Read this post for how to address private student loans. For therapists and psychologists there are three major student loan forgiveness opportunities:. These three options do not cover every opportunity for student loan forgiveness, but they are the major ones. This is when you become permanently disabled and are unable to earn a material income i. It also is very compatible with the therapist and psychology profession because it is only available to those working full-time at a c 3 nonprofit or those employed full-time by the government.
This is what my wife and I are pursuing for her loans. If they work for qualifying employers, PSLF is the best student loan forgiveness opportunity for therapists and psychologists. The core requirements of PSLF include:. If you fulfill all the requirements the remaining balance of your student loans will be forgiven tax-free once your application is accepted. There is no cap on the amount of debt forgiven in PSLF. Or a million. There is no limit.
The qualifying monthly payments do not have to be consecutive. For example, you could make 60 qualifying payments, take a couple years off from working and therefore, not have any qualifying payments , and then return to the workforce and start making qualifying payments again. The qualifying repayment plans include the standard ten-year repayment plan and the four income-driven repayment plans.
You can read more about the four income-driven repayment plans here. Graduated, extended, or any other repayment plan not mentioned is not eligible for PSLF. If you make a payment plan and you are not on a qualifying repayment plan, the payment is not a qualifying payment towards PSLF. Unfortunately ICR, the worst of the four income-driven repayment plans, is the only income-driven repayment plan that a direct consolidation loan that repaid a Parent PLUS loan is eligible for.
Make sure you fully understand the implications before going through with student loan consolidation. Finally, for a payment to be marked as eligible towards PSLF you must be employed full-time working for a qualified employer. These include:. Ready to take control of your student loans? This book is for you. If you are not eligible for PSLF there is still another good option for loan forgiveness: income-driven loan forgiveness.
When you make payments on an income-driven repayment plan for years depending on the plan you will have the remaining balance on your loans forgiven. Income-driven loan forgiveness does not have an employer requirement like PSLF.
The length of time you will have to make payments to achieve forgiveness will depend on the income-driven repayment plan you are on. You may look at those time frames and groan. I get it, 20 or 25 years is a long time. Ultimately, though, you can still save a lot of money and you likely will benefit if your debt-to income ratio is 2 or higher i.
He lives in Texas and is single. There are some interest subsidies depending on the income-driven repayment plan, but ultimately the debt will rise. Unlike PSLF, forgiven debt is taxable income under income-driven loan forgiveness. Chad will have to report that as taxable income. Throughout that time Chad can set aside money in a brokerage account and invest it in an index fund.
The point is this: income-driven loan forgiveness can be a much better option than killing yourself trying to pay a huge amount month-after-month on the standard ten-year repayment plan.
In fact it may even be impossible to pay the amount the standard ten-year repayment plan requires, making income-driven loan forgiveness attractive and beneficial. No tax bomb. This is why PSLF is the holy grail of loan forgiveness. Borrowers in default on their loans cannot apply. This program accepts individuals working in the fields of public health, public education, emergency management, social work, law enforcement, and public library sciences.
Licensed primary care clinicians must commit to work full time in communities with healthcare shortages for up to two years. The program accepts health service psychologists, licensed clinical social workers, marriage and family therapists, and licensed professional counselors. Professionals working in medical and dental services can also apply. Applications, which require gathering supplemental materials such as loan account statements, take about three weeks to complete.
In order to be eligible, candidates cannot be in default of their loans. Individuals set their monthly payments based on their income and family size. Individuals who consistently pay on time might be eligible for loan forgiveness after 20 years. Primary care providers who make a commitment to work for at least two years full time in communities of need can receive financial assistance through this program.
Eligible occupations include licensed professional counselors and substance abuse, behavioral disorder, and mental health counselors.
Specific application guidelines and loan assistance amounts vary in each state. In California, mental and behavioral health providers can apply for the California State Loan Repayment Program if they hold a valid license and agree to a service obligation of two to four years, depending on if they work full or part time.
Now that we have covered the types of loans, it is easier to explain what types of loan forgiveness programs are available. Sometimes, the forgiveness plan depends on the type of loan that is in question. A borrower must apply for an income-based repayment plan. The government offers four income-based repayment plans. Income-driven repayment plans have different repayment periods ranging from 20 to 25 years.
Qualifying payments for the PSLF Program include payments made under any of the income-driven repayment plans. Student loans in default are not eligible for repayment under any of the income-driven repayment plans. If the borrower is employed by a government or not-for-profit organization, they may be able to receive loan forgiveness under the Public Service Loan Forgiveness PSLF Program.
Before a borrower can be eligible for forgiveness, they must have made qualifying monthly payments ten years under a qualifying repayment plan while working full-time for a qualifying employer. In order to repay loans under that plan, the loans must first be consolidated into a Direct Consolidation Loan.
A borrower can potentially receive forgiveness under both the Teacher Loan Forgiveness Program and the Public Service Loan Forgiveness Program, but not for the same period of teaching service. Borrowers with Direct Loans and FFEL Program loans who are also highly qualified teachers who teach full-time for five complete and consecutive academic years in a low-income elementary school, secondary school, or educational service agency can have loans forgiven.
Department of Education for their direct federal student loans. The years of qualifying teaching and qualifying payments may not count toward both the Teacher Loan Forgiveness Program and the Public Service Loan Forgiveness Program.
To also qualify for the PSLF program, additional qualifying monthly payments ten additional years would have to be made. See the Perkins Loan Forgiveness section below for information on how a portion of Federal Perkins Loan can be canceled. A loan in default is not eligible for forgiveness. Counselors who meet the requirements of teacher loan forgiveness can qualify for cancellation of up to percent of a Federal Perkins Loan. The requirements are to serve in a low-income school, be a special education teacher, or teach in an area designated as a teacher shortage area, such as mathematics, science, foreign languages, or bilingual education.
A guidance counselor, occupational therapist, recreational therapist, or psychologist or counselor qualifies as a teacher for this program, provided they meet other teacher requirements, such as being licensed, certified, or registered by the appropriate state education agency. Perkins Loans that are in default are not eligible for forgiveness, cancelation, or discharge.
There are some unusual circumstances in which a loan can be discharged. Students who become totally and permanently disabled can have their direct loans, FFEL loans, or Perkins loans forgiven.
If the borrower dies, their federal student loans are discharged after the required proof of death is submitted. Or, the borrower may still be required to repay the loan under new repayment and interest terms. There are also some uncommon school-related misconduct loan forgiveness circumstances.
Loans can be forgiven if a school misled the borrower or otherwise engaged in misconduct in violation of certain state laws. Borrowers who keep up with their payments will have the balance forgiven after 20 years in most cases, rather than the previous 25 years, or ten years for those pursuing the Public Service Loan Forgiveness Program.
This allowed mental health and school counselors, who work in public-service fields for ten years, to be eligible for loan forgiveness if they have met the following requirements:. These borrowers may also qualify for additional repayment or forgiveness options through their state or the U.
Department of Education.
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