The role of student loans in the lives of students is undeniable. It comes to the help of millions of students who are unable to pay for their education. Despite the fact that they become very helpful initially, later on, these loans turn into a nightmare for many students. This is because once students graduate, they struggle to pay back such big amounts. It might happen due to several factors. For instance, unemployment after graduation, insufficient salary, and more. So, many students look for ways of how to get out of student loan debt. If you are reading this article, you have probably the same challenge at the moment.
The good news for you is that we will talk about how to get out of student loan debt in this blog post. Just keep in mind that this article will be about federal loans. The reason for this is private loans are impossible to get rid of. So, after reading this article, you will have a very clear understanding of this topic.
How to Get Out of Student Loan Debt Legally
Income-Driven Repayment Plans
When we talk about how to get out of student loan debt, we have to start with Income-Driven Repayment plans. Among these plans, graduated payback, Pay as you earn, extended payback, revised pay as you earn, income-based payback, and income-contingent payback are available. In graduated payback, your repayment amount is small and increases every two years. The reason for its design in this way is that you would be able to complete the total amount in ten years.
In pay as you earn plan, your loan amount and income are decisive factors. Depending on them, you may or may not be eligible for this plan. If you qualify, you will need to spend 10% of your discretional revenue to loan debt. Further, the duration of your repayment will be prolonged to 20 years. Another plan for you on to get out of debt is extended payback. Here, you will be able to repay your loan in 25 years, as it will be fixed.
The next plan in the IDR program is revised pay as you earn. This is very similar to pay as you earn plan. Your qualification depends upon the income and debt amount here, and you will spare 10% of your discretionary income for the debt. The only difference is, your payback period will be prolonged to 20 or 25 years. In the income-based student loan repayment plan, your income and debt amount are again critical. Depending on them, you will have to spare 10 or 15% of your discretionary revenue to loan payback. Also, the duration of payback will be 20 or 25 years.
The last option among IDR plans is the income-contingent payback plan. In this option, the amount of people in your family, your revenue, and your tax filing status affect your case. Two choices will be available for you to choose from. The initial one is paying the amount of the debt in 12 years. The second one is paying back 20% of your discretionary income. You can choose whichever option you want.
Public Service Loan Forgiveness Program
There are actually multiple ways of how to get rid of student loan debt legally. One of the most common and working methods is Public Service Loan Forgiveness (PSLF). To get your loan forgiven with this method, you have to work for a public organization for ten years. Another nuance you need to take into account is that not all public agencies will qualify for this forgiveness. So, you need to work in an eligible organization. Another possible negative aspect of PSLF is that you may have to work in a low-pay job. In this case, you will have to work for a lower salary for ten years. On the other hand, there is a positive side of the Public Service Loan Forgiveness program, too.
Here, you will not get any tax on your debt amount that will be forgiven. The last point to mention regarding PSLF is you need to be in one of IDP plans when you apply for PSLF. The reason behind this is once you finish making 120 payments, no amount will be there to pay. In short, if you are patient enough to work for a public agency for ten years, possibly with a low salary, this is an ideal choice for you.
Teacher Loan Forgiveness Program
Another way to get out of a loan is through the Teacher Loan Forgiveness program. Different from Public Service Loan Forgiveness, here you will be able to get rid of $17.500 of your loan. Also, you need to work in an elementary or secondary school. By working in any other type of school, you will not be eligible for this option. Further, you need to work for five consecutive years in a type of the above-mentioned schools.
Please note that you may work as a science or mathematics teacher. While working as a teacher, ensure that you will be able to prove to be a highly-qualified one. So, this is another possible choice for you on how to get out of student loan debt. Just keep in mind that you can apply both for PSLF and Teacher Loan Forgiveness. However, if you apply PSLF while working as a teacher, your payments as a teacher will be erased. So, be careful.
Permanent Disability Discharge
We do not wish anyone to be eligible for this program. Still, permanent disability discharge is another method on how to get rid of student loan debt legally. To qualify for a disability discharge program, you need to prove your permanent disability. You can do it in 3 ways. These are through Veterans Affairs Determination, Social Security Administration Determination, and Physician Certification. You will be considered permanently disable if you show any proof from any of these sources. Even though no person would want to apply for this option, it is still available for many students to apply. Please note that this is still one of the best options on how to get out of student loan debt. It is because your loan will immediately be forgiven with the help of disability discharge.
Now you must have a very vivid understanding of getting out of student loan debt legally. As you can see, your student loans will not disappear in a moment. For this, you need to carefully explore the above options and choose the one that suits you the best. Obviously, for different people, different programs will be more appropriate. That is why analyzing the available alternatives carefully and coming to the best conclusion is the best way forward.
Moreover, as we emphasized above, these programs are available for federal loans. In case you have taken a student loan from a private source, note that you will not be eligible for these alternatives. In most cases, it is impossible to get rid of private loans. So, ensure that you apply one of these programs and hopefully it will help you know how to get out of student loan debt.