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Getting out of Debt

Should I Apply for Student Loan Forgiveness?

Should I Apply for Student Loan Forgiveness?

8 Minute Read

Remember that little thing called a FAFSA? You or your parents probably filled it out when you were in high school, somewhere between studying for the SAT or ACT and managing your senioritis. At that time, you probably thought filling out all that FAFSA paperwork was the make-or-break difference between going to college or flipping burgers for the rest of your life.

But maybe no one warned you about the difference between scholarships/grants (free money) and loans (money you have to pay back). Since you can get all of the above by filling out the FAFSA, you might’ve overlooked some fine print and signed up to receive thousands of dollars in student loans without even realizing it!

Or maybe you did know what you were getting into but thought loans were the only way to pay for school. And now, as 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.)

Hopefully, it helps that the government seems to understand the amount of financial stress graduates face as they struggle to pay back those loans. That’s why they created student loan forgiveness programs. Sounds promising right?

Going to college debt-free is possible! Find out how.

Don’t get your hopes up.

What Is Student Loan Forgiveness (and How Does It Work)?

If you haven’t heard, outstanding student loan debt in America has risen to over $1.5 trillion.1 Did you get that? Over $1.5 trillion. But don’t worry: If your student loan debt makes up a piece of that trillion-dollar pie, the government has a plan to help you take care of those income-stealing loans. It’s called student loan forgiveness.

Chances are—you’ve heard of it.

Remember back to when you filled out that FAFSA form? Sure you do. Depending on what kind of financial aid you were offered, that might’ve been the day you unknowingly signed away your financial future for a college education. The money (minus any scholarships or grants) probably came in the form of federal student loans (handed out by none other than our federal government).

And now that you’re out of college and have been paying on those loans for what feels like forever (with no relief), you probably want to know how you can get some help. But let’s take a step back for a minute and look at the facts. It seems like the odds of getting your loans forgiven are about the same as winning the lottery.

The U.S. Department of Education came to the “rescue” through their student loan forgiveness programs. The only problem is that their requirements are kind of 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.

A lot of times, those requirements are different depending on what type of forgiveness program you’ve applied for.

Student Loan Forgiveness Programs

Requirements for student loan forgiveness all come under different programs with different circumstances and eligibility requirements. Here are some of the most popular 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.2 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 the requirements:

  • 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 make (or prove that you’ve made) on-time payments for 10 years while working full-time for a qualifying employer like the government or a non-religious nonprofit.3

But, like I said earlier, getting your loans forgiven with this program doesn’t happen as much as you’d think. As of March 2019, 73,554 people submitted 86,006 applications for their loans to be forgiven through public service.4 Out of those 86,006 applications, only 864 were actually approved and just 518 lucky people were granted student loan forgiveness. That’s only 0.7 percent!

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.5 Nice, right? This means they spent 10 years in low-paying jobs only to find out they wasted their time and effort. Not only that, they could’ve been debt-free a lot sooner. Not. Cool.

3. Disability Discharge Forgiveness

If you have a disability that leaves you totally or permanently disabled, you might qualify for this program. With this type of forgiveness, 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 Veterans Affairs, the Social Security Administration or your physician.6 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.

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!

Here’s how:

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 the minimum payment you were paying on the first and put it toward the second. Pretty soon, you’ll see that “snowball” start to grow—all the way to debt freedom.

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.

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.

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 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 YouTubeInstagramFacebook and Twitter.

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