘Direct loans’ obtained at from the federal government. Besides this offer, there are also Federal Loan Forgiveness Programs for Perkins, Stafford and PLUS loans. However, the loans that are defaulted are not eligible for Forgiveness programs. The students are offered payment options such as Level, Income Sensitive, Extended Plan or Graduated Plan. The payment based on income is considered most convenient by most of the borrowers. The loan repayment amount is determined by taking into account the income and the size of the family.


A specified maximum percentage of his gross income is allowed as payment towards the interest and the principal amount of the loan. If the student is yet to settle the loan after 10 years of repayment, the amount outstanding is forgiven by the federal government. Public Service Loan Forgiveness program is started to forgive the loans which were availed by the students under the Federal Direct Loan Program. The students who have completed minimum of 10 years of ‘qualified employment’ are eligible for this program. Employment with the Federal government, offering military service, employed with non- profit organizations and offer voluntary service with Peace Corps, AmeriCorps and VISTA are termed as ‘qualified employment’.


A well trained child care provider is eligible for the cancellation of the entire loan amount that is obtained under the Direct Loan Program or under the FFEL. Employed as a teacher, doctor or nurse helps in cancelling the loan dues. The nurses or teachers working to serve the people in the low income areas are eligible for the loan forgiveness. Although there are offers of forgiveness programs for the student borrowers who offer services to enhance the life of the downtrodden ones, it is recommended that you make your best efforts to repay the student loans with the consolidation program.


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