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History Of Loan Forgiveness
Loan forgiveness was passed in the United States in 2007 under the College Cost Reduction and Access Act as The Public Service Loan Forgiveness program. This program's goal is to release people from having to pay some or all of their federal loan debt that was created in order to receive an education. While passed in 2007, it was not enacted until October 1st, 2017. According to The Department of Education, as of December 31, 2019, 1565 workers have had their loans forgiven, making it an extremely competitive program.
Who Qualifies For Loan Forgiveness
Workers who qualify for loan forgiveness are those that have made 120 qualified payments under while working for an approved employer. It is also important to mention that this program only forgives direct student loans made by the Federal Government. Private student loans issued by loan companies and private lenders do not qualify for The Public Service Loan Forgiveness program.
Public Service Qualifications
This program is designed to provide aide to those who work at public service jobs. Working for a government organization of any level and non-profit organizations (permitted that the organization is tax-exempt Section 501(c)(3) of the Internal Revenue Code) qualify under these regulations. Working for the AmeriCorps and the Peace Corps is also a qualifier for the grant. Military service and medical practice may also help get some or all of your loans forgiven.
Before a debt can be forgiven under this program, the worker must have made 120 monthly qualified payments. The term "qualified" means the minimum amount required to be paid on time. While these payments do not have to be consecutive, they must be done while the worker is employed by one of the organizations mentioned above.
Exceptions To The Qualifications
While it is much more unlikely and takes twice as long, it is still technically possible to receive loan forgiveness when working for an unqualified employer. Some federal income-based repayment plans provide various debt forgiveness after 20 years in the workforce.
Other Loan Forgiveness Options
If one does not qualify for the Public Service Loan Forgiveness program, there are additional loan forgiveness programs for those who work in specialized fields. AmeriCorps, the National Guard, teachers in low-income schools, and medical and nursing school graduates are all eligible for additional loan forgiveness programs.
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