For most of us, federal student loan payments are like school projects — if we don’t think about them, they aren’t there. But the truth is, once you graduate, you have to start repaying Uncle Sam.
Fortunately, there is hope for some of us with student loan forgiveness.
Student loan forgiveness is comprised of programs by the federal government that allow people under certain circumstances to not pay back their full loan amount.
These are great programs for college grads. If you fear you will be working a low-paying job after graduation, then you must take a look at these.
One of these federal forgiveness programs is the Public Service Loan Forgiveness Program.The PSLF encourages graduates to work full time in a public service job, and in return, the government will forgive your student loans.
Public service jobs include employment with federal, state and local government and some not-for-profit organizations. The services provided by these organizations don’t matter.
Student loans will be forgiven under the PSLF after you make 120 on-time monthly payments. All of those 120 payments must be made while employed with qualifying public service organizations.
Only loans from the William D. Ford Federal Direct Loan Program are eligible for the PSLF. However, if you consolidate your loans under the direct consolidation loan, that new loan will be eligible for the PSLF.
What’s different about this program is that the income you make from working one of the qualified jobs does not affect your eligibility of loan forgiveness. Working for the government is a good option to reduce student debt even if you are planning on having a high salary.
There are also forgiveness programs for people who are under financial hardships. These programs are special repayment options that can reduce the amount of your monthly payments based on your discretionary income.
Discretionary income is the amount of money you earn above the poverty line in the state you live in, for your family size. These programs are called income-based repayment.
If you meet the low-income requirements, then your monthly payments are reduced up to 20 percent of your discretionary income. After 20 years of payments, any remaining student loan balance is forgiven.
If you are worried about working in a low-income job, these new programs can be a blessing to you. Everyone should be aware of these programs to avoid defaulting on student loans.
There are also loan forgiveness programs based on occupations.
One gives forgiveness to teachers who work at low income elementary or secondary schools for five consecutive years. After the five years, you are forgiven $5,000 of your loan and possibly $17,500 for special education and secondary math and science teachers.
Other occupations that are eligible for loan forgiveness include the armed forces, law enforcement, firefighters, nurses and medical technicians, peace corps volunteers, speech pathologists and librarians. If you are thinking about working in one of these fields, you need to look into forgiveness programs available to you.
However, each type of federal loan has their own unique rules, and I encourage you to go to studentaid.ed.gov and explore all the options available.
Jay is a 20-year-old finance junior from St. Simon’s Island, Georgia. You can reach him on Twitter @hjcranford.
Opinion: Students should look into loan forgiveness programs
By Jay Cranford
January 14, 2015