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Private Student Loan Forgiveness

Allan Said:

What are the details of Obama's student loan forgiveness plan?

We Answered:

The law is very specific... your private loans won't be forgiven no matter what you do... sorry. When you die, your cosigners will still be responsible for this debt if it isn't paid off yet. Also, not all your assumptions about the whole 20 years all is forgiven thing is true... the law is very specific about what jobs you get that will allow you to have your loans forgiven (just because you work for a non-profit isn't going to qualify you). You have also been misinformed about the unsub to sub loans. This is simply not true.

This info is directly from the cited source below... from a Dept of Education publication on page 44. Note, that federal loans are put on a 10 year payment plan automatically. If you make 120 payments (10 years) the loan would be paid off... you wouldn't have any "remaining balance" to be forgiven. This is one of those laws that looks good on paper, but not very helpful.


What is loan forgiveness for public service employees?
Under this program, the remaining outstanding balance of principal and accrued interest on an eligible Direct Loan will be forgiven for a borrower who is not in default and who makes 120 monthly
payments on the loan, under certain repayment plans, after Oct. 1, 2007 (the first cancellations of loan balances will not be granted until Oct. 1, 2017 at the earliest), while employed in certain public service fields. You must be employed full-time in a qualifying public service field during the same period in which the 120 payments are made and at the time that the cancellation is granted.

For this loan forgiveness program, eligible Direct Loans include Federal Direct Stafford Loans, Federal Direct Unsubsidized Stafford Loans, Federal Direct PLUS Loans (for parents or graduate and
professional students), and Federal Direct Consolidation Loans. Although loan cancellation is only available for loans made and repaid under the Direct Loan Program, borrowers with loans made
under other federal student loan programs may be eligible if you consolidate those loans into the Direct Loan Program. However, only payments made on the Direct Consolidation Loan will count
toward the required 120 monthly payments.

What is a public service job?
Eligible public service jobs are full-time jobs in the following fields:
• Emergency management
• Government
• Military service
• Public safety
• Law enforcement
• Public health
• Public education (including early childhood education)
• Social work in a public child or family service agency
• Public child care
• Public service for individuals with disabilities
• Public interest law services (including prosecution or public defense or legal advocacy in low income communities at a nonprofit organization)
• Public service for the elderly
• Public library sciences
• School-based library sciences and other school-based services
• Certain tax-exempt organizations
• Faculty teaching in high-needs areas, as determined by the Secretary
• Full-time faculty member at a Tribal College or University

Note: A borrower who pays only, or primarily, under a 10-year standard repayment plan or under another repayment plan in amounts consistent with a 10-year standard repayment is unlikely
to have a remaining balance for loan forgiveness after making 120 payments on the loan.

How do I qualify for this loan forgiveness?
To be eligible to have remaining balances canceled, you must not be in default on the eligible loans and must have made 120 monthly payments on the eligible loan(s) beginning after Oct. 1, 2007. Earlier payments do not count toward meeting this requirement. Payments must have been made under any one or a combination of them following Direct Loan Program repayment plans.
• Standard Repayment Plan with a 10-year repayment period.
• Income-Contingent Repayment (ICR) Plan—not available to parent Direct PLUS loan borrowers.
• Income-Based Repayment (IBR) Plan—not available to parent Direct PLUS loan borrowers.
• Other Direct Loan repayment plans, but only payments that are at least equal to the amount that would be required under the 10-year Standard Repayment Plan may be counted toward the
required 120 payments.

NOTE: In the case of a parent PLUS loan, the qualifying public service employee is the parent, not the student on whose behalf the loan was received.

Rebecca Said:

service job for pilot?

We Answered:

If you want to gain hours or like flying for free, you could look into volunteering for Civil Air Patrol. I know several pilots who fly for them (mostly retired folks) and get to log lots of time on search and rescue and other missions. You have to have at least 200 hours to be a mission pilot, but based on your ratings you'll probably qualify. I've also heard from the younger pilots that they don't get to log as much time, but nonetheless it is still something you could like at.

Alfredo Said:

Does anyone know very specific details about the new student loan forgiveness program?

We Answered:

I didn't see the CNN program, but here is what the Department of Education has for the student loan forgiveness policies. Page 47 of this book describes the details of having loans forgiven. These are not just for public health but the wording is "Public Service". (The idea is that those who work in public service often have a very low salary and are not able to make as much money as those going into the private sector). Also be aware these are for FEDERAL loans. If he has private student loans (or he consolidated loans after graduation, he probably won't qualify. I say that because all federal loans have a 10 year payment plan, not 30 years as his are).
http://studentaid.ed.gov/students/attach… (page 47)

What is a public service job?
Eligible public service jobs are full-time jobs in the following fields:
• Emergency management
• Government
• Military service
• Public safety
• Law enforcement
• Public health
• Public education (including early childhood education)
• Social work in a public child or family service agency
• Public child care
• Public service for individuals with disabilities
• Public interest law services (including prosecution or public defense or legal advocacy in low income communities at a nonprofit organization)
• Public service for the elderly
• Public library sciences
• School-based library sciences and other school-based services
• Certain tax-exempt organizations
• Faculty teaching in high-needs areas, as determined by the Secretary
• Full-time faculty member at a Tribal College or University

Note: A borrower who pays only, or primarily, under a 10-year standard repayment plan or under another repayment plan in amounts consistent with a 10-year standard repayment is UNLIKELY TO HAVE A REMAINING BALLANCE for loan forgiveness after making 120 payments on the loan.

(This is why no one ever really qualifies, they passed the law, but if the person actually pays on it for 10 years, they pay the loan off!!!!) Stupid, worthless benefit that looks good on paper but never gets used unless someone takes a job working for minimum wage after they earn their degree.

How do I qualify for this loan forgiveness?
To be eligible to have remaining balances canceled, you must not be in default on the eligible loans and must have made 120 monthly payments on the eligible loan(s) beginning after Oct. 1, 2007. Earlier payments do not count toward meeting this requirement. Payments must have been made under any one or a combination of the following Direct Loan Program repayment plans.

• Standard Repayment Plan with a 10-year repayment period.
• Income-Contingent Repayment (ICR) Plan—not available to parent Direct PLUS loan borrowers.
• Income-Based Repayment (IBR) Plan—not available to parent Direct PLUS loan borrowers.
• Other Direct Loan repayment plans, but only payments that are at least equal to the amount that would be required under the 10-year Standard Repayment Plan may be counted toward the required 120 payments.

Connie Said:

Extremely depressed and stressed. Overwhelmed with student loan debts. Advice anyone?

We Answered:

Yes there are loan forgiveness programs out there for federal student loans (not private). I will attach a link with more details. Unfortunately for you, all of them require you to be working (or dead or disabled) to utilize them.

Crystal Said:

Can someone make me feel better about my student loan debt?

We Answered:

It all depends on what you want to get out of it. Check out my financial aid blog for more financial advice info and more useful ideas
http://student-loans-info.50webs.org/

Jacqueline Said:

Student loan debts?

We Answered:

Well, are you in default yet? If not, and even if you are, there may be help. First, call your servicer and see if you qualify for a hardship deferment (these are renewable for three years) on your loans. If you are unmarried, low income and a parent you may qualify for one. Ask also about income contingent repayment options as well. Or ask about making reduced payments until your child is in school and you are able to return to the work force. Most lenders will work with you to keep you out of default if possible, but you have to ask for help. If you are in default look into a consolidation loan to get this mess under better control and a part-time job again.

You cannot discharge student loans in bankruptcy now, so that is not a route you can go and shouldn't anyway. A bankruptcy affects you for a long time. And a lender who already knows you're in trouble on your student loans is not likely to lend a private loan to you either, especially at that amount if you have no collateral and no ability to repay. Bank loan officers aren't paid to be charitable to the poor, trust me, and a check of your credit will show problems with student loan repayments. That's a big red flag to them. And if you've discussed this little scheme with friends then it's likely to get back to the bank that this is your plan, and it's called fraud. Or are you willing to give your child up to go to jail? Sorry, that's the harsh reality of it.

You are far better off to work with the lender, or to get money from your family (or sue for child support if necessary) to work at paying this back.

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When you die, your cosigners will still be responsible for this debt if it isn't paid off yet.

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