How to Have Your Student Loans Forgiven

Student loan debt has had a negative impact on recent college graduates' goals of buying property. Some mortgage programs such as The Federal Housing Administration (FHA) offer mortgages that do not count student loan payments if they are deferred for at least 12 months after the mortgage closes. Many college graduates likely understand that once the student loan payments begin they may not be able to pay their mortgage. But there are numerous student loan forgiveness, cancellation, or discharge programs available. Depending on your occupation, you may qualify for one of these federal student loan programs. Below is a list of ways you can have your student loans forgiven, cancelled, or discharged.

Teacher Loan Forgiveness

Direct loans and Federal Family Education Loans (FFEL) may be partially or completely forgiven if you are a teacher. You have to teach full time in a low income elementary or secondary school for a minimum of 5 consecutive years. If you meet these requirements up to $17,500 of your subsidized or unsubsidized loans may be forgiven. Your student loans must have been obtained after October 1, 1998.

Public Service Loan Forgiveness

Direct loans (where a minimum of 120 payments have been made since October 1, 2007) may be partially or completely forgiven if you are employed in certain public service jobs. These occupations include: volunteer in the Peace Corps, AmeriCorps, or Volunteers in Service to America, employment with any federal, state, or local government agency, or not-for-profit organization that has been designated as tax exempt by the Internal Revenue Service (IRS) under section 501C (3). Also military service, public safety, law enforcement services, public health services, public education, public and school libraries, public interest law services, early childhood education, and public service for individuals with disabilities and the elderly may qualify under this program. Please contact your human resource department to see if your organization is eligible for the Public Service Loan Forgiveness Program.

Total and Permanent Disability

If you have been totally and permanently disabled, you may qualify for a discharge of your federal student loans. If you receive a total and permanent discharge (TDP) of your federal student loans you will also not be required to pay any TEACH grant service debts. The documentation required to prove you are totally and permanently disabled can be proven in any of the following ways (additional requirements may apply):

• Veterans can provide a copy of their documentation from the U.S. Department of Veterans Affairs declaring them unemployable due to a service related disability.
• If you receive Social Security Disability or supplemental security income benefits, you can provide a copy of the notice of award letter from the Social Security Administration to show your disability determination.
• A certification from a licensed physician stating that you are totally and permanently disabled and cannot engage in any gainful employment because your disability is either expected to result in death, or has continuously lasted for at least the past 5 years, or is expected to continue for at least the next 5 years.

Bankruptcy Discharge

If you are considering a bankruptcy (either Chapter 7 or Chapter 13), you will need to prove to the bankruptcy court that repaying your student loans would cause undue hardship on you and your dependents. Bankruptcy courts use the following method to test a person’s qualification for an undue hardship decision. All three of the following conditions must be met. First, if you are required to repay your student loans you would not be able to maintain the minimum standard of living as deemed by the State and County where you live. Second, the court finds that hardship would continue for the majority of the student loan repayment period. Third, you have made good-faith efforts to repay the student loans for a minimum of 5 years.

Know the facts before you act

Depending on the situation, you may be required to report forgiven student loans as taxable income. This may result in a significantly higher tax bill. Always consult your student loan servicer for all the facts prior to completing a student loan forgiveness program.

Article source: https://www.lender411.com/student-loan-debt-forgiveness/