Have crippling student loan debt? Here are ways you can legally stop paying student loans. It may be worth your time to see if you qualify.
More than 40 million Americans have student loan debt. Of those borrowers, 5.6 million owe more than $50,000. That kind of crushing five-figure debt can take a real financial and mental toll.
You probably heard about student loans being discharged and now you are looking all around the internet if there are any legitimate student loan forgiveness programs available out there so you can stop paying student loans.
Is it too good to be true?
While looking for the real ways to get them discharged and quit paying student loans you also have to watch out for student loan forgiveness scams. There are a lot of them claiming they can get your debt forgiven, which is usually not the case.
There are also the legitimate ones that can guide you through the whole application process that helps you take advantage of any federal programs that might be available for you. So before you stop paying so you can avoid student loans sold to a collection agency you should learn about your forgiveness options.
Student loan forgiveness options have been around for some time now when President Obama reformed part of the Direct Loan program in 2010 by signing the Health Care and Education Reconciliation Act of 2010.
Student Loan Forgiveness programs have been set into place in order to help aid former students in paying for their education following graduation (sadly, these programs are only applicable to students with federal student loans, not private student loans).
Getting loan forgiveness is a lengthy process that only applies under certain circumstances.
How To Stop Paying Your Student Loans
Besides making more money, you may feel like your options are limited. Here are three legitimate programs that could help you get your loans forgiven:
1. Enroll in income-driven repayment
Most federal student loans are eligible for at least one income-driven repayment plan. If your income is low enough, your payment could be as low as $0 per month.
An income-driven repayment plan sets your monthly student loan payment at an amount that is intended to be affordable based on your income and family size. You can enroll in four income-driven repayment plans:
- Revised Pay As You Earn Repayment Plan (REPAYE Plan)
- Pay As You Earn Repayment Plan (PAYE Plan)
- Income-Based Repayment Plan (IBR Plan)
- Income-Contingent Repayment Plan (ICR Plan)
If you’d like to repay your federal student loans under an income-driven plan, you need to fill out an application.
2. Pursue a career in public service
If you are employed by a government or not-for-profit organization, you may be able to receive loan forgiveness under the Public Service Loan Forgiveness Program.
The PSLF Program forgives the remaining balance on your Direct Loans after you have made 120 qualifying monthly payments under a qualifying repayment plan while working full-time for a qualifying employer.
To qualify for PSLF, you must
- Work for a government agency or for certain types of nonprofit organizations
- Work full-time for that agency or organization
- Have Direct Loans (or consolidate other federal students loans to qualify)
- Repay your loans on an income-driven repayment plan
- Make 120 qualifying payments
Think you are eligible? You can use the PSLF Help Tool to assist you in starting the Employment Certification Form that you will eventually print, complete, and submit.
3. Apply for a disability discharge
Total and Permanent Disability Discharge is available to federal student loan borrowers who are disabled and unable to engage in any substantial gainful activity (employment) because of physical or mental impairment.
The discharge would provide you with relief on your student loans by removing the debt completely that is under your name. You must be able to prove to the Department of Education (DoE) that you are in fact permanently disabled.
Few options to prove your disability
- If you have received a notice of award for SSDI or SSA you can submit this to the DoE to review. The notice must state that you are permanently disabled, as well as having your next review between 5-7 years. If your next review is less than 5 years, you will not qualify for a disability discharge.
- Your physician can submit a certified form stating that you are totally and permanently disabled. The physician would need to state what is your disability, how long it is expected to last, and whether he or she believes you are unable to engage in gainful activity due to your disability.
- If you are a veteran, the Veterans Affairs office can provide documentation to you that you are unemployable due to a service-related injury.
Your disability must have lasted, or is expected to last at least 60 months, or is expected to result in death.
4. Ask your employer
If you are not eligible for federal programs, you may get lucky if your employer can help with those payments. According to a report from Debt.com, about 4% of employers help their employees with their student loan payments. That number is going to increase next year.
All that it takes? Simply asking your employer if they offer assistant with student loan repayment.
The worst they can say is no.
5. Serve your country
If you are a veteran and served your country then you may be eligible for student loan forgiveness. Each branch has its own set of requirements and rules so it’s worth checking out.
If you didn’t serve, you can also benefit by volunteering your time with AmeriCorps or Peace Corps which can also grant loan forgiveness.
6. School closure
The closed school discharge program is available if you attended a school that closed while you were enrolled or if you withdrew 120 days before the school’s closure. (Note that the period changed from 90 days to 120 days as of July 1, 2014).
Only loans received at least in part on or after January 1, 1986, may be discharged. FFEL and Direct Stafford loans, PLUS, and Perkins loans are eligible. Consolidation loans are trickier. A consolidation loan usually consists of a number of underlying loans.
If any of these underlying loans could be canceled, you can apply for a closed school cancellation for these loans only. If granted, you will receive a credit for the amount of the underlying loans related to the closed school.
7. Borrowers defense to repayment (BDR)
The Obama administration introduced the Borrower Defense to Repayment (BDR) rule as a way to provide debt relief to students defrauded by their school.
The legislation was prompted by the closing of Corinthian Colleges, which left approximately 16,000 students with debt and no degree. Although borrowers have been able to seek loan forgiveness from fraudulent colleges since 1995, BDR makes the application process much easier.
For-Profit Schools went through several investigations between 2010 and 2016. What the investigations revealed that in some cases the colleges had over 50% dropout rate, they were overcharging students, using illegal recruitment tactics, misleading students about their accreditation and especially job placement.
Some colleges were even encouraging students to forge documents to get approved for loans they should never have gotten. At this point, these schools have cost the taxpayer around $24 billion dollars.
In the six months prior to leaving office, the Obama administration forgave nearly 28,000 loans.
With the options available there is a high chance that you could get out of student loan debt or more formally get your student loan debt forgiven, it just a matter of taking the time and knowing your options.
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