Student loan forgiveness is a scenario where all or a portion of a borrower’s outstanding student debt is discharged or cancelled. Forgiveness programs in the US serve as a means to relieve the burden of student loan debt which can become a source of stress on one’s finances. US student loan forgiveness is granted for various reasons like disability, bankruptcy, or public service.
Here are a few situations where US student loan forgiveness, discharge, or cancellation is viable.
If you are employed by the government or operate for a non-profit organisation, you can receive forgiveness under the Public Service Loan Forgiveness (PSLF) Program.
If your academic institution closes while you are enrolled or soon after you’ve withdrawn, you may be eligible for discharge on your federal loan.
If you are permanently and completely disabled, you might qualify for a discharge on your federal loans.
In the scenario of the death of the borrower or the student on whose behalf the loan was taken out, federal student loans are to be discharged.
In rare cases, you can have a student loan discharged after you’ve declared bankruptcy. However, this process is not automatic.
Loan forgiveness for student loans can also apply in the scenario of a borrower’s defence to repayment, false certification of one’s eligibility for the loan, having an unpaid refund from your school, and being a victim of forgery.
If you are eligible for complete student loan forgiveness, or discharge of your loan, you need not continue making any more payments. Alternatively, if just a part of your loan is forgiven, you are responsible for paying the remaining balance in your federal loan.
If you qualify for a student loan discharge, you might receive a refund of some or all of your payments towards your loan. Any negative credit information related to your delinquency may also be removed. If your loan defaulted, the discharge might clear its default status, making you eligible for federal student aid again, provided you have no other defaulted loans.
Student loan forgiveness is necessary to provide financial relief to borrowers saddled with student loan debt, create opportunities for underserved communities, and promote economic equity. However, many borrowers still require access to credit to fund other major life expenses, such as consolidating high-interest debt, buying a house, covering medical bills, and more.
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Student loan forgiveness is real, with multiple programs in the US offering this feature to borrowers. Based on one’s circumstances and the situation, a portion or all of one’s student loan payments can be forgiven, discharged, or cancelled.
No, student loan forgiveness is a public governmental initiative offered by the Federal Student Aid Office at the US Department of Education. However, forgiveness does not apply to private loans, only to federal student loans.