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Relief From Private Student Loan Debt

Relief From Private Student Loan Debt
Relief From Private Student Loan Debt

Relief From Private Student Loan Debt : When you have a large student loan balance, you may struggle to keep up with monthly payments or to qualify for other types of credit. This can be especially true for private student loan borrowers who don’t have access to income-based repayment plans. Borrowers collectively shoulder $128 billion in private student loans, which make up 7.3% of the $1.76 trillion student loan market. Relief From Private Student Loan Debt

What private student loan borrowers should do

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While private loan borrowers can’t count on sweeping student loan forgiveness to erase their debt, there are steps they can take to make their loans more manageable. Refinancing for a lower interest rate is certainly not as good as having your loans completely wiped out, but it’s a smart financial move that will pay off the sooner you choose to make it. Relief From Private Student Loan Debt

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When private student loan borrowers refinance, they swap their current private student loan(s) for one new loan. This can be from the same lender (if offered) or through a different lender of their choice.

Although rates have been rising, they’re still relatively low so now is a good time for private student loan borrowers to consider refinancing before they go up again. The Fed is expected to continue raising rates so refinancing may not be as cheap. And if your credit score is better than when you applied for your private student loan, you have a better chance of qualifying for a low rate. Relief From Private Student Loan Debt

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5 federal student loan forgiveness programs

Public Service Loan Forgiveness

Public Service Loan Forgiveness (PSLF) is available through the U.S. Department of Education for federal Direct Loan borrowers. You might also qualify for this option if you have Federal Family Education Loan (FFEL) Program loans or Perkins Loans that have been rolled into a Direct Consolidation Loan. Relief From Private Student Loan Debt

Under this program, borrowers working for eligible employers can have the remainder of their federal student loans forgiven after making 120 qualifying monthly payments. Keep in mind that PSLF is employer-based, not role-based, so you don’t necessarily need to be a police officer, firefighter, teacher or similar to qualify. You can determine if you work for an eligible employer by using the Federal Student Aid’s employer eligibility tool. 

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  • Forgiveness amount: Varies based on amount borrowed and repaid. 
  • Qualifications: Work full-time for a qualifying employer, certify your employment annually and make 120 qualifying loan payments. 
  • Taxable/not taxable: Not taxable.

Teacher Loan Forgiveness Program

The Teacher Loan Forgiveness (TLF) Program offers up to $17,500 in student loan forgiveness to teachers with Direct or FFEL program loans who teach full time for five consecutive years at an eligible school or organization that serves low-income students. Eligible schools include elementary and secondary schools or educational service organizations. Relief From Private Student Loan Debt

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  • Forgiveness amount: Up to $17,500.
  • Qualifications: Be a state-certified teacher with a bachelor’s degree without having certification or licensure requirements waived on certain bases (also referred to as being a “highly qualified teacher”) and work five years teaching full-time at a qualifying school. 
  • Taxable/not taxable: Not taxable.

Health professional loan repayment

If you work in a qualifying healthcare role, you could qualify for student loan assistance through organizations like the National Health Service Corps (NHSC) or the National Institutes of Health (NIH). The NHSC offers up to $120,000 in loan assistance for qualifying full-time healthcare professionals, while the NIH offers up to $50,000 per year to healthcare professionals conducting qualified research. Eligible nurses might also qualify for an up to 60% loan payoff through the Nurse Corps loan repayment program in return for a two-year service commitment. Relief From Private Student Loan Debt

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  • Repayment amount: Up to $120,000 or up to 60% of loans, depending on the program.
  • Qualifications: Licensed healthcare professionals working in qualifying roles.
  • Taxable/not taxable: NHSC payments aren’t taxable, but NIH and Nurse Corps repayments are taxable. Relief From Private Student Loan Debt

Service member loan repayment

While members of the U.S. military could qualify for PSLF, several other student loan assistance programs also exist for service members. For instance, the U.S. Army offers a special program that will repay up to $65,000 in student loans for qualifying members, while the Coast Guard provides up to $60,000 in assistance. Other branches also offer student loan repayment programs. 

  • Repayment amount: Varies by program.
  • Qualifications: Varies by program.
  • Taxable/not taxable: Payments can be taxable, depending on the program.

Relief From Private Student Loan Debt

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