Student Loan Forgiveness. 10 Things To Know About Grad Student


Student loan forgiveness is the release from having to repay federal student loans that were borrowed to pay for post-secondary education, in full or in part. Student debt in the United States has hit an all-time peak, with an estimated 43 million Americans owing an average of nearly $40,000. However, under some conditions, some of the debt can be discharged or forgiven. 

Student loan forgiveness relieves you of the duty to repay a portion or the entirety of your federal loan debt. The hope of seeing the debt vanish could seem to be a pipe dream come true. In fact, however, only a small number of people are qualified. The requirements differ depending on the form of loan, but most only grant forgiveness to those working in specific public service occupations.

There are also repayment options that include some debt relief. Finally, in some cases, a loan can be forgiven because the educational institution defrauded the student in some way.

Federal Loans Available For Graduate Students

For graduate students, there are two forms of federal loans.  While both are provided by the federal government, the interest rates and the amount you may borrow from each vary.

  • Federal Direct Unsubsidized Loans
  • Federal Direct Graduate PLUS Loans

You can apply for both loans by filling out an FAFSA®. Based on the paperwork you submit, the cost of attendance, and the amount of other financial aid you receive, the graduate school will determine how much you will borrow.

Federal Direct Unsubsidized Loans

Federal Direct Loans (also known as “Stafford Loans”) do not require proof of financial need, and you are responsible for the entire loan interest. To be eligible for a Federal Direct Loan, you must be enrolled at least part-time.

Federal Direct Graduate PLUS Loans

Direct Graduate PLUS Loans will help you cover your graduate school costs if you need additional funds in addition to Federal Direct Loans. To be eligible for PLUS Loans, you must be enrolled at least half-time at a qualified school in a program leading to a college or technical degree, or a certificate.

Loan Forgiveness Available For Graduate Students

Public Service Loan Forgiveness

After working full-time for at least ten years in a public service agency and making 120 qualifying monthly payments after October 1, 2007, qualified borrowers will have their Direct loans forgiven.

Know more about public service loan forgiveness

Teacher Loan Forgiveness Program

The Federal Teacher Loan Forgiveness Program’s main aim is to aid the teaching profession by making it easier for people to enter and stay in the profession. Individuals who teach full-time for five years in a row in designated schools or educational service providers will be eligible for up to $17,500 in interest-free grants under the program.

Total and Permanent Disability Discharge

If the Social Security Administration (SSA) or the Veterans Administration (VA) determines that you are fully and permanently disabled, you will be eligible to get all of your student loans forgiven.

Death Discharge

This is a decision you should never have to make. However, if you or a parent who took out a PLUS loan for your education passes away, your student loans are normally forgiven to avoid any hardship.

Bankruptcy Discharge (in rare cases)

In most bankruptcy proceedings, student loans are not used. However, in certain cases, you will be required to prove in bankruptcy court that your financial obligations under the faand program will cause you serious hardship. As a result, a bankruptcy judge will be allowed to cancel the student loans.

While student loan repayment plans are usually very flexible, this is not always the case.

Closed School Discharge

Your school can close while you are still enrolled or shortly after you withdraw under some circumstances. This could be conditions for a student loan waiver under certain circumstances.

When your school is closing, make a point of gathering all of your academic and service financial statements, since they can almost definitely come in handy when applying for a valid debt discharge proceeding.

10 Things To Know About Student Loan Forgiveness

1. No guarantee there will be student loan cancellation

President Joe Biden wants to fully cancel student loans. Similarly, House Democrats want to revoke student loans right now. The deal, however, ends there. Although Biden needs $10,000 in student loan forgiveness, some Democrats, including Senator Elizabeth Warren (D-MA) and Senate Majority Leader Chuck Schumer (D-New York), want $50,000.

The distinctions don’t stop there. Biden requires Congress to pass legislation to revoke student loans, while Democrats want Biden to use an executive order to cancel $50,000 in student loans. Using a textualist approach to interpreting the Higher Education Act of 1965, Warren and Schumer claim that Biden already has authority from Congress to revoke student loans via an executive order.

Biden claims he’s unlikely to do so, meaning that he doesn’t believe the president has the power to revoke billions of dollars worth of student loans unilaterally. Instead, Biden, a former Delaware senator, is likely to believe that Congress is the proper branch of government to make budget decisions. Biden is considering canceling student loans by executive order, which is positive news for borrowers. However, there is no assurance that Biden will be able to cancel student loans unilaterally, nor that Congress will have the votes to do so.

2. 6% of borrowers owe a third of all outstanding student loan debt

Just 6% of borrowers owe more than $100,000 in student loan debt, according to Brookings. Just 2% have debts in excess of $200,000. Around 18 percent of borrowers owe less than $5,000 in student loan debt, accounting for around 1% of total debt.

3. It’s Difficult to Qualify for the Public Service Student Loan Forgiveness Program

This is an excellent program to take advantage of if you have government loans and work in the public sector. The government forgives any outstanding student loan debt after ten years of working and making payments.

The only issue with the Public Service Loan Forgiveness Program is that qualifying for it is difficult. Student loan borrowers who have been making payments for ten years and believe they are ready to have their loans forgiven are turned down. Just 2,828 of the 179,000 borrowers who applied for the program were accepted.

If you want to take advantage of this scheme, you must pay attention to every detail in order to qualify at the end of your ten-year payment period.

4. Teachers Have Special Student Loan Debt Forgiveness Programs Available

You may not be aware that there is a special student loan waiver program for teachers if you have student loans. This program, rather than the Public Service Loan Forgiveness Program, could be a better match for you.

In as little as five years, teachers will get their loans forgiven. Teachers will have up to $17,500 in federal student loan debt forgiven after working full-time for five years in a low-income school.

This may not be a viable choice for teachers who owe more than $17,500 in student debt.

5. Private student loans don’t qualify for forgiveness.

There are no forgiveness programs for private student loans unless you have a wealthy uncle or supportive relatives. Private lenders are in business to make money, and they want you to pay back everything you owe them.

However, don’t assume that all types of federal student loans are available for forgiveness. 

If you’re having trouble making payments on your private student loans, there might be ways to make them more manageable. For example, you may be able to refinance at a lower interest rate, lowering your monthly payment.

When you’re dealing with a financial hardship, some private lenders can give deferment or forbearance to temporarily reduce or stop payments. For example, if you lose your job and your loan is in good standing, SoFi provides unemployment insurance, which suspends your monthly payments for up to 12 months.

If you’re having trouble making your loan payments, always contact your lender. They will assist you in gaining a better understanding of your choices and avoiding being delinquent and damaging your credit.

6. Student loan repayment options affect forgiveness programs.

You must repay the loans from the public service program using a qualifying repayment plan. It’s a smart idea to have an income-driven plan because it keeps your monthly expenses between 10% and 20% of your disposable income.

income-driven repayment plan that will allow you to pay off your debts as quickly as possible before applying for loan forgiveness. Just keep in mind that depending on the case, the amount of debt forgiven by the teacher program is limited to $5,000 or $17,500.

You must repay the loans from the public service program using a qualifying repayment plan. It’s a smart idea to have an income-driven plan because it keeps your monthly expenses between 10% and 20% of your disposable income.

income-driven repayment plan that will allow you to pay off your debts as quickly as possible before applying for loan forgiveness. Just keep in mind that depending on the case, the amount of debt forgiven by the teacher program is limited to $5,000 or $17,500

7. States Have Their Own Student Loan Forgiveness Programs

State student loan assistance services are also available, which many people are unaware of. These are dependent on where you live and what career you pursue.

Student loan forgiveness is sometimes offered by states to employees who fill a labor shortage. Healthcare professionals, physicians, dentists, and teachers are only a few examples.

They are frequent forgiveness services for individuals who are willing to work in remote areas of states. States with high rural populations have a tough time finding skilled professionals. They use student loan forgiveness as a motivator to attract top talent.

8. 26% of borrowers owe about 50% of all outstanding student loan debt – and it’s for graduate school.

Student loan debt from graduate school accounts for about 48% of all unpaid student loan debt. Borrowers without a bachelor’s degree hold about 24 percent of all student loan debt.

9. Income-Based Repayment Plan is the Most Popular Repayment Option

About 18 million people are enrolled in one of the income-driven repayment plans. Every year, the number of people who participate grows.

When it comes to one of these instalment programmes, you have some choices. It can be difficult to keep track of the various factors for each one, but taking advantage of this can help you save money on your loans in the long run.

Although these repayment options are only available to those with federal loans, they may be critical in assisting you in managing your student loan repayment timeline.

One thing the statistics suggest is that the most common alternative is an income-based repayment plan, which helps you to pay off your federal loans over a 10-year period. Currently, nearly 3 million recipients out of 42 million are taking advantage of this repayment opportunity.

The REPAYE programme is the second most common option, followed by the Pay As You Earn option (PAYE). Another 3.5 million people are using federal loans to participate in these two programmes.

10. There are Forgiveness Options for Disabilities and Injuries

You could be eligible for student loan repayment if you have been involved in a major accident or illness. There are permanent disability forgiveness opportunities for borrowers who are unable to work again.

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About Sana

Sana has been working in the higher education field for the past 5 years. She has been a passionate reader, has written numerous publications, and published a book on Graduate education. She is a huge Harry Potter fan and can watch the Harry Potter movies anytime.

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