Student loan debt is a part of many people’s lives due to the high cost of a college education. If you have a student loan or are planning to apply for one, make sure you understand how student loan debt forgiveness works. It can make a big difference in how you will repay your loan.
What is Student Loan Debt Forgiveness?
The vast majority of student loan debt forgiveness programs are available for federal loans. A forgiveness program isn’t intended to quickly eliminate your debt. It can help ease the burden by forgiving all or a portion of the debt after you’ve already made payments over a specific period of time.
Many federal forgiveness programs are targeted at people in specific careers. For example, there are programs for the following careers.
- Government and non-profit workers
- Teachers
- Nurses
- Doctors and other health care professionals
- Lawyers
- Military members and military veterans
- Volunteers
The Department of Education also offers income-driven repayment plans that can result in loan forgiveness though they aren’t traditional forgiveness programs.
- Income-Based Repayment
- Pay as You Earn
- Revised Pay as you Earn
- Income-Contingent Repayment
Why Should Student Loan Debt Be Forgiven?
Several factors contribute to the discussion on forgiving student loan debt. It’s an issue that affects many Americans and the numbers are worthy of attention.
- The cost of attending either a four-year public or private college has almost tripled since 1980
- In 1980 Pell Grants covered roughly 80% of the cost of a four-year degree, but that percentage has dropped to 33%
- In 2022, federal student loan debt has reached $1.6 trillion and more than 45 million people have loans
Some experts look at those factors and believe that student loan debt has an impact on the economy. Without such debt, economic growth would increase. Many people with student loan debt have delayed typical life experiences such as buying a home, getting married, having children, and saving for retirement. In addition, if a borrower finds themselves in a crisis, it is extremely difficult to discharge student debt even if they must file for bankruptcy.
Another issue that experts point to is the social inequity of getting an education given the current situation. Individuals in lower-income households have no alternative but to take out a loan. If they can’t make the required payments, they must abandon their plans for a college education, which will tend to keep them in a lower-income bracket over the long term.
Do I Qualify for Student Loan Debt Forgiveness?
Each student loan debt forgiveness program has its own rules, so you’ll need to research the programs that apply to you to determine your eligibility.
If you might be eligible for programs that help people in specific careers, you’ll need to verify that you have an eligible type of loan and work for an eligible employer. It’s also important to check on how your loan forgiveness will impact your taxes. In some situations, forgiven amounts are considered taxable income.