Back in the day, when you were trying to figure out life after high school, you might’ve believed the lie that loans were the only way to pay for college. And now that you’re a college graduate staring at a mountain of debt, you probably wish you would’ve explored other options. (If it makes you feel any better, so do I. I’ve totally been there.)
It might seem like the government created student loan forgiveness programs because they understand the amount of financial stress graduates face as they struggle to pay back those loans. Think again.
What Is Student Loan Forgiveness?
Student loan forgiveness is the government’s plan to help certain people with their student loan debt. A lot of college grads apply for student loan forgiveness through their loan servicer, hoping they won’t have to pay part—or any—of their student loans back.
You might’ve also heard of loan cancellation or discharge—so what’s the difference? Basically, when you don’t have to make any more payments on your loan because of your job, it’s called forgiveness or cancellation. When you don’t have to make any more payments on your loan because of other situations, like a permanent disability, it’s called discharge.
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Chances are, you heard the term loan forgiveness tossed around back when you took out those loans and thought, It’s chill. I can just get all this debt forgiven later, and I won’t have to worry about it.
But let’s take a step back for a minute and look at the facts. In reality, the odds of getting your loans forgiven are about the same as winning the lottery.
You might think the U.S. Department of Education is coming to the “rescue” through their student loan forgiveness programs. The only problem is that their requirements are pretty much up in the air depending on where you work, how many payments you’ve made, and whether or not the government changes the eligibility requirements.
Student Loan Forgiveness Programs
Requirements for student loan forgiveness, cancellation and discharge all come under different programs with different criteria. Here are three of the most common programs:
1. Teacher Loan Forgiveness
If you’re a teacher, you might be able to say “Bye, Felicia” to up to $17,500 of those federal student loans.1 But before you imagine life without that student loan payment, you need to check out their requirements—and then check them again. Here are a few of them:
- Teach full time for five academic years in a row.
- Teach low-income students at an educational service agency or at the elementary or high school levels.
- You must have taken out the loan before the end of your five teaching years.
- Make sure you’ve never had an outstanding balance on your loan.
2. Public Service Loan Forgiveness
There’s been a lot of hype around this one lately. If you’re one of the lucky few who is eligible, you’ll have to:
- Work full time for a qualifying employer, like the government or a nonprofit.
- Make (or prove that you’ve made) on-time payments for 10 years.
- Have Direct Loans.
- Have an income-driven repayment plan (that just means the amount of each monthly payment is based on your income).2
But like I said earlier, getting your loans forgiven with this program doesn’t happen as much as you’d think. Up through March 2020, a total of 145,758 people have submitted 188,396 applications for their loans to be forgiven through public service.3 Out of those 188,396 applications, only 3,174 were actually approved and just 1,831 lucky people have been granted student loan forgiveness. That’s only 1.3%!
If you’re one of the #blessed ones who received an approval letter, you might want to be extra cautious. In 2017, some borrowers who qualified for the program received letters of denial years later.4 Nice, right? This means they spent 10 years in low-paying jobs, only to find out they wasted their time and effort. Not. Cool. And they could’ve been debt-free a lot sooner if they had just paid off their loans instead of waiting around for them to be forgiven.
3. Disability Discharge Forgiveness
If you have a disability that leaves you totally or permanently disabled, you might qualify. With this program, your federal student loans or your Teacher Education Assistance for College and Higher Education (TEACH) grants could be discharged.
In order to qualify, you have to prove your disability status through one of these:
- Veterans Affairs
- The Social Security Administration
- Your physician5
If your loans do get discharged, you’ll be monitored for the next three years to make sure you’re actually disabled. If you’re no longer disabled within those three years, you’ll have to start making those payments again.
You can learn more about other types of forgiveness, cancellation or discharge on the official Federal Student Aid site. But just know there are other ways to ditch your debt that don’t involve trying to understand all those loopholes. My head hurts just thinking about it, y’all.
Should I Apply for Student Loan Forgiveness?
I’ll be honest with you: Student loan forgiveness isn’t really your ticket to freedom. Most of these programs have a ton of eligibility requirements that can change on a dime. The last thing you want to do is stay in a low-paying job in the hopes that your loans will be forgiven in 10 years. (Ever notice how the government has a habit of changing its mind?)
Instead of counting on the government to save you, take control of your own financial future. It’s time to destroy that debt—and fast!
1. Decide to change.
I’m talking no more credit cards and no more debt. If you really want to get out of debt fast, you need to stop getting into more of it. Remember that the caliber of your future is determined by the choices you make right now.
2. Get on a budget.
You might think you don’t need a budget. I get it. Sometimes it feels like your payments are eating your entire paycheck every month. But when you create a zero-based budget and start telling every dollar where to go, you’ll feel like you’ve gotten a raise. But don’t blow it all on a car upgrade or designer kicks. Throw that money at your debt!
3. Use the debt snowball.
The debt snowball is the fastest way to pay off debt. Start with the smallest balance and do everything you can to get rid of it. Yup—sell everything, work more hours, get a side hustle, and eat beans and rice (okay, it doesn’t have to be literal beans and rice, but you get the point). Put all of that extra money toward the loan until it’s G-O-N-E. Then take what you were paying on the first balance and put it toward the second. Pretty soon, you’ll see that “snowball” start to grow—all the way to debt freedom.
Here's something else I want you to think about: refinancing your student loans. This could be a dope option for you if it would help you increase your debt snowball. The things to keep in mind are:
- It should never cost you anything to refinance.
- You should only get a fixed rate on your loans.
- Your new net interest rate must be lower than your current net rate.
- You should never sign up for a longer repayment period.
- You should be sure you don’t let the joy of a refi make you so happy that you take your eye off the goal of getting completely out of debt as soon as possible.
Just be sure to find the right lender to get this done the right way. This is who I recommend you work with to refinance your loans.
Listen: You don’t have to be in debt forever. And no student loan forgiveness plan is a sure thing. Like I said earlier, you don’t want to be a slave to your payments for 10 years or more.
Honestly, my heart behind all this is that future generations will never even consider student loans as an option. With that mindset, it’s possible that one day no one will need student loan forgiveness programs!
But if you already have student loans, here’s the bottom line: Get on your own forgiveness plan (and forgive yourself for taking out loans in the first place) and get out of debt as quickly as you can. Use the Student Loan Payoff Calculator to figure out how quickly you can pay off your loans by making extra payments.
Want to learn more about the debt snowball? I got you. Check out this free three-day email series that will help you start to take control of your money and get rid of those loans—for good. Boom.
About Anthony ONeal
Since 2003, Anthony has helped hundreds of thousands of students make smart decisions with their money, relationships and education. He’s a #1 national bestselling author and travels the country spreading his encouraging message to help teens and young adults start their lives off right. His latest book, Debt-Free Degree, helps parents get their kids through college without student loans. Connect with Anthony on YouTube, Instagram, Facebook and Twitter.