WHAT IS LOAN FORGIVENESS?

Loan forgiveness is a part of a federal program that pardons any outstanding balance on a student loan after certain conditions are met. Federally-backed student loans do allow loan discharge or forgiveness under specific circumstances. A student loan can be forgiven, cancelled or discharged; which means they are no longer required to repay their loan.

To qualify for a discharge, there have to be circumstances beyond the borrower’s control that prevent loan repayment from occurring.

For example, the Public Service Loan Forgiveness Program will forgive any remaining balance on Direct Loans after the individual has made 120 timely, monthly payments under a repayment plan AND is engaged in full time employment with a qualifying employer.
 

There are four programs that will forgive or cancel your federal student loan. The qualifying variables will be the job and repayment plan you choose. These are:

• Public Service Loan Forgiveness
• Teacher Loan Forgiveness
• Perkins Loan Cancellation
• Income-driven Repayment

To qualify for any of these loans forgiveness programs, your loans cannot be in default. This means they cannot be left unpaid past the nine month period.

Federal student loans must be paid with accrued interest in most circumstances. The borrower will not be excused due to dissatisfaction with the educational program or school, or because the borrower was unable to find employment after graduation.

To determine which type of loan forgiveness plan you qualify for, you need to speak to a qualified loan servicer. In some cases, you may consolidate different federal loans into a single loan; therefore making repayment easier. In addition, graduates entering certain professions are eligible for specific loan forgiveness programs. These professions include:

• Teachers
•  Nurses
• Doctors
• Fire Fighters
• Police Officers, etc.

Eligibility for any loan forgiveness requires the borrower to demonstrate that payments were made on time, according to a repayment plan.

A look at the Eligibility Criteria & Benefits of Teachers Loan Forgiveness Program

Teachers play an integral role in a society. It is seen that in spite of all the development there is a huge shortage of teachers to teach in remote areas because most of them shy away from working in faraway places or schools designated for low income group. It is the reason that federal government is coming up with new schemes to attract more people to take up education as a career. One of the effective steps in the area is Loan forgiveness for teachers. 

It is one of the most famous loan forgiveness programs for teachers. There are two programs under the category that teachers can apply for forgiveness. The first is Perkins Loan Forgiveness and second is Teacher Loan Forgiveness. The work experience required for the both is five years.

The teachers qualifying for these are eligible for reduction of principal amount and early forgiveness. The principal amount reduction can fall anywhere between $5000 to 17500 along with complete forgiveness after a period of 10 years. It means any remaining balance after this period will be completely forgiven. Another significant advantage is that your loan forgiveness is not taxable.

A Look at the Eligibility Requirements

• If you have defaulted subsidized or unsubsidized loan then to be eligible for loan forgiveness you need to get into repayment agreement with the financial institution you have defaulted the loan.  First you need to consolidate the loan. 
•  Apply for loan forgiveness before completing five years as a teacher, if you apply after five years then you may not be eligible. 
• Please note all schools that operate under Bureau of Indian Education qualify as education institution serving students from low income group. It includes both elementary and secondary schools. If you are working in BIE School and if it is not listed under Annual Directory for Low income school then too you can apply for loan cancellation benefits.
•  If you have taken teaching to gain benefits via American Corp then the experience won’t be counted towards teacher loan forgiveness.
•  It is important that you should have completed 5 academic years as a full time teacher. Most importantly one of those years should be after 1997.
• If you are giving your service as a teacher in an approved education institution after 2007-2008 for consecutive 5-years then you can apply for benefits.

You must be employed in a federal approved elementary or secondary school that qualities for funds under education act 1965. There are few more criteria to be fulfilled under the section.

• The school should be approved by the department of education.
•  It should have minimum number of students who are entitled for education under title 1. 
• The school should be clearly listed in Annual Directory specially allocated for Low Income Schools.

The loan forgiveness program for teachers has motivated them to take teaching as a profession. If you are into teaching profession then apply today for the benefits.