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Student debt is an amount that graduates and undergraduates borrow from the federal government or banks for post-secondary education. After completing their higher studies, they have to return this amount back to the banks or government. Students can borrow this amount to pay their tuition fees, buy books, or for other expenses.

More than 33% of students in the USA borrow money to continue higher studies. The federal government pays the largest amount as a debt to students. Borrowers can apply for student debt forgiveness if they got a loan from the federal government. If they are eligible, the government will forgive the entire or a part of the debt.

In this article, we will briefly cover types of student debt and student debt forgiveness programs. Further, we will cover how to pay off credit card debt and much more. Let’s get started…

An Outlook of Student Debt Statistics

According to Student Loans and Other Education Debts, one-third of American students get a loan to get through colleges or universities. In 2021, each student get $38,792 loan on average. The total amount of debt is approximately $1.6 trillion according to the Federal Reserve Bank of New York.

If we look at the graph of student debt from the past few years, this amount is rising rapidly. For example, this amount was $1.17 and $1.33 trillion in 2016 and 2018 respectively. Now, this amount has reached $1.6 trillion.

According to Saving for College, this amount will reach $2 in the next two to 3 years. And, in 2038, student debt will be around $3 trillion. You might be wondering why this amount is going up drastically.

There are two main reasons behind the rapid growth of student loans debt. First, the total number of students is increasing in colleges than it used to. More students get more loans to continue their studies. Second, the tuition fee is going up rapidly in public universities. Further, different states have reduced the amount of subsidy they used to give to the universities. As a result, student loans debt going up.

What are Different Types of Student Debts?

There are two primary categories of students debts i.e. federal government debts and private debts. Federal government debt is also referred to as direct loan because it is directly issued by the Education Department of the USA. On the other hand, private loans are offered by different private banks.

Most students prefer to go with federal loans because these offer more protection as compared to private loans. Plus, federal loans offer more flexibility in repayment options and have higher chances of student debt forgiveness. Here are some popular types of student debts:

1. Subsidized Debt for Undergraduates

These loans are given to undergraduate students based on their financial needs. Interest doesn’t accumulate in this type if the borrowers are enrolled in college.

2. Unsubsidized Debt for Undergraduates and Graduates

Both undergraduates and graduates can get this loan regardless of their financial needs. Because it’s more expensive because it’s an unsubsidized debt. Remember graduates have to pay higher interest rates than undergraduates. Further, if borrowers are enrolled in the college, the interest rate accumulates.

3. PLUS Debt

Like unsubsidized debt, graduates and the parents of undergraduates can get this loan. The amount of the loan can be up to the cost of attendance and their living expenses. In this type, students have to pay the highest interest rate.

4. Perkins Loans

This loan is available for undergraduate students and they can take it based on their financial needs. The difference between subsidized debt for undergraduates and this debt is that it is administered by colleges. If the borrower is enrolled in the school, the interest rate won’t accumulate.

Student Debt Forgiveness Programs

Student debt forgiveness releases debtors from all or a part of the outstanding amount they are required to repay. Borrowers take such loans for their post-secondary education. Debt forgiveness is available for different kinds of debts. And, you must have to qualify for forgiveness by doing certain public service jobs.

There are plenty of student forgiveness programs you may qualify for through different state and federal programs. Your eligibility depends on different factors like your profession and the place where you work.

1. Income-Driven Repayment Forgiveness

There are four main income-driving repayments forgives plans offered by the federal government. Borrowers can cap their loan payments by enrolling in one of these plans. Once they enroll in the plan, their outstanding amount will be eligible for forgiveness after twenty to 25 years.

Borrowers with huge loan balances should join this program for debt forgiveness. However, it’s quite difficult to qualify for forgiveness through this method.

2. State-Sponsored Repayment Assistance Programs

This program assists licensed nurses, teachers, lawyers, doctors, and some other professionals to repay their debt. For example, if a teacher teaches specific subjects like math, foreign languages, and science full-time for 5 consecutive years, he/ she will be eligible for a debt forgives program.

How much amount will be forgiven depends on the types of student debts the borrowers chose. For instance, if they took a loan under Perkins's debt type, they won’t have to pay any amount. However, for other students' debts types, they still may have to pay a little bit amount. Contact the Higher Education Department of your state and know if you qualify for a program.

3. Military Student Debt Forgiveness Program

If you are serving in the army, air force, navy, coast guard, or national guard, you may qualify for your own loan forgiveness program. For instance, qualifying officers and soldiers in the National Guard may receive around $50,000 to pay off federal government loans. And, you will get it through the Student Loan Repayment Program.

4. Additional Student Debt Replacement Assistance Programs

There are plenty of other organizational and national student loan replacement programs that offer debt forgiveness to public service professions. For instance, health professionals – appointed by the institute to conduct research – get up to $35,000 debt assistance from the National Institute of Health.

How to Cancel Student Loan Debt?

Student loan cancellation means borrowers don’t need to pay all outstanding amounts on them. People with Perkins loans can cancel 100% of student loan debt by doing a public service job.

For instance, if a borrower does a full-time teaching job in a low-income public school for 5 consecutive and teaches different qualifying subjects like science and math, he/ she can easily qualify for debt cancellation. Each working year, their debt amount will gradually decrease and will be zero after 5 years.

How to Pay Off Credit Card Debt?

So far, you have learned how to cancel student loan debt and how to reduce debt amount by availing of debt forgiveness programs. If you still have to pay some debt, follow the steps below to get out of debt:

1. Increase Your Income and Reduce Your Expenses

This is the universally acknowledged formula that helps you to pay off the debt in no time. You should increase your income somehow. For this purpose, you may have to do a part-time job along with your study. At the same time, try to reduce your expenses to save some amount. Avoid spending amount on useless things can end up in huge savings. You can use this amount to get out of debt.

2. Follow Snowball Method

According to this method, you should try to pay off the card with the smallest balance if you have many credit cards. After paying off the smallest card, move to the next smallest one. The only benefit of this method is that it keeps you motivated.

3. Adopt Debt Avalanche Method

This method urges you to start paying off the card with the highest interest rate. Once you start paying for this card, the interest rate will go down gradually. After paying the first card with the highest interest rate, move to the second one with the highest interest rate.

4. Pay More Than Minimum

Paying more than the minimum amount is better for paying off debt quickly. It keeps you focused if you intend to pay a higher amount. Because you will do more effort and pay more attention to your work to earn more money.

5. Always Pay Timely

Never pay your amount late because it will impact your credit score badly. A bad credit score can result in a higher interest rate. When the interest rate goes up, it will become more difficult for you to pay off your debt. Therefore, you must pay your amount in time to avoid any inconvenience.

Wrapping Up

Many students have to get loans from different banks or federal governments for higher studies. The debt amount is too huge to repay for many students. That’s why the federal government has initiated some programs that help you to repay your debt. Student debt forgiveness and debt cancellation are part of this program.

If you don’t qualify for student debt forgiveness or cancel student loans debt, you will have to pay the entire amount yourself. That’s why knowing how to pay off credit card debt can be crucial for you. Plus, you can also contact debt relief companies for help. Such companies have years of experience that may help you to get out of debt.