Lana Oconnell
There are several ways to qualify for help with paying off student loans. Firstly, the federal government offers loan forgiveness programs, such as the Public Service Loan Forgiveness (PSLF) program, which is available to government and qualifying nonprofit employees. Additionally, the U.S. Department of Education provides loan forgiveness for those who work full-time for a government or non-profit organization. Certain states, organizations, and companies also provide assistance, particularly for those working in high-need industries like healthcare or education. Furthermore, local or state governments may offer student loan assistance for individuals who move to or buy property in their area. U.S. military personnel and veterans may also qualify for their own loan forgiveness programs. Individuals with disabilities may be eligible for a Total and Permanent Disability (TPD) discharge, while those who have attended a school that closed while they were enrolled may be eligible for a closed school discharge.
| Characteristics | Values |
|---|---|
| Qualifying monthly payments under a qualifying repayment plan | 120 |
| Qualifying repayment plan | IDR plan or a standard 10-year plan |
| Qualifying work | Full-time government or not-for-profit organization work |
| Qualifying service | AmeriCorps service |
| Qualifying disability | A disability that severely limits your ability to work now and in the future |
| Qualifying school | School closing while you are enrolled |
| Qualifying work (for up to $50,000 loan forgiveness) | U.S. military personnel and veterans in the Army, Navy, Air Force, National Guard, and Coast Guard |
| Qualifying work (for up to $6,000 loan forgiveness) | Teachers with a specific teaching license in Mississippi |
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What You'll Learn
Public Service Loan Forgiveness (PSLF)
To qualify for PSLF, individuals must work for a qualifying public service employer. This includes full-time employment with a government or not-for-profit organization. Additionally, AmeriCorps service can count toward PSLF, and participants who complete a term of national service in an approved AmeriCorps program are eligible for the Segal AmeriCorps Education Award, which can be used to repay qualified student loans.
To benefit from PSLF, individuals should enrol in a qualifying repayment plan, such as an IDR plan. IDR plans base monthly payments on income and family size, and the balance on student loans may be forgiven after a certain number of payments over 20 or 25 years. Individuals can use the PSLF Help Tool to apply for PSLF and fill out the necessary forms electronically or download and submit paper forms. It is important to submit an updated PSLF form annually to verify that one is still on track to receive PSLF.
It is worth noting that the PSLF Program has faced some criticism and is currently being revised to exclude organizations that engage in activities with a substantial illegal purpose, such as aiding violations of federal immigration laws or supporting terrorism.
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AmeriCorps service
AmeriCorps is a federal agency that connects Americans with opportunities to give back to their communities through service work. One of the key benefits of serving with AmeriCorps is the Segal AmeriCorps Education Award, which can be used to repay qualified student loans.
The Segal AmeriCorps Education Award
The Segal AmeriCorps Education Award is a benefit received by participants who complete a term of national service in an approved AmeriCorps program. These programs include AmeriCorps VISTA, AmeriCorps NCCC, and AmeriCorps State and National. After successfully completing your service, you can use the Segal AmeriCorps Education Award to repay qualified student loans and to pay for current educational expenses at eligible institutions of higher education and training programs. The award amount is equivalent to the maximum value of the Pell Grant for the fiscal year in which the term of national service is approved, and it can change each year.
Qualifying for the Award
To qualify for the Segal AmeriCorps Education Award, you must successfully complete your AmeriCorps term of service and enrol in the National Service Trust. The award is available to those who serve full-time, half-time, or part-time, and there are prorated awards for individuals who cannot complete the entire service period due to circumstances beyond their control. Additionally, VISTA members who complete a term of service within a 12-month period may choose a cash option instead of the education award.
Using the Award for Student Loan Repayment
The Segal AmeriCorps Education Award can be used to repay qualified student loans, including federal government loans under Title IV of the Higher Education Act (excluding PLUS Loans to parents of students), loans under Titles VII or VIII of the Public Service Health Act, and loans made by a state agency or state institution of higher education. You must use the award within seven years, and all payments made with the award are subject to federal tax in the year each payment is made.
Other AmeriCorps Benefits
In addition to the Segal AmeriCorps Education Award, AmeriCorps members receive a modest living allowance during their service term. They may also be eligible for forbearance on most federally guaranteed student loans, with AmeriCorps potentially covering interest payments that accrue during service. AmeriCorps offers skills development opportunities, such as leadership, teamwork, and problem-solving, and connects alumni with employers through its Employers of National Service program. Furthermore, AmeriCorps has a Schools of National Service program where colleges and universities provide benefits to alumni, such as matching the Education Award or offering application fee waivers.
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Total and Permanent Disability (TPD) discharge
If you have a total and permanent disability (TPD), you may qualify for a discharge of your federal student loans. To be eligible for a TPD discharge, you must have a disability that significantly impacts your ability to work, both currently and in the future. This disability can be either physical or mental.
If your application for a TPD discharge is approved, you will no longer be required to repay your federal student loans or complete any remaining TEACH Grant service obligations. This means that you can have your entire federal student loan balance forgiven if you meet the eligibility criteria.
In most cases, individuals applying for a TPD discharge will need to provide specific types of proof of their disability. This may include medical documentation or other evidence that demonstrates the severity and permanence of the condition. Additionally, some applicants may be subject to a post-discharge monitoring period. During this time, the individual's condition may be reassessed to ensure that they continue to meet the eligibility criteria. If it is determined that an individual's condition has improved and they are no longer considered permanently disabled, their discharged loans may be reinstated.
However, it is important to note that some individuals may qualify for an automatic discharge. If you are identified as eligible by the Social Security Administration or Veterans Affairs, you may not need to go through the entire application process. The U.S. Department of Education and the Department of Defense also offer special benefits and considerations for military service members with federal student loans.
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Bankruptcy, disability, school closure
Bankruptcy
It is challenging to discharge federal student loans through bankruptcy. To do so, you must meet the standard of "undue hardship", which requires demonstrating that you cannot afford to pay the minimum amount and that making payments would prevent you from maintaining a "minimal standard of living". This standard has been notoriously difficult to meet for over 25 years. However, there is evidence that the criteria for demonstrating "undue hardship" may be loosening, making it somewhat easier to discharge student loans through bankruptcy.
On the other hand, private student loans are generally easier to discharge in bankruptcy. In addition to filing for bankruptcy, you must file a separate "adversary proceeding" with the bankruptcy court specifically regarding your private student loans. In this proceeding, you will need to demonstrate that you are unable to afford the minimum payments, and you may wish to consult an attorney who specialises in student loan adversary proceedings.
Disability
If you have a disability that severely limits your ability to work now and in the future, you may qualify for a Total and Permanent Disability (TPD) discharge of your federal student loans. This discharge applies to physical and mental disabilities, and you may be required to provide specific proof of your disability. If you are identified as eligible by the Social Security Administration or Veterans Affairs, you may automatically qualify for a TPD discharge.
School Closure
If your school closes while you are enrolled or soon after you withdraw, you may be eligible for a closed school discharge of your federal student loans. To qualify, you must meet certain requirements, such as transferring the credits earned at the closed school to another school or demonstrating that you were unable to complete a similar program at another school.
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$6.99
State-specific programs
Some states offer specific programs for certain professions, such as teachers, nurses, doctors, and lawyers. For instance, Mississippi's Winter-Reed Teacher Loan Repayment Program offers to pay up to $6,000 per year on undergraduate educational loans for teachers with a specific teaching license for each year of full-time teaching in a particular geographical or subject area.
Additionally, U.S. military personnel and veterans in the Army, Navy, Air Force, National Guard, and Coast Guard may qualify for their own loan forgiveness programs. Qualifying soldiers and officers in the National Guard, for example, may receive up to $50,000 to repay their federal student loans.
Three federal healthcare agencies also sponsor loan forgiveness programs: the National Health Service Corps, the National Institutes of Health, and the Indian Health Service. The National Health Service Corps offers loan forgiveness to healthcare professionals working in primary care, dentistry, mental health, and other fields. The National Institutes of Health provides assistance to current and potential medical researchers, while the Indian Health Service is for clinicians working at their facilities.
Furthermore, some states may offer student loan repayment assistance if you work in high-need industries, such as healthcare or education. These programs are often structured as "student loan repayment assistance" rather than direct forgiveness, providing funds directly to the borrower or loan servicer.
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Frequently asked questions
PSLF or Public Service Loan Forgiveness is available to government and qualifying nonprofit employees with federal student loans. You can qualify for this program if you have made 120 qualifying loan payments on an IDR plan and 10 years of full-time public service work.
An IDR or Income-Driven Repayment plan bases your monthly payment on your income and family size. If you repay your loans under an IDR plan, the end-of-term balance on your student loans may be forgiven after you make a certain number of payments over 20 or 25 years.
You can qualify for student loan forgiveness if you have a disability, your school closes while you are enrolled, or if you are experiencing financial or health-related issues. Additionally, some employers offer student loan repayment assistance as part of your benefits package.
Some states may offer student loan help if you move to the area or buy property. For example, Mississippi's Winter-Reed Teacher Loan Repayment Program will pay up to $6,000 per year on undergraduate educational loans to teachers with a specific teaching license for each year of teaching full time in a particular geographical or subject area.
