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Student Loan Forgiveness: All you need to know

It was in 2007 that President George W Bush signed the Public Service Loan Forgiveness (PSLF) program into law under the College Cost Reduction and Access Act of 2007. According to the Federal Student Aid, an office of the US Department of Education, more than half a million Americans opt for PSLF.

Public Service Loan Forgiveness (PSLF) in Atlanta

PSLF is a program that removes federal student loan debt. To become eligible, you need to work in public service for ten years. In those ten years, you will need to pay 120 student loan installments. After a decade of paying these installments and working in public sector domains, the government forgives the balance of your federal student loan debt.

How do you qualify for PSLF?

You need to meet several specific requirements to qualify for PSLF. PSLF is applicable only on federal Direct Loans. However, other loans made under other federal student loan programs can only be eligible if consolidated into a Direct Consolidation Loan. The catch is you need to fulfill the 120-installment payment requirement only towards that consolidation.

Another rider to qualify for PSLF is to get enrolled in one of the Direct Loan repayment plans or income-driven repayment plans, such as Pay As You Earn and Income-Based Repayment plans. You will also need to be employed in a full-time public service organization and not in part-time work.

The point to note is that not all jobs qualify for PSLF. The jobs that do include governmental groups, not-for-profit tax-exempt organizations and private not-for-profits, such as military, public safety, education, health, library services, and many suchlike services.

Forgiveness with Income-Based Repayment (IBR) in Atlanta

IBR was established in response to the burgeoning student loan debt that exceeded $1 trillion in 2011 (https://www.moneycrashers.com/student-loan-affects-credit-score/). The advantage of IBR is you get to pay lower payments; in case you are paying more. It is a good option for those seeking PSLF.

IBR is applicable to both direct subsidized and unsubsidized loans and subsidized and unsubsidized Federal Stafford loans; all PLUS (Parent Loan for Undergraduate Students) loans made to students; and FEEL (Federal Family Education Loan) PLUS loans made to parents.

IBR plan has slightly higher monthly payments in the range of 10 percent or 15 percent of the discretionary income. However, it will never exceed the amount you would have paid under the 10-year Standard Repayment Plan. In this, the payments are recalculated annually, based on your income and family size. This requires updating of income and family size each year. If a student has not repaid the loan in full after 20 or 25 years, any outstanding balance on loan is forgiven.

Will IBR hurt my credit score?

 The good news is the IBR program has no impact on your credit score. This is because your credit information is not reported to the bureaus, so it doesn’t impact your creditworthiness. However, since IBR is applicable only to federally guaranteed student loans and not to private loans, you need to be careful about student loans you are taking out.

Military student loan forgiveness and assistance in Atlanta

The state takes care of veterans and members of the US Armed Forces, as regards student loans. In their case, the interest rate is capped at six percent, under the Service members Civil Relief Act, on loans taken out by them. This applies both to federal and private student loans. The extra interest above six percent is pardoned and can’t be levied once the service member leaves active duty. The six percent interest rate cap for mortgages stays for one year after the discharge of service member from active duty service.

Furthermore, service members, who work in an adverse location and draw special pay, do not have to pay any interest on the Federal Direct Loans during their service. In case the service members are called to active duty service, the US Armed Forces can delay repayment on their federal student loans under certain circumstances. In such cases, the interest on subsidized loans are paid by the US Department of Education.

Then there is the HEROES Act of 2003 that empowers the US Education department to waive specific student aid laws and regulations for service members called to active duty for more than 30 days. The servicemembers with 100 percent disability are qualified for a Total and Permanent Disability Discharge for their federal student loans. The determining authority for such disabilities is the US Department of Veterans Affairs.

Is there student loan forgiveness for the military? 

PSLF is applicable to military service. For this, the servicemembers need to select an income-driven repayment option, like IBR or Pay As You Earn repayment. Once discharged from service, they also need to take up public service employment for ten years, in government or the teaching field or as an emergency responder.

Forgiveness with Pay As You Earn (PAYE) in Atlanta

President Barack Obama initiated the PAYE plan in 2011. In this US federal loan repayment plan, the payment amounts are based on income, rather than on a fixed amount. The plan caps the monthly loan repayments at 10 percent of your discretionary income, and if you continue to make qualified payments for 20 years, it offers student loan forgiveness.

PAYE offers the lowest monthly payment amount, based on your income, family size, and state of residency. This plan allows you to continue making payments, even if you are not facing hardship anymore. And, depending upon specific qualifications, your loan can be forgiven after 20 years.

What is the best income-driven repayment plan?

The plan with the least monthly loan payments is the best income-driven repayment plan. However, among the four plan options, it is difficult to analyze, which has the least monthly payments. This is because changes in salary and marital status, enrolling in graduate school and the like, can influence the total loan amount.

In such a scenario, you need to assess each of the repayment plans, based on your specific circumstances. PAYE is the best income-driven repayment plan if you have no loans before October 1, 2007, and minimum one loan disbursed on or after October 1, 2011.

Forgiveness with Revised Pay As You Earn (REPAYE) in Atlanta

If you are looking for a more generous subsidy, then opt for REPAYE. For the first three years, it pays the entire difference in subsidized loans and half the difference in unsubsidized loans. Afterward, it covers half the difference on both loan types.

All federal Direct Loan borrowers can avail REPAYE, except those with parent PLUS loans, where income-contingent repayment can be used. You can be eligible for REPAYE, if you consolidate your other federal loans, such as Perkins loans or older Federal Family Education Loan Program loans.

REPAYE offer you student loan forgiveness after 20 years, but if you owe loans for graduate or professional studies, an additional five years are added. REPAYE payments will also become higher than the standard repayment plan if your income rises. 

What is REPAYE?

 REPAYE is an income-driven repayment plan, where the federal student loan payments are capped at 10 percent of your discretionary income. If you make repayments for 20 or 25 years, your remaining balance is forgiven. It is deemed the best combination of availability to borrowers and low monthly payments.

REPAYE will work best for you, if you are single, do not have graduate school debt, do not qualify for other income-driven repayment plans and expect a much higher future income.

Loan repayment assistance for doctors and other health care professionals in Atlanta

Federal government extends multiple types of loans to healthcare workers, such as the William D Ford Federal Direct Loan Program, the Federal Perkins Loan Program, and the Federal Family Education Loan program.

The following are the federal loan repayment options available for healthcare workers, depending upon their financial situation:

  • Standard Repayment plan: This plan provides the worker up to 10 years to repay the loan at a fixed monthly amount.
  • Graduated Repayment plan:Here too, the repayment period is of up to 10 years, but the payments start low and increase every two years. However, they will not be more than three times greater than other monthly payments.
  • Extended Repayment plan:To qualify for this plan, a health worker needs to have more than $30,000 of Direct Loans or more than $30,000 of FFEL program loans to repay. The plan grants up to 25 years to repay with fixed or graduated payments.
  • Income-Contingent Repayment (ICR) plan:This plan is ideal for a health worker, who is a Direct Loan Program borrower. In this, payments will be lesser of either 20 percent of the worker’s discretionary income or of a fixed payment over 12 years that is adjusted in the income.

Besides these, there are a few other repayment plans, such as REPAYE plan, PAYE plan, and IBR plan.

Do hospital employees qualify for student loan forgiveness?

Hospital employees qualify for loan forgiveness. However, every state has its system to determine whether loans of healthcare employees can be forgiven. For example, the Georgia Health Care Provider Loan Repayment Programs covers a wide range of healthcare professions focused on rural or underserviced areas.

Such programs include Physicians for Rural Areas Assistance program, Georgia Physician Loan Repayment program,

Dentists for Rural Areas Assistance Program, Physician Assistant Loan Repayment Program, and Advanced Practice Registered Nurse Loan Repayment program.