The Obama Student Loan Forgiveness Program Is a Nickname for The Federal Direct Loan Program.
Student loan debt is often cited as being one of the biggest modern financial crises. Many former students face an impossible amount of debt and in turn, political leaders have been looking for a way to solve these issues. “Obama Student Loan Forgiveness” is a nickname for the William D. Ford Direct Loan program. The name came about when President Obama reformed part of the Direct Loan program in 2010 by signing the Health Care and Education Reconciliation Act of 2010. Student Loan Forgiveness programs have been set into place in order to help aid former students in paying for their education following graduation (sadly, these programs are only applicable to students with federal student loans, not private).
How Obama Student Loan Forgiveness is Different
The Direct Loan Program (FDLP) is the only government-backed loan program in the United States. It is commonly referred to as Obama Student Loan Forgiveness because, in July of 2010, President Barack Obama introduced new loan programs enacted under the Health Care and Education Reconciliation Act of 2010. As a result of expanded funding for federal student loans, more borrowers gained access to more options with loan repayment.
President Obama made the following changes to federal student loan forgiveness:
- The federal government will no longer give subsidies to private lending institutions for federally backed loans.
- Borrowers of new loans starting in 2014 will qualify to make payments based on 10% of their discretionary income.
- New borrowers would also be eligible for student loan forgiveness after 20 years instead of 25 on qualifying payments.
- The money will be used to fund poor and minority students and increase college funding.
What Are The Benefits of The Student Loan Forgiveness Program?
In this program, there are many benefits that a borrower can take advantage of. The borrower has the ability to consolidate all their federal student loans into one new loan, and in that consolidated loan, the borrower is able to choose a repayment plan that is affordable. Direct Loans, whether consolidated or not, do qualify for all of the federal loan forgiveness programs unless there were any Parent Plus loans included in the consolidation.
The Six Different Repayment Plans
- Standard Repayment – The borrower will pay a fixed amount each month for the life of the loan. The payment would be determined by your borrowed amount, interest rate, and term of the loan.
- Graduated Repayment – The borrower would make payments lower than the standard repayment plan, but would gradually increase every two years.
- Income Contingent (ICR) – In this plan, the borrower would make payments based on their income, family size, loan balance, and interest rate.Borrowers in the ICR can have a payment as low as $0.00/mo
- Income-Based (IBR) – This plan bases the borrower’s payment strictly on their income and family size. The balance of the loan and interest rate are not used in calculating the monthly payment. The borrower would be responsible to pay 15% of their discretionary income to their federal student loans. Borrowers in the IBR can have a payment as low as $0.00/mo
- Pay As You Earn (PAYE) – This plan usually has the lowest monthly payment, and is also based on your income but uses 10% of your discretionary income as a payment instead of the 15% used in IBR. Qualifying for the PAYE repayment plan is more difficult than the others. Borrowers in the PAYE can have a payment as low as $0.00/mo
- Revised Pay As You Earn (REPAYE) – The REPAYE plan also uses 10% of your discretionary income to calculate your monthly student loan payment, but will account the income of both spouses even if filing separately. The REPAYE plan also includes the best interest loan forgiveness benefits.
How Low Could Your Payment Be? Find Out!
Interest Forgiveness
In the Obama Student Loan Forgiveness program, interest in the IBR does not capitalize on the subsidized portion of your Direct Loan. This applies only for the first three years of your IBR payment, and only if your IBR payment is less than what is normally due to interest. This can amount to many thousands of dollars depending on your loan balance and what type of payment you currently qualify for. There is also interest forgiveness in the PAYE and REPAYE plans as well. Here is an in-depth guide on student loan interest forgiveness.
Example: A borrower owes $40,000 in subsidized loans. The interest rate is 6.875%, and the term is 25 years. The borrower is single with an adjusted gross income of $25,000/yr. The interest on this loan would normally be $229.17 per month, but the borrower can qualify for an IBR payment of $93.69. In this case, the borrower would be forgiven $229.17 – $93.69 = $135.48 of interest per month. If this person’s financial situation does not change for three years, they would be forgiven $135.48 x 36 = $4,877.28.
See How Much Interest Forgiveness You May Receive
Student Loan Forgiveness At The End Of The Loan Term
If you enroll into either the Income Contingent, Income Based, Pay As You Earn, or Revised Pay As You Earn repayment plans, your loan balance would be forgiven at the end of the term if you still have a remaining balance. The term of the loan would be between 20-25 years depending on which repayment plan you choose, and when your loans were originally borrowed. How much you will be forgiven will depend on your original loan amount, how much you are earning, and how much your earnings fluctuate during your repayment term.
Example: Borrower owes $85,000 in federal student loans. The interest rate is 6.875% and the term is 25 years in the Income Based Repayment Plan. The borrower is currently earning $35,000 per year and expects their income to stay the same for the term of the loan. This borrower would qualify for an IBR payment of $218.69, and assuming the income doesn’t change, would make these payments for 25 years or 300 payments. The total amount the borrower would pay on this loan is 300 x $218.69 = $65,607 of the original $85,000 that was borrowed. This person would qualify for $19,393 in student loan forgiveness on the principal balance after making those qualifying payments. This does not include the interest that is being forgiven as the borrower would normally pay much more than the original debt due to the interest on the loan.
Other Student Loan Forgiveness Programs
You may be wondering, are there options for federal student loan forgiveness? Under the William D. Ford Direct Loan program, there are actually a few different forgiveness options, and each one is effective in addressing the specific needs of student borrowers. Regardless of your financial status, occupation, or age, there are several federal student loan forgiveness programs that could offer you an effective solution.
Public Service Loan Forgiveness
Payments made in the Direct Loan program in an IBR, ICR, or PAYE repayment count as qualifying payments for those who work in the public sector and would like to apply for public service loan forgiveness. In the public service loan forgiveness program, you may qualify for forgiveness after 10 years or 120 payments instead of the standard 20-25 year forgiveness. Unfortunately, many people are not aware that they must be in the Direct Loan program and in one of the correct repayment plans to qualify for this forgiveness. The public service loan forgiveness program is also quite often confused with the term Obama Student Loan Forgiveness.
Public Service Loan Forgiveness Eligibility Assessment
Teacher & Disability Forgiveness
There are other programs that offer student loan forgiveness as well, but they are not part of the Obama Student Loan Forgiveness (Direct Loan) program. These are separate programs that exist specifically to help teachers by offering a principal reduction, or the disabled by offering a complete discharge on your federal student loans. For more information on these programs please visit the Teacher Loan Forgiveness page, or the Total & Permanent Disability Discharge page.
Teacher Loan Forgiveness Eligibility Assessment
Enroll in the William D. Ford Direct Loan Program
If you are one of the millions of former college students facing an impossible amount of debt to repay, there are a variety of government programs set into place in order to help you pay back your loans in a timely and more reasonable manner. The William D. Ford Direct Loan program (with some additions, The Obama Student Loan Forgiveness Program) aims to provide more ways to do so. Learning more about and applying for these programs is a great way to not only lessen your monthly payments but also improve your credit.
The Trump administration is taking its own approach to the William D. Ford Direct Loan Program, and student loan legislation as a whole. Learn more about Trump’s plans for student loan forgiveness here.
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Do you choose your repayment option when you “accept” the loan? Or is it after your schooling is complete and repayment begins?
Also – why would anyone choose a standard loan when these options based on your income exist? Worst case scenario is you make a lot of money and have to pay the whole thing back – which you would do anyway with a standard loan. Am I missing an advantage to a standard loan? Or perhaps many just don’t qualify for the income based ones? If the latter is true, what are common reasons why one wouldn’t qualify?
By the way, thanks for this awesome page. Really helpful information here.
Hi Kim, thanks for the compliments on the site!
When you enter repayment you can select your repayment type. Someone may choose a standard repayment plan because they do not want to prolong paying the debt, as well as having a higher income. Someone with a higher income could pay more in an income-driven payment plan over a standard payment. Advantages of the standard payment plan are that you know exactly how much you will pay every month of the loans term, and when exactly it will be paid off.
I have $20000 in student loans. I pay $155 a month. What would my best option be so i can eliminate loans asap.
Unless you qualify for any of the forgiveness programs, your best bet is to pay as much as you can every month to pay down the debt faster.
I have about $50,000 a school loan that is 25 years old. They have never made me pay on it, but now they are, and it is a crazy amount even on the payment plans. Is there a way to get it forgiven since it is so old?
There are no forgiveness programs that are just based upon the age of the loan, unless you are in an income-driven repayment plan which has forgiven after 20-25 years of making payments.
So my husband had an outstanding balance with his student loans and was not making any payments on them. This was all well before we even met. Over the years he accrued so much interest that the amount nearly doubled. Once we were married and filing our taxes jointly our federal taxes were taken every year for his student loans (which were in collections). Over the years the student loans as well as some of the interest has been paid. But with all the years that he was not paying there is a balance of over $20,000 but that is just with interest. Again the student loan itself has been paid. What are our options?
Well, just so you understand when you say the student loan has been paid, it actually has not if there is a remaining balance regardless if its interest that’s capitalized or principal from the original balance. The interest that has capitalized on the loan is part of the balance thats due on it now. Unfortunately, this is a problem many people face when they just stop paying on their loans. The loan balance starts to accumulate interest, and the collections companies tack on their fees and you have a balance much higher than what it originally was.
If the loan is in default you can go through a direct loan consolidation which would quickly get the loans out of default. You can also select an income-driven repayment plan which could give you a payment that’s based on your income. You could see what your income driven payment might be with this calculator. Neither of those will make the loan go away, but will get you into good standing.
If you want to pay down the debt faster, you could pay extra on your student loan every month if your finances allow for it. There is no easy way to make the loan just go away. Bankruptcy (in some cases) or student loan forgiveness, via the programs listed on this page, are the only quick fixes.
I was a victim of ITT-Tech predatory student loan practices. I attended from 2006-2010. My original loan amount was $75k. The interest on these loans was at 20%. I was not able to make the monthly payments and kept putting them in deferment. I am sure the loans are well over $120k by now and my credit is taking a hit for it where I can not even buy a new car. I can not afford much as my wife and I just had a baby. Our rent is super high because of where we live, but don’t have a choice to move away due to our work situations. Our annual income is about $80k. We live in California so everything is more expensive here. I need to be placed in the right direction. I really want forgiveness since my degree is not worth anything. I just need some kind of guidance. I need to get these loans under control and get a better credit score.
Sean have you considered an income-driven repayment plan? Check out this calculator. With a family size of three (you, your wife, and the child) and an income of $80k/yr, assuming you guys file jointly, your payment would be somewhere around $400-$450/mo. Since your loan balance is so high, you would likely not pay it off by the end of 20-25 years and the balance could be forgiven at that point.
Do either of you work in the public sector, or a non-profit, to be considered for public service loan forgiveness?
I have two types of loans–1) A consolidated Navient for around $60k and 2) a bunch of standard federal Stafford loans for $60k. I pay $350/mo on Navient, and its fixed at 2.5%. The Stafford loans are also fixed, but at around 6.5%, but I do income based repayment for those (I earn $85k) and my total cost is around $400-500 a month for them. I am 37 and have 4 years under my belt for government/NGO work for the PILF program (but I haven’t had a qualifying job now in over 4 years so I am giving up hope on loan forgiveness). Due to my over $800/mo student loan expenditures, I am not able to save as much as I’d like. What can I do to lower my monthly payment??
I owe 85,000 in student loads but didn’t finish school now they are taking my income tax and I don’t know were to go from here I can’t afford to pay 400 to 500 a month in loan payments and still run my house any advice
I would take a look at the income-driven repayment plan. You might be eligible for a very low payment.
I graduated in 1997 and consolidated my loans into a graduated payment plan I believe in 2000. Still owe 14000+. We had to take deferment this last year due to my job situation, but continued to pay interest on my unsub portion. My loans will be coming back due in about a month, and my lender is raising the payments higher than they were before and I’m not sure I’ll be able to squeeze out the payments. Will these loans be forgiven when they hit 25 years – is that why my lender is trying to make sure they’re paid off before then? I’ve considered switching to income based payment, but I hate to start a 25 year clock now (I’m 42), if I only need to hang on a few more years to get rid of these loans. Thanks for your reply.
There is no forgiveness with a graduated repayment plan Eric. So your options are slim. With a balance of only $14k I would try to find a way to pay down the debt. You do not want to wake up in 20 years with a doubled balance due to interest capitalizing on the loan.
so i graduated ITT-Tech in 2015 and then it closed a few months after I graduated. Its a ridiculous i pay of this loan when the school closed and my degree is no longer worth much. Can i do any type of loan forgiveness???
There is a discharge program but if you graduated you are not eligible for a discharge.
I have Parent Plus loans, I can’t afford the 20% of my income repayment. Parent Plus loan holders don’t have the same options as students that have loans. My loans have been consolidated and I’m being told I have no options. 20% is way too high of a percentage for a single, paying rent and all other utilities. Help is needed.
Unfortunately, right now the only income-driven repayment plan for parent plus loans is the ICR, which is the 20%.
How do I contact my lender? My school shut down and I don’t know who the loans are through anymore they’ve been sent to the federal government for repayment.
Try to login via studentloans.gov
My situation is probably one of the most confusing and unique situations out there. Sorry about that.
My original student loan was obtained in 1990. I went to school for only about 8 months before quitting due to the school closing, which they did about a month later.
So in 1992, I went back to school for a different field altogether. Within a week or two, they said that I was in default. About 2 days later, they said that I was in good standings. Took them about 5 months to get the paperwork to the school to verify it.
I decided not to pursue further education at that time.
Then, in 2001, they threatened to take my tax returns to satisfy the debt. Problem was, they sent that letter to me 2 weeks after I had already gotten my tax return and spent it.
Again in 2002 and 2003, they threatened to take my taxes again, only to already get my tax return and spent it. Then in 2004, they took my tax return in the amount of $2,852. About 2 weeks later, they sent me a letter telling me that they took my tax return to satisfy the debt, and even sent a receipt to prove it.
A couple of months later, they said that I was still in default and told the school I was trying to go to that. They got on the phone with the Student Loan Auth and told them that they had the letter and receipt proving that I was not in default after all.
Had to once again stop going to school. Then in 2005, they claimed that it was not placed on my debt, that it was applied to someone else’s debt instead.
In 2007, I found out that I fell under 5-7 conditions for complete forgiveness. I applied, and they denied me for each and every reason.
In 2009, they told me that I owed over $4,000 on a $1,300 loan.
Now I am not working, can not afford to pay anything, got very little usable training in the schools I went to, and now being demanded to pay over $6,000.
Is anyone there?
Billy, if the loan is in default and you haven’t been paying it, interest is capitalizing and making the balance grow. I would log into studentaid.gov to view the loans, and apply for an income-driven repayment plan if you cannot afford the payments. Student loans need to be addressed and tackled head-on or it will be a never-ending burden on you.
Hello,
I am unsure which option would be best for me to apply for. I consolidated my student loans with Sallie Mae in 2005 and they were bought by other loan companies a couple times. Navient is now the company that my monthly payments go to. I pay almost $400/month which is really hurting our finances and we are falling deeper and deeper in debt with mortgage, food, gas, utilities… I have a family of 5. Our combined income is less than $60000 (or close to that). What is your advice?
If you are looking for payment relief, I would take a look at the revised pay as you earn plan. Based on what you said your discretionary income would be around $17,000/yr, and in the REPAYE pllong-termould have a payment somewhere around $140/mo.
Just keep in mind this might not be a long term solution as you probably wouldn’t be paying all the interest on the loan, so the loan might be growing even though you are making income driven payments.
Hi. I’m a federal government employee since June, 2000.
I had Direct and Stafford loans that I consolidated with Sallie Mae in April 2007. When the PSLF program began in October 2007, I contacted Sallie Mae to inquire about my loan with the PSLF program and the representative confirmed my consolidated loan was a qualifying loan in PSLF program.
I set up my payments for auto-payment each month so I didn’t have to worry about the due date each month… it automatically paid from my bank account. I have made more than 120 consecutive payments on-time and I have continued to hold my federal government position throughout this time.
I submitted the PSLF application in January 2018. Yesterday, I received a letter from “FedLoan Servicing” indicating that my loan is not eligible for PSLF.
I’m angry and confused because I thought I was on track and each year I thought I was one year closer to reaching the term of 120 payments to receive forgiveness on the balance.
I don’t know where to start trying to get answers and how to resolve this matter.
Michael, it sounds like you would be eligible to me. Are your loans consolidated direct loans? Also are you making income-driven payments? You need to be in an IBR/ICR/PAYE/REPAYE to qualify for PSLF. Check out your repayment plan, that sounds like its probably your issue. Especially so if you haven’t been sending income documents to them on an annual basis, you can be certain you are not in an income-driven repayment plan.
Michael,
Unfortunately, in order to be able to grandfather your qualified payments you made prior to your new Direct Consolidated loan you must either pay under the income-driven plans or make the equivalent payment of a 10 year loan term. The problem is Consolidated Loans offer terms based on your balance so unless your Direct Consolidated Loan balance was less than 7500 your Non-Income Driven Plan payments would not qualify towards the needed 120. Ironically if your making a 10 year payment you would end up paying the full balance anyways with no “forgiveness” benefit. If you have been working for the government that long chances are your salary made the income driven plans higher than the offered standard or graduated plans and makes sense why you choose that path. Long story short the Dept. of Ed does consider appeals on a case by case basis to retro qualify your payments if you can provide evidence of your loan servicer (Sallie Mae now Navient) mishandling/information.
I’m a single mother of 2 boy and I multiple student loans on 7000 annual income need help
Crystal take a look at the income-driven payment plans. They should help make your monthly payment affordable. Contact your lender to enroll into one if you think its right for you.
Hi I went to school back in 2010 graduated and went back to another school graduated again in 2014 but I was never abel to get a job in my fields of study. I owe over 20,000 in school loans and I have not made any payments. it’s obviously affecting my credit, something I didn’t know becouse I was young and didn’t know anything about credit or credit scores. what can I do can I still get any forgiveness program?
Also right now the only income I have is taking care of my father through the IHSS program but I only get paid like $140 the most every 2 weeks
One last thing I have 4 kids
Do you think you qualify for any of the programs listed on this page? I would consider an income-driven repayment plan since it sounds like you need payment assistance. This will help reduce your monthly payment and has loan forgiveness after 20-25 years.
Thank you for all the information.
I have worked for schools, and non-profits for my entire career since 2000. I have been on IBR since it started. PSLF seems perfect for my situation; however, for the past 7 years, I have lived and worked in Canada. Its hard to get a clear answer as to why, but It appears that my Canadian employment doesn’t qualify for PSLF.
Because my IBR amount is based on my taxes and my US income is $0, my minimum payments are also $0. However, my total loan goes up at about $250 a month from the unpaid interest. It seems like if nothing changes I could just keep doing nothing and in another 13 years, I will be eligible for loan forgiveness, though my loan will have doubled in that time. Alternatively I could pay off my interest, and let the load balance stay as is until forgiveness, or I could work to pay down the principle. Its hard to know if the rules will change in the next 10 – 15 years, so I find I am left wondering which is the smartest path.
My daughter has a student loan that I co-signed for. I have been paying for it for the last 10yrs. I am a nurse working at a state hospital. She is low income with 2 kids. Is there a program that she (we)could file for to forgive the loan?
My daughter does not work for any kind of government or federal agency. She does general labor work and did not get her degree with the schooling.
Sounds like she should be looking into an income-driven repayment plan.
So my concern is this…I went to Virginia college and attended for two years, part time. The picture was painted for me very beautiful so I’d enroll. Let’s just say every semester each class has two to three instructors because either they would quit or got fired. Every new instructor added had a different teaching style, didn’t know what to do for weeks, and majority of the time the students taught themselves. It took weeks to receive our books, everyone was always so lost and looked like chickens missing their heads. What a horrible experience. Six months from now I will owe 25k for my medical billing coding program with a certificate not associates, still have to wait on them to set me up for my major exam which was supposed to be in January and they pushed it back to an unknown date due to the school being audited mid February and they need to make themselves look good in order to continue running and ruining more lives. I don’t know how they will continue to get away with this, but I’m going to drown in this debt now. Any advice??
I am 66.5 years of age, yet I still work in the medical device research industry for a Fortune 100 company. My wife owns her own business that does approximately $750.000/yr in sales. She is 61 yrs of age. I have a Stanford Loan at $173,000 with interest ($134K as a primary) that I accrued obtaining a Doctorate of International Business degree. Currently I make well over $150,000/yr, but soon I will be retired, living only social security and savings. When I retire I plan to be an adjunct professor to supplement social security (teaching on-line). By the time I retire in 0.5 years my home will be paid for. I just graduated, and I am now considering different programs for the loan repayment. Which loan repayment strategy would you suggest? Can the loan repayment strategy change over time? In other words can a IBR loan be converted to a ICR or PAYE? If I teach on-line in the future would a PSLF apply and could the loan type be changed at that time?
You can change repayment plans at any time and year after year, although I am not sure what the reason would be to do this between the income-driven plans. If you want to benefit from PSLF (assuming you will meet all the other requirements) then you need to make sure the loans are direct loans (consolidate into direct loan program if they are not). Consider the PAYE when you want to go on an income-driven repayment plan because it does not consider your spouses income if filing separately. With REPAYE it considers both your incomes regardless if you file separately or jointly.
To whom it may concern,
I received a letter today in mail from https://fsaid.ed.gov and being from the “ed.gov” I assumed that it was legit. There was a phone number to call and apply for the loan forgiveness, which I did, and they told me that I was approved for it. At the end, I received an email from Studora.com as a loan forgiving company. I am doubting if I fell for the scam or this is part of the government loan forgiving acts? If anybody knows and is dealing with the same issue, please let me know.
Diana, that is a private company that is offering paid assistance for help with application processing. The programs are federal. If they did not make it very clear that they are a private company and they are charging you a fee for assistance with government programs, I would walk away. If you want to hire a private company and pay for their services then by all means, go ahead. Just know that the programs are free to apply for and you do not need to pay anyone a fee for this if you want to apply and go at it on your own.
Based on the fact that you received a mailer claiming to be ed.gov and then it turns out to be a private company, I would not do business with them. The first thing they should be informing you is that they are a private company offering paid assistance for federal programs.
Hi
I working for the federal government (United states Postal Services) since 10/19/2015. I have made all my payments on time since 2005. I want to know if I am qualified for any federal program for student loan forgiveness. I graduated in 2005 and never got any job offers in this field. If I am qualified what kind of forms do I fill out and get it from. Thanks
The public service loan forgiveness program seems like the most likely one for you Khalida. Your employment would qualify(if full-time), but you also need to have Direct Loans and be making income-driven payments. If you have direct loans since 2005, and you’ve been making IDR payments you can apply for the program directly with your lender.
My loans are in offset. And I just filled my taxes and didn’t know that I had these loans I was incarcerated the time they went to the debt collector. What can I do to save my taxes. This is my first year filling since I’ve been released. What do I do. And the debt collectors are wanting my tax return money please help.
You need to get your loans out of default to prevent a tax offset. if your wages are not being garnished, you could apply for a direct loan consolidation to get out of default. That would need to be done before you file your taxes. You could also go through a rehab to get the loans out of default but that takes 9 months so your taxes this year would be offset.
Here is a complete guide to tax offsets.
Hello
I have 70K in student loans from Nelnet. They are in a 20 year payment plan. I am a RN for almost 25 years and my income is above 100K per year and it is my understanding that I make too much money for any loan forgiveness program is this correct?
Thank you
Sherri
The income is only a factor when determining your payment. If your income is high, your payment will be high in any of the income-driven payment plans, which means you may pay off the loan before you receive any type of forgiveness. It depends on your loan size as well. If your loan has a large balance it might not be paid off in ten years for PSLF, or 20-25 years for PAYE and you may be able to receive some sort of forgiveness. Also, family size impacts the payment amount as well. The bigger the family the smaller the payment and more likely to qualify for forgiveness. This page helps you figure out what your discretionary income is, which is used to calculate your monthly income driven payment. Take a look at the public service loan forgiveness program if you work in the public sector.
I work for TRIO (Upward Bound) which is federally funded. We service low income, First Generational students. Would I qualify for PSLF?
If your employer is in the public sector, then yes. I am not familiar with TRIO, but all that is relevant is who writes your paycheck, a government entity or a private one? If government then your employment qualifies but you must also meet the other criteria.
I have student loans for my RN and LPN. I Work FT for an insurance company and PT in a private practice. Would I qualify for loan forgiveness?
Dear Demetrios,
Happy New Year. We have a unique situation, seeking guidance, hope you can help.
Backstory: Our son received a 4yr B.S. in May 2016 on $107K Parent Plus Student Loans. Signed a 6yr contract with the Navy and shipped out in March 2017. We have been covering these loans, living on one income, since 04/17. While never having been in default, we do struggle. (Debt is on us but of course we are glad to support him anyway we can.) While we all have good credit scores and low debt, SoFi is not willing to refi these loans into our son’s name. (If the loans were in his name, he would at least be able to place them on hold during active duty and he would also be eligible for PSLF.) Do we reach out to Laurel Road or CommonBond, or is he being denied because of his affiliation with the service? Are they hesitant to lend due to the financial risks (i.e. death of lender, void of payment after 10yrs, etc). I also work for the government. Any words of wisdom would be much appreciated. Warm regards, The Smith’s
Hello 🙂
I can’t really answer why SoFi won’t refinance them for you, I am sure they determine if they want to lend on a case-by-case basis. I don’t think it would hurt you to check out the other lenders and see what your options are. Specifically, I think you should be looking for a lender which has a co-signer release clause (SoFi does not)
LendKey and CommonBond both have a co-signer release. So while you might not be able to refinance without his name on the loans at all, you could at least refinance them where you have the option to be removed from the loan after x amount of payments.
Lastly, if you work for the government you should
really
be looking at the PSLF program. You would need to consolidate into the direct loan program into an income contingent repayment plan. After 10 years you could qualify for complete loan forgiveness. I think this is your best path if you see yourself working there for the next 10 years. If you want to pursue this do not consider a private consolidation or refinance as it would immediately make your loans ineligible.
I hope this helped. Happy new years to you and yours as well, and thank your son from all of SDR his service to our country!
Very helpful feedback. Much appreciated.
I graduated in 2006 and have never missed a payment. I am a social worker, providing public service but in the private sphere, with a for-profit company since 2009. Does this rule me out for the loan forgiveness program for public service?
Yes it does. You would need to work for a government organization or a non-profit.
I have not finish school yet and plan on going back in the fall. But o took off two semesters due to personal reasons. How can I continue if I have to start back paying loans before I graduate
I have been in public service for 15 years, and am just now getting federal student loans. Would I need to continue to work in public sector for 10 additional years, or just make the 120 payments?
Casey, you need to make 120 qualifying payments on your student loans to qualify for PSLF. A qualifying payment includes things such as making income driven payments, working in the public sector at that time, having direct loans, etc. So yes, you would need to continue to work in the public sector and meet the other criteria during that time as well.
Hello. I have loans with Navient and a smaller balance with Nelnet. I have been teaching for 13 years and I wanted to know if I would be eligible for some sort of loan forgiveness.
Dwayne, I would look into the teacher loan forgiveness program and the public service loan forgiveness program. You might be eligible for both. TLF can provide up to $17,500 of immediate forgiveness, and PSLF can provide complete forgiveness after 10 years.
So I should apply for both?
Yup! I would apply for both after reviewing the programs to see if you think you qualify.
Hello, I have a real dilemma that is seemingly unconscionable by the USDE in the way they are handling it. I had several student loans during the course of my education back in the late 70s early 80s. I graduated from Weber State University with an Associate of Science degree in Nursing. The loans were all paid off to my knowledge, even to the extent that ED intercepted my federal income tax refunds to be applied to the balance when I had periods of unemployment and couldn’t make the monthly payments. Apparently I have one remaining loan with a balance of approx. $1600. This remaining loan is over 38 years old and I have not had any documentable income for over two years. Now I am suffering from a disability, Miller-Fisher Syndrome (a variant of Guillain-Barre Syndrome) which has rendered me unable to work, and based on individual accounts of others with the same affliction, could be permanent and most likely will be. I filed a disability claim through the SSA and was awarded approx. $1600/month to support myself. Once this happened, like the vultures that they are, the Treasury Department found the old loan still in default after nearly 40 years and began to garnish me of approx. $260/month to apply to the loan balance. This has left me with an inadequate amount of money to support myself each month with my current financial obligations and to have anything left over after the bills are paid to buy groceries with and gas for the car to get around. For them to attach a disabled person’s meager award from the SS Disability people is despicable and unconscionable. My income from SSD is far below the “poverty” income level and no one can live on less than $20k/year, which works out to be less than $10/hr. What can I do to get on a $0 repayment amount or have the loan forgiven? I can’t afford to have this cut in my monthly paycheck for another 6 months to pay the loan off. I’m a veteran, I no longer work in the field of my education, and am most likely permanently disabled for life. How can a government entitiy such as this prey on a disabled senior citizen to offset a student loan balance of such insignificant amount that they would deprive me of my disability pay? I have no other source of income and no assets to absorb the blow of this dastardly deed by our beloved federal government. It’s an evil they have enacted upon me and I am at their mercy. Please HELP!! Many Thanks!!
Bryan, have you taken a look at the permanent disability discharge program? If you are considered permanently disabled and that status is not going to change for a minimum of 5 years, you should be able to have the loans discharged in full. For a garnishment of social security, $750/mo is off limits. Since you are at $1,600/mo they are permitted to garnish up to 15% of that so long as you don’t fall below the $750/mo limit. Unfortunately, there isn’t much grey area here and they just apply the law as its written. I would definitely look into the TPDD program.
Bryan if you qualify for SSI for disability the permanent total disability discharge program should discharge our loans. I have not yet been approved for SSI disability but I did apply to have my student loans discharged 3 years ago with medical documentation and a letter from my Dr. that I was unable to return to work. If I receive an income more then the min. amount of I believe its about 16000 per year during the 3 yr. probation period they can reassign the total amount. I’ve just had to send in a a signed paper with proof of no income once a year. Its terrible the stress it causes. I have a traumatic brain injury from an auto accident 7 years ago which is why they approved it. I have Crohns disease and am unable to work at all. I am in the process of applying for SSI now. Good luck I hope you can get approved.
Hello, I have been working for state colleges for 4 years. My salary is roughly 60k. My loan debt is over 80k in federal stafford loans. Because I initially had an IDR, my payments so far have mostly gone towards interest. I make extra payments each month to avoid accrued interest from capitalization.
I am faced with a conundrum and I was wondering if you had any input, as it would be much appreciated.
I was wondering if I qualify for a public service loan forgiveness (I have not filed for this, but it seems that this can be done retroactively should proof of employment be provided) if I continue working in this sector or for another non-profit that qualifies. In that case, I would continue making minimum payments and not worry about interest capitalization because any remainder would be forgiven after the 10 years and 120-qualifying payments (which I have been making). This also depends on the maintenance of the program for forgiveness, if this program is cancelled, I would have to pay all of the untended interest, so that appears to be a gamble but correct me if I’m wrong.
Alternately, because I have a very good credit rating (FICO 820) and my salary is likely to increase, I could consolidate and refinance with a private lender for a lower rate than the 6.8% which applies to most of the accounts in the total loan. I have looked without doing a hard credit check and lenders and rates seem to be b/t 2.9-4.0% variable (and the prime rate is likely to increase).
And help would be appreciated as I regret my advanced degree was not in the field of finance.
Nate
Hi Nate. First I must applaud you for having a really good grasp of the situation around your student loans, finance degree or not! You aren’t able to come to a conclusion because there really isn’t one simple and correct answer. I’ll try to give you my advice.
If you think your employment will continue in the public sector, then the PSLF program seems to be the best path in my opinion. You are correct that it’s not something you need to pre-enroll into. As long as for 120 months you are making income driven payments, and are employed in the public sector with direct loans, you should qualify. Please also note that you have to have Direct loans. Are your loans Direct Stafford? If they aren’t you would need to consolidate them into the direct loan program, but that would reset the ten year period. As far as them canceling the program, it’s certainly possible but I think its unlikely. There were some talks about canceling the program. I still personally think its unlikely, but your guess is as good as mine.
As far as going with a private refinance, its also not a bad idea if you think your income is stable enough and you won’t need any of the income-driven plans in the future. You are essentially guaranteed significant savings with the better rate.
I think, if I were you, I would hang tight and try to have my loans forgiven in 6 years. If something happens to the program in the meantime, then I would seriously consider the private refinance.
Thank you very much Demetrios, this was very helpful.
After doing more digging, it became clear that the Direct/FFEL thing got me, it appears 28k would currently be eligible.
My totals are-
unsubsidized direct- 14k
subsidized direct- 14k
FFEL unsubsidized- 16k
FFEL subsidized- 33k
Would it be possible to “hedge my bets”, making qualifying payments only on the Direct Accounts, while refinancing the FFEL accounts with a private lender (or, alternatively, consolidating only the FFEL accounts with a direct consolidation loan?). I am not sure I want to constrain my employment options for the next 10 years, but it is something to consider. Can I make more at a non-qualifying to cover the difference is the question. Something about opportunity cost is coming back from intro to economics…haha.
Cheers,
Nate
One more thing to consider is that your FFEL loans WILL qualify IF you consolidate them into the direct loan program. But, if you consolidate your payments in the PSLF program get reset so do it with caution. I can’t really tell you what’s the best option for you, you need to determine that. For PSLF you need to work 30/hours a week so you could always pick up a second job at a non-qualifying institution. Also the payments do not need to be consecutive, so if you work in the private sector for some time that does not nullify your previous work or reset the counter.
I will say that your eligible loan balance of $28k for forgiveness after 6 years doesn’t seem all that significant. I would go for a higher paying job if it’s covering the difference (interest + principal included). You seem capable of making that call! Good luck to you!!
Federal subsidies are what create artificial markets (bubbles) and the reason why tuition is so high in the first place. It would be better for everyone if there was no “help” from the Federal government at all (except for the “non-profit” universities of course).
That’s kind of a jerky thing to say. Everyone isn’t perfect with a mommy and daddy to hold their hand in the student aid office. Quite frankly I was lied to and misled in every way imagineable regarding my loans by the financial aid office when I was a kid and now that I’m older and smarter I have a mountain of debt to deal with. It’s truly unfortunate that the world isn’t perfect like you.
I was wondering is there a way to get an old ITT loan forgiven? I went there in 2009 for about a year and I didnt learn anything. Unbeknownst to me, they had already charged me the entire amount to go there upfront there were time I would go into the financial aid office to talk about my loans and they would already have them done without me knowing what they did. I am aware that they have closed ALL ITT campuses across the nation, was just looking for some information on how I can get out of their loans. I am in school now for something completely different, thanks in advance.
The school would need to close within 90 days of you being a student there to qualify for discharge of the student loan. If you are saying that you didn’t apply for the actual loan, contact the lender and request a copy of the promissory note with your signature on it. They need to be able to validate your debt.
Hello,
I would like to know if being in the IDR program will affect your credit score.
If you are making your payments in an IDR it would not negatively impact your credit, it would actually help. You would be making on-time payment on your loans.
Hello, I finished school in 1990. My loan amount at the time was approx 26k. I kept deferring and forbearing my loan over the years. At one point i was contacted by some guy saying he was from a student loan refinancing program and he could get my loan to 3.25%. I signed up and well that never happened and currently my loan is at 88k. I now have a family and have a household of 9 including my dad who I take care of because he’s elderly. I make 120k but it’s not enough with all the bills and medical expenses. Do i have any other options as my forebearance tonw is running out. Thanks
Ernest, sounds like a fair amount of damage has been done by capitalizing interest on the loan. Based on your income and family size of 9, it sounds like your income driven payment could be around $450/mo or so, which may or may not help you. Since your income is relatively high, you might be a good candidate for a private consolidation. Check out LendKey. Their current rates are very competitive (2.74% variable | 3.15% fixed, for example). There is no easy way around the loans, and allowing them to continue in forbearance is just making your problem bigger. Look at your federal repayment options, and if they don’t help you because of your higher income, I would seriously consider a private refinance in your case to get that interest rate down. Generally, the federal rates are much higher than private, right now.
Earnest S,
Don’t listen to Demetrios; stay on the income repayment plan. Your loan is forgiven Twenty-five years from the date it was issued. Don’t EVER take out a private loan to repay a federal consolidated student loan because the changes made by President Obama to forgive that loan will not apply.
Lynn,
Forgiveness in an IDR only applies if the payment calculated is low enough where the borrower will still have a balance after 20-25 years. In Ernests case, his income is high enough where he’s unlikely to be forgiven any amount. He needs to consider his individual circumstance, he may or may not be better off in a private loan. If he is not going to receive any forgiveness in an IDR due to higher income, then he might be better served by refinancing and getting a lower rate which will result in a lower monthly interest payment, as well as less total interest paid over the life of the loan. There is no one size fits all for anyone, and I am just suggesting he take a look at all his options because some people, specifically with higher income, can certainly be better off in a private loan.
The forgiveness in an IDR happens based on when you enroll into the IDR, not from the date the loan was originated.
Thank you both for the information. I will look at my options based on both of your suggestions. I graduated in 1990, 27 years ago, so I’m guessing if I was to be forgiven , I would’ve received some sort of notice already. Thanks again.
I have student loans that equal $49,000. I graduated in 2012. Fms, a debt collection agency for U.S. Dept. Of Education, is now trying to garnish 25% of my wages. They do not have a court order yet. I’m a single mother with 4 dependents and my salary is $45,000. What are my options?
If you are not already consolidated in the direct loan program, you could consolidate and your loans would immediately be taken out of default. Apply for an income-driven repayment plan since it sounds like you need payment relief. Based on the numbers you provided it sounds like your payment in the PAYE or REPAYE would only be around $49 per month. Once the judgment is passed and an active wage garnishment is happening, your options become very limited so I suggest you take these steps now. Your other option is to talk with the debt collector and start making payments.
I am currently paying back my loans and I was paying 54.66 for a year and then had to reapply for IDR and now my payments are higher because my income increased but I am paying off multiple hospital bills, my rent went up, I have a car payment. I just sent them what I could afford which was only 10.00. I am stressing out because I need my refund money in order to pay towards my bills. What can I do?!
Mari the calculation for your payment in an IDR depends on your discretionary income which is calculated this way. The only thing I can think of is to make sure you are in the PAYE or REPAYE plan. These work off 10% of your discretionary income, vs 20% for the ICR and 15% for the IBR. So those could help reduce your payment a bit if you aren’t already in one of them. The calculation for the IDR plans do not consider any increases in your personal cost of living, it’s just based on the national averages and they do increase it annually it just doesn’t consider your personal situation.
Correct me if I’m wrong but if you are currently making payments, they should not be able to garnish your return because you would not be in default at the point of applying for your return. They shouldn’t take your return if you haven’t defaulted I wouldn’t think.
That’s correct
I am a parent of three college graduates. I have about 60K in parent plus loans. is there any forgiveness for parent loans?
Gary, parent plus loans consolidated into the direct loan program are eligible for the income contingent repayment plan. Are you looking for payment relief? PLUS loans could also qualify for teacher forgiveness, or public service loan forgiveness after a direct loan consolidation. So yeah, the same forgiveness options generally exist for parent PLUS loans, but you need to first consolidate and then if applying for PSLF you must make ICR payments in the consolidated loan.
Hi! I just graduated December 13th, 2017, and i am currently unemployed. I have a little over $100, 000 debt. What are my options?
Chasity, first I would apply for an income-driven repayment plan if your loans are federal. You are probably currently in a grace period, but since you would likely qualify for a zero payment you may be better off in an IDR since the payments actually count towards loan forgiveness. That payment plan should be affordable for you even when you find work. The end goal should be to pay down the debt, so once you find a stable job and can make bigger payments, start paying it down. If you plan on working in the public sector, or as a teacher I would review these two programs to know what you must do to qualify for loan forgiveness in those programs.
I took out $9000 in student loans in 1988 as of today I still owe them $20,000. I’ve been paying $241 a month for the last 14 years. I’ve tried settling and they won’t except a pay off. What can I do?
Tami, if none of the programs on this page can help you there really aren’t many options besides paying off the loans, unfortunately. It doesn’t sound like you need any payment relief so an income-based payment would probably only hurt you by allowing more interest to capitalize on the loan. If you are able to make extra payments towards principal every month, you could pay it off quicker and save a large amount of interest.
Hello, I completed graduate school in 2001 owing about 25k. I’m a psychologist and work with lower income children, but I operate my own practice as opposed to an agency. I have wife who doesn’t work and 2 children. After overhead and businesses expenses my net income is pretty low (approx 45). I still owe about 9k in student loans. They are stafford subsideized loans, all through the same lender. Would I qualify for any of these programs? Thanks.
Jason qualification via a comment form like this is impossible. I suggest you review each of the available programs to see what you think you qualify for. It sounds like an income-driven repayment plan may help you if you need some relief on your monthly payment. Be careful though, with only $9k in loans the goal should be to get rid of them and pay them off and not push them down the road. If you really need payment relief look into an income-driven repayment plan.
Hi, I graduated college in 2009. I couldn’t afford the monthly payments I had so my loan defaulted. They garnish about $150 biweekly from my pay checks. I’m trying to buy my first house. I was told I wouldn’t be able to do deferred payments and could get my loan closed if I payed $15,000 over 90 days. That would be $5,000 a month which is completely unaffordable, I don’t even know why she bothered getting what my wages are and bills if she was just going to give me that insane of a monthly payment. Are there any options for me. I was thinking I might just have to find another company to buy the loan off and have really high interest payments, please let me know if you can think of any better options.
Thelma, once your loans have reached the state of a wage garnishment there aren’t many options left. Take a look at this page and make sure they are not taking more than what they are allowed by law.
I have a B.S. and have consistently made my payments since 2004, upon graduating. Does this program take this into account? Could I be eligible for forgiveness. I am down to only owing $3600.
The Public Service Loan Forgiveness program is retroactive but only if you are in a direct loan with an income drive repayment plan, and only since 2007.
HI, Its been almost 20 yrs later since i went to school. I had a co signer for my loans and those were paid. And now I just receive a letter from a collection agency in the amount of $9133 from the US dept Of Education. I havent heard from them in over 15yrs approx. I cannot afford patment . I make less than 50k a yr,How can i get rid of this
Hi Khurram, we’ve seen this before where people are notified they have outstanding student loans that they were not aware of. I would tell you to not avoid them, as they won’t simply go away. You should first ask the debt collector to send you a validation of the debt. Secondly, I would create an account and login to the studentloans.gov site, you should be able to view your loans through the system. Then to get your loans out of default take a look at this page and review the two options at the bottom. I would also read a bit about the repayment plans that may be available to you. Some of them are very affordable (payments as low as $0.00/mo).
I have been in approved deferment for Federal loans going on 8 years. I am a 2004 graduate of DeVry, single, 45 years old. I have had difficulty finding any job regardless of industry or skill level, and currently make $14 an hour as a temp, living with family because I cannot afford a place of my own, or anything else to survive. Isn’t there any way to get any kind of debt relief or elimination on student loans? A couple companies I had talked to all want monthly payments, and right now that is impossible for me. Needless to say it doesn’t get included in bankruptcy, and I can’t even afford to file for that because I can’t afford monthly payments. What part about being broke is hard to understand?
Sandy, it sounds like the best option for you would be an income-driven repayment plan instead of deferment. You could qualify for a payment of $0.00 per month in the PAYE or REPAYE plan. Under either of these plans you would be eligible for loan forgiveness after 20-25 years of your income driven payment. I would take a look at those if I were you. Call your lender and apply on your own.
I’ve been paying my student loan through OSLA since 1997. I still owe 13K. Is there a student loan forgiveness for that since I’ve been paying consistently for so long? I know have one child in college and I’m her cosigner and one going to college next year where I’ll have to be a cosigner.
Maureen, I am not aware of any programs that are available for what you described. Sorry.
I have been contacted by a few companies regarding loan forgiveness but they ask for 3 payments of 250 for the first 3 months. How do I know these are legit companies?
I would avoid working with any companies that charge a fee before services are performed.
Hi Demetrios,
Are there any forgiveness options if graduated from ITT-Technical Institute?
I graduated on December 2007 (B.S. Engineering) , but some companies just won’t hire graduates from this school, therefore I cannot advance in ma career nor get a M.S since all schools offering masters degrees in engineering do not recognize the school either.
What are my options?
Please advise.
Thank you
Hello Fernando. Take a look at this page which talks about closed school discharge. Since you already graduated, I do not believe you would qualify.
Hi, i get calls from an organization that wants to refi my fed parent loan. They indicate they cut the payment in half, but must charge me a several hundred dollar fer up front as part of their process.
Ive had people tell me NOT to work with any such company that charges several hundred dollars up front to then have me go thru their Tefi “process”.
Thoughts?
Parent Plus loans are eligible for the income contingent repayment plan which you can read more about here. You do not need to pay anyone for a consolidation. I suggest you try to apply on your own first, and then if you still need assistance consider hiring a private company for help.
Hello,
I worked full time, putting myself through school while hoping to obtain an elementary teaching position. I didn’t get one after several years as a teaching assistant. I felt I was misled by the industry, but that’s another issue. We are talking about over $100,000 in student loan debt.
I now work in maintaining and painting
apartments for a family owned business, which pays “cheaply” at $10.00 an hour.
I am on an income driven repayment plan ,with 0 payments with Mohela, but was wondering what I could di or if I would qualify for any forgiveness . I am tired of working hard for little money and nothing to show for it but debt. Not smart…
Brenda, the income-driven repayment plan does have forgiveness after making those payments for 20-25 years If you are looking for immediate forgiveness, you would need to qualify for public service loan forgiveness, or disability discharge, which neither sound like they would apply for you. It sounds like you are likely in the best scenario that’s available to you at the moment.
Single mother can no longer make payments on student loans
Hi Misty. Take a look at the income-driven repayment plans. They should give you a very affordable payment, it can even be as low as $0 per month.
A payment of 0 dollars is no payment at all. What would that do to reduce my student loan debt?
It wouldn’t reduce your debt short term, in fact, the loan would continue to grow due to capitalizing interest. The benefit is that long-term if that $0 payment continues, the loans are forgiven after 20-25 years in the income-driven repayment plans. These plans are intended to stop people from falling into default, going to collections, getting their wages garnished, having their tax refund taken, etc.
I have recently applied and was estimated to have a monthly payment of $0.00 a month. I am just worried that I may have my tax return taken. I just want to confirm that it will not be taken if my monthly payment is at the $0.00 estimated payment.
If you do not have any defaulted loans you should not have your taxes offset.
I have been called by the student loan forgiveness by telephone but was disconnected before able to speak to anyone. I immediately returned several and was not able to reach anyone. Monday was the last call. I returned the call but was hung up on. I am a permanently disabled Gulf War veteran and have worked for the Department of Defense as a civilian for well more than twenty years which I think qualify me for forgiveness. I am also currently unable to work and am unemployed.
Please provide as much information as possible. Thank you.
Hello Vera, this page talks about disability discharge and how to check your eligibility. If you want to apply you can do so on official site located here. If you prefer to have someone assist you through the process you can call us and we will connect you with someone who can help. We recommend applying on your own if possible since it will be free, but if you hire someone to help you there will be a fee involved. Good luck!
How can i apply for my self
I would contact your lender and see if they can direct you. It depends on what you want to apply for, what you qualify for, etc. If you are looking for a consolidation, you can start here.