2 Situations That Don't Qualify for Student Loan Forgiveness

Borrowers aren't eligible for student loan forgiveness just because they're struggling to make payments.

Occasionally, the Student Loan Ranger dips into our mailbag to answer your questions. When we do this, we try to identify different topics that are important to you. One topic our readers ask about more than any other is student loan forgiveness.

Student Loan In India

Student Loan In India 

This is understandable – student loan forgiveness eliminates your remaining federal student loan balance, meaning you no longer have to pay. Of course, many borrowers are happy to get rid of their loans without paying them, and we are happy to help eligible borrowers do so.

However, student loan forgiveness only applies in certain situations. This is primarily for those working in specific fields, such as public service, teaching or medicine. Borrowers who find themselves in difficult situations, including total and permanent disability, may also have their federal student loans discharged.

We often receive questions from borrowers who are struggling to make their payments or who have been paying their student loans for years whether they qualify for student loan forgiveness. Unfortunately, though, neither situation qualifies.

1. I can't afford my payments: Monthly loan payments can burden borrowers. For some, this means choosing between student loans and more pressing bills – such as rent, mortgage, car payment. Opting for the latter is certainly justifiable.

Such financial hardship won't qualify you for student loan forgiveness. But it might qualify you for a significantly lower payment under an income-driven repayment plan option. Each year, these repayment plans look at your income, family size and debt balance to customize your payment amount, which could be as low as zero dollars per month.

One added benefit of income-driven repayment options is that they forgive your balance after 20 or 25 years of eligible payments, depending on which plan you qualify for. This isn't the immediate reprieve borrowers hope for – it won't be full forgiveness, despite the despite the promises some companies make – but it is something.

If you can't afford payments under an income-driven repayment plan, you may be able to pause your federal loan payments altogether with a deferment or forbearance. Although these options may increase the total amount you owe, they could help you avoid an even costlier outcome: student loan default.

Anytime you have difficulty with your monthly payments, contact your loan holder and discuss what options may be available to you.

2. I have been paying long enough: While some millennials may hope for a debt-forgiveness bailout, we receive many questions from borrowers who have been repaying their debts for years or even decades

Some have covered their original amount borrowed; others have barely made a dent after years of accrued interest. Regardless of their path, these borrowers have reached a similar destination: They want to know if they have paid either enough or long enough to qualify for student loan forgiveness.

Unfortunately, there is no overarching statute of limitations on federal student loan repayment. When you take on a student loan, you agree to pay the amount you borrowed plus interest – no matter how long that takes. As mentioned previously, some repayment plans may forgive your remaining balance after a set number of years of eligible payments, but it's also possible to repay your loan in full before reaching that point.

If you are in this situation and are struggling with your payments, you can use the options we mentioned above. If you're in good financial shape, consider aggressively prepaying your student loan. Although you can't directly pay a chunk of your principal balance, you can overpay your monthly amount to limit interest costs and more quickly shrink the amount you owe.

Student Loan in India forgiveness is alluring but also regulated and restricted. However, other programs can help you manage your payments, including even paying off your remaining balance in the future. Investigate and take advantage of legitimate options that help you with your student loans.

Source: https://educationloansinindia.wordpress.com/2016/07/02/2-situations-that-dont-qualify-for-student-loan-forgiveness/