Let's look at various options for dealing with student debt: discharge, forgiveness, repayment, debt consolidation – and finally, the worst that can happen if you simply don’t pay.
Potentially-eligible positions include those in nursing, government, police, fire and social work.Only payments made after October 1, 2007, qualify towards earning eligibility, so borrowers won't reach the 120-payment milestone to qualify for forgiveness until 2017.In order to get some debt forgiven under the public service program, you must first make 120 qualifying payments (meaning, paying the minimum amount due on time).These payments must be made while you are working for a qualified employer – generally, a federal, state or local government organization or a nonprofit organization with tax-exempt status: In effect, you qualify after 10 years on the job and 10 years of payments.As a full-time elementary or secondary school teacher in a low-income community, you can have 15% of your Perkins Loan forgiven for years one and two of employment, 20% in years three and four, and the remaining 30% in year five.
Federal Direct Subsidized and Unsubsidized Loans – and Subsidized and Unsubsidized Federal Stafford Loans – may also be forgiven if you teach an understaffed subject such as math, science, or special education or work in a school in a low-income neighborhood.
As with anything related to the federal government, the terms related to student loan forgiveness are subject to change.
Regardless of any alterations that may be on the horizon, Mark Kantrowitz, senior vice president and publisher of and author of "Filing the FAFSA," warns borrowers against betting their financial future on the hope of debt forgiveness, especially the kind that's tied to public service.
According to figures released by the Department of Education in August 2015, nearly 3.9 million Americans were enrolled in an income-based or income-contingent repayment plan, a 56% increase since June 2014, to deal with a collective total of more than 8 billion in outstanding debt.
The plans have a two-pronged appeal: the possibility of lower monthly payments now, plus the chance for balances to be forgiven later.
Non-federal loans (those handled by private lenders and loan companies) aren’t part of this program. Ford Direct Loan, and instead borrowed through the Federal Family Education Loan Program (FFEL) or Perkins Loan Program, you are allowed to consolidate these debts into a Direct Consolidation Loan; this new piece of consolidated debt would then be eligible for public service loan forgiveness, under the same terms as those described above.