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How do I qualify for student loan forgiveness?

Girl spreading arms out in freedom
There are a few avenues available for borrowers who are seeking to have their student loans forgiven. The easiest and most accessible way to achieve forgiveness is through the government-sponsored Income-Based Repayment (IBR) plan.

The IBR plan was designed to help borrowers having difficulty meeting their monthly student loan payments. But there’s another perk that comes along with the program: complete forgiveness of student loan debt after either 10 or 25 years of on time payments.

The 10-year forgiveness opportunity is available to public service workers. Loan forgiveness for public service employees is granted only if qualified borrowers are employed in the public service sector for a full 10 years, and make consistent, on time payments during the full extent of those 10 years.

The 25-year forgiveness opportunity available to all IBR plan participants, but they too must make consistent, on time payments for the entire 25-year duration that their enrolled in the IBR plan.

The Risks Involved

However borrowers who plan to have their loans forgiven after 10 or 25 years should be well aware of the risks involved. Every payment for the duration of those forgiveness opportunities must be made. If borrowers miss one, they may very well be disqualified, or have to begin their lengthy stint over.

This is particularly important for those who are making the minimum payments allowed on their student loans. Making the minimum payments allows more interest to accrue, which ultimately means a borrower will pay more to satisfy their debt. If borrowers are trying to qualify for student loan forgiveness, and if they’re just paying the minimum payments, then they subject themselves to a gamble.

If they don’t encounter any financial difficulties and are able to maintain their payments, then they will ultimately save money by making minimum payments and qualifying for a complete cancellation.

But if they do run into financially hard times, and if they do miss a payment, then their decision to make minimum payments will come back to haunt them as their student loan interest will have grown significantly over the course of 5, 10, or 20 years.

Other Sources of Student Loan Forgiveness

There are other avenues that end in complete cancellation of college-related debt. These sources include proving student loans cause unmanageable financial hardship (which many claim, but an extremely small amount can convince a bankruptcy court to agree with them), receiving false certification from a school, attending a school that closes and not being able to transfer credits, or by a student becoming permanently disabled.

Additionally, if a student loan borrower passes away, the remainder of the debt may become cancelled as well.

Keep in mind, however, these other opportunities are rare, and most will not qualify for them.