how can i get rid of my student loans

How Can I Get Rid of My Student Loans?

Student loans can feel like a huge burden, especially when you’re struggling to make payments each month. With the average student loan debt at $37,113 for the class of 2021, it’s no wonder recent grads are looking for ways out. While student loans can’t just be wished away, there are strategies you can use to pay them off faster or even qualify for loan forgiveness. Keep reading to learn how you may be able to finally get rid of your student loans for good.

Evaluate Your Federal Loan Repayment Options

If you have federal student loans, the first place to look for potential relief is through an income-driven repayment (IDR) plan. These plans base your monthly payment on your income and family size. Depending on the plan your payment could be as low as $0 per month. The tradeoff is that you may pay more interest over the life of the loan by extending your repayment term to 20 or 25 years. However any remaining balance is forgiven after you make the required number of payments.

The four types of IDR plans are:

• Income-Based Repayment (IBR)
• Pay As You Earn (PAYE)
• Revised Pay As You Earn (REPAYE)
• Income-Contingent Repayment (ICR)

To qualify for forgiveness through IDR, you’ll need to submit an application and proof of income each year you’re enrolled. But it provides temporary financial relief now while working toward long-term debt forgiveness. Over half of federal direct loan borrowers in an IDR plan can expect some amount of loan forgiveness.

See If You Qualify for Public Service Loan Forgiveness

Public Service Loan Forgiveness (PSLF) provides total federal student loan forgiveness for borrowers who work full-time for a government agency or qualifying non-profit. Unique among forgiveness programs, PSLF provides forgiveness after just 10 years of payments instead of 20 or 25.

To receive forgiveness through PSLF, you must:

• Have direct federal loans
• Work for an eligible employer such as federal, state, local or tribal government or a 501(c)(3) non-profit
• Make 120 qualifying payments under an IDR plan

A few things to keep in mind – you must be employed full-time, at least 30 hours per week. Payments made while you were in school or in deferment do not count as qualifying payments. It’s imperative to complete the PSLF form annually and when you switch employers to ensure your loans and employment qualify.

Explore Options for Private Student Loan Relief

Unfortunately, PSLF and federal IDR plans only apply to federal student loans. But if you have private student loans, you still have options:

Refinance your private loans to a lower interest rate. This can save you money by lowering your monthly payments. Variable rates are under 3% currently, compared to fixed rates averaging 7-8%.

Ask your lender about hardship programs or deferred payments. Most lenders want to work with borrowers struggling to pay and may offer reduced payments or payment pauses.

Look into employer student loan repayment assistance. A growing number of companies now offer benefits to help employees pay down student debt quicker.

Research state and local student loan repayment programs. Several states offer forgiveness programs as incentives, especially for teachers, doctors and nurses working in underserved areas.

While not ideal, bankruptcy or disability discharge are last resorts for private loan relief if you have an extreme financial hardship. However, these options are very limited. Private student loans are notoriously difficult to discharge in bankruptcy except in cases of permanent disability or death.

Pursue Loan Forgiveness for Public Service Careers

In addition to the PSLF program, there are several federal and state programs that offer student loan forgiveness if you enter specific public service fields:

• Teachers can receive up to $17,500 in forgiveness through the federal Teacher Loan Forgiveness Program after 5 consecutive years of service in a low-income school district.

• Nurses, doctors, dentists and other healthcare workers may qualify for assistance through programs like the Nurse Corps Loan Repayment Program and National Health Service Corps.

• Full-time AmeriCorps and Peace Corps volunteers can earn education awards worth thousands to pay down student loans.

• Attorneys working in public service may qualify for LRAPs through law schools or employers.

• State-based programs offer forgiveness for teaching, healthcare, STEM and other critical needs professions.

Loan forgiveness programs for nurses, teachers and other public service careers usually require 2-5 years of service, often in high-need areas. Research requirements for your state carefully.

Consider Student Loan Forgiveness for Military Service

Both current and former military members may be eligible for student loan forgiveness. Military programs include:

• SLRP: The Army, National Guard and Army Reserves offer the Student Loan Repayment Program (SLRP) to enlisted personnel, up to $65,000 lifetime.

• PSLF: Military employment qualifies for PSLF. Time spent on active duty counts toward the 10 years of payments.

• VA Loan Discharge: Federal student loans are discharged with a 100% disability rating from the VA.

• HEROES Act: Total and permanent disability discharge can be approved for veterans based on a VA disability determination alone.

Check with your branch of the military regarding their current incentive programs. Note that SLRP requires a 3-year enlistment, so discuss options with a recruiter.

Know When Student Loans Can Be Forgiven or Discharged

Outside of specific forgiveness programs, your federal student loans may still qualify for discharge in certain situations:

• School closure
• False certification by the school of your eligibility to receive loans
• Total and permanent disability
• Bankruptcy (in very limited cases)
• Borrower defense to repayment due to school misconduct
• Death

For private student loans, options are more limited, but they can potentially be discharged with permanent disability or death. Private lenders are not required to offer hardship provisions or forgiveness programs.

Apply for Forgiveness ASAP and Recertify Each Year

The most important thing is applying for any forgiveness program you may qualify for right away. Don’t wait until the end of your service commitment to submit forgiveness applications. In addition, you must recertify your eligibility each year by submitting updated income or employment verification.

Getting your student loans forgiven or discharged requires proactively managing the process annually. But it could wipe away tens of thousands in student loan debt, making the effort well worth it. Explore all your options and see what strategies may help you finally get out from under your student loan burden.