Student Loan Forgiveness Programs

Student Loan Forgiveness ProgramsThe cost of education is always a rising curve, in the US. With undergraduate degrees averaging between $20k to $50k, per year, depending on the kind of university – Public or Private (Read Public vs Private College Statistics) – and MS costs in the neighborhood of $80k, including living and tuition, you can imagine that studying in America often comes with a host of financing troubles.

And this doesn’t even cover the massive bills in getting a business or a medical degree. Over 44million Americans hold a whopping $1.5 trillion in student debts with average debt per student around $37k.

Read How much does an MBA cost in India, USA and Europe and Cheapest countries to study.

Naturally, loan repayment and loan refinancing have become a common educational side-effect, for students graduating with 20+ years of education loan to pay off. But the most blessed and idyllic situation is the possibility of either having a scholarship foot your university bills, or on the other side of the coin, have your loan pardoned or forgiven. As if the loan never existed.

Most private lenders, unfortunately, don’t take to such a loan discharge scheme very kindly. After all, the idea of lending money has never been without its gains from interests over the repayment years, especially for a private bank or financier.

However, the US Federal Government does often extend a helping hand of Loan Forgiveness, when it comes to certain conditions – either the kind of job, kind of degree, or the services promised or provided, by the borrower, to the American society.

Often universities, themselves, find ways to relieve their students off the cost burden based on predetermined conditions like merit or financial background of the student.

Read,

 
In this article, we have collated some of the popular federal government schemes, and other state or university schemes, of student loan forgiveness. Unfortunately, a lot of the federal schemes are only available to US citizens. However, international students can avail university or certain organizational schemes.
 

Student Loan Forgiveness Schemes

 

Scheme Eligibility Criteria
Public Service Loan Forgiveness PSLF (details) If you have a Direct Loan (loans available to the borrower directly from the Ford Federal Loan), and you have fulfilled certain conditions, you may be eligible to apply for a loan forgiveness under the PSLF scheme.

Candidates need to have satisfied the following eligibility criteria.

  • Loans are required to be Direct or Direct Consolidated
  • Candidates need to have satisfactorily made loan repayments for a continuous 120-month period. They are required to complete and submit an Employment Certification form, annually, to verify their qualification towards PSLF at the end of the 10 years
  • Qualifying employment includes direct government positions, non-profit organizations that are tax-exempt, or not, as long as they satisfy the requirement of qualifying public services, AmeriCorps, and Peace Corps volunteering

A rejection is not final and a candidate can reapply upon successfully meeting the conditions, in his second attempt.

Teacher Loan Forgiveness (details) If you teach in a low income school for 5 continuous years, you may be eligible for up to $17.5k loan forgiveness. The loans need to be Direct or under the Federal Family Education Loan Program (FEEL) categories.
Income Driven Repayment Plans (details) In this scheme, your loan repayment amount is adjusted to your income, as long as you have a Direct or FEEL Loan.

There are four varieties of Income Driven Repayment Plans with their respective repayment amount.

  • Revised Pay as Your Earn (REPAYE Plan): 10% of your discretionary income
  • Pay as You Earn (PAYE): 10% of income but not more than the 10 year standard repayment amount
  • Income-Based (IBR): 10-15% of income
  • Income Contingent (ICR): Whichever is less, 20% of income or standard repayment for 12 year period
Federal Perkins Loan Cancellation (details) Up to 100% Federal Perkins loan discharge is available for teachers from low-income families, special education teachers, or in a field with extreme shortage of qualified educators. This scheme is also available to other public service professionals like firefighters, police officers, military service men and women, nurses, etc.
Total and Permanent Disability Discharge (details) Candidates with total and permanent disabilities can be relieved off their Direct, FEEL, Federal Perkins, or other obligations.
Death Discharge (details) Candidates under their parent’s PLUS Loan scheme, or who have loans under their own name are liable to get the loan discharged to remove any hardships from surviving dependents.
Bankruptcy Discharge (details) Candidates who have surrendered their bankruptcy status can get their federal student loans discharged upon proper adversarial court proceedings in the presence of creditors
Closed School Discharge (details) In the unforeseen circumstance of finding your school shut down, while you are enrolled, you can avail a full discharge of your Direct, FEEL or Perkins loans.
False Certification and Unauthorized Payment Discharge (details) If a student is cheated out of Direct or FEEL loan money, by a school, under false pretenses, he can apply for such a discharge.
AAMC Loan Forgiveness Programs (details) The Association of American Medical Colleges, or AAMC, have state wise schemes of various Loan Repayment, Scholarship and Forgiveness Programs
Teach for Texas Loan Repayment Assistance Program (details) The TFTLRAP provides loan repayment assistance to teachers in schools serving communities with shortage of qualified teachers. Unfortunately, the shortage of funds has relegated this scheme to only renewals and no new applications post 2019.
Math and Science Scholars Loan Repayment Program (details) This is available to only US citizens and is applicable to qualified teachers in Texas Public Schools.

 

Other University based Loan Forgiveness Programs

 
Besides the above, mostly federal loans forgiven and forgotten, there are others that are provided by business schools, like Yale SOM, Wharton, Stanford GSB, Berkeley Haas, Fuqua and Kellogg, for the hefty charge on MBA and other business programs. More details on those can be found here – MBA education loan forgiveness programs for B-School students.
 
A few other schools that participate in such loan relief programs are listed below.

  • Columbia Business School Loan Assistance Program (details):
    This program helps to reduce the financial burden of graduates who take up management and leadership positions in the public and non-profit sectors.
  • Stanford GSB Loan Forgiveness and Refinancing (details):
    This award recognizes the efforts of MBA graduates who choose less lucrative professions that are aimed to positively impact social, economic, and political stability. The candidates are required to either work for a qualified non-profit or a local or national government.
  • North Carolina’s Forgivable Education Loans for Service (FELS) [details]:
    The college Foundation of North Carolina, including University of North Carolina, supports Forgivable Education Loans for Service program in NC. This is provided to students, with a minimum academic record, who are committed to working in critical employment shortage professions in NC.

 
Clearly, the above list is not exhaustive and we will keep adding to it as we get wiser. However, be forewarned about a lot of scammers waiting to lure desperate students into a far more trying and difficult situation, according to this article by Marketplace.org. Look for the signs and find credible ways to keep your student debt from getting deeper. Meanwhile, here is a loan comparison tool for pushing your cause – Student Hero.

Read 5 factors to compare when choosing an international Graduate Student Loan.
 
Good luck!
 
Some relevant links to help you along.

Reference: 1


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5 Comments

  1. Abhishek Bapat says:

    Hello I’m Abhishek Bapat from India . I have completed my bachelor of commerce from a recognised university with marketing as a special subject and have completed my education in English . I have been working with Foliage Outdoors as an instructor since 6 years . Foliage outdoors is a travel and tourism company . I have assisted corporate outings as well as I have handled management work . I even have a 1 year marketing experience in our own family business which is a pharmaceutical distribution. I have completed Company Secretary foundation level with A grade . I want to pursue my further education by doing MBA in marketing . So what are the requirements needed please let me know

  2. Rajkumar says:

    Hi sir I completed b tech in 2014 ug only ,I’m eligible for ms? currently I’m working in non it …

  3. Vineta says:

    Hi ,

    I am a chemical engineer with experience of 3 years + in operations. I want to persue my MBA in operations. Is it a good idea to give GMAT or I should try for Indian COlleges. Can you please guide me.

  4. Faizal says:

    Hi Sameer,

    I am Faizal from India, I have completed my B.tech (IT) and my MBA operations management. I have 3 years of work experience. I wanted to work abroad. What is it I can do to jump abroad. ?

  5. Sameer Kamat says:

    @Abhishek: We’ve covered the requirements for international MBA programs in this video:
    https://www.youtube.com/watch?v=3hugSTxze0k

    @Rajkumar: Based on the minimal information you’ve shared, there doesn’t seem to be any reason why you can’t apply to MS programs.

    @Vineta: You would probably end up as an older student in Indian MBA programs. GMAT MBA may work better.

    @Faizal: Join a company that can provide you with international opportunities. Or go for a masters degree in the country you want to work in.

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