Students do need to take loans, and they are sometimes saddled with loans too. Is there a way out? Yes, there is student loan forgiveness programs that come to the aid of students who are saddled with huge amounts of debt to repay after the end of their study program.

Loans are meant to be repaid. It is true for students too even if they do not complete the particular program that they might have taken the loan for.

Public service loan forgiveness program

You are eligible for this student loan forgiveness program only if you are working in public service jobs. This means you must be in service of the general populace irrespective of your profession. It is not your profession that matters, but it is your employer that matters. You must be a full-time employee of a state government, local government, the federal government, tribal governments, and not-for-profit organizations which are exempt from paying tax under a certain section of the Internal Revenue Code. Some not-for-profit organizations which are not exempt from paying tax, but whose primary responsibility is providing some defined public services are also eligible for this program. So if you are working for any of these programs then you are eligible for student loan forgiveness even if you have not completed the program for which you had taken the loan. If you are working full time for AmeriCorps or as a volunteer for Peace Corps then to you are eligible for this popular program.

You are not eligible for this program if you are working for:

• Labor unions
• Any political organization
• Organizations that depend on making profits for sustenance like government contractors.
• Not-for-profit organizations which are neither tax-exempt under a certain section of Internal Revenue Code not provide any qualifying public service.

Full-time employment

If you are working part-time for an employer who qualifies for this program, you are not eligible for this program. You must be a full-time employee. This implies that you must devote at least 30 hours a week for such public service to be eligible for Public Service Loan Forgiveness Program.

Forgiveness with income-based repayment

This is basically an income-based repayment program where the amount of repayment is capped at 10-15%p of your disposable income. You have to repay, but the repayment amount is capped. You have to make consistent repayments till 20-25 years of taking the loan. After this tenure, the remaining amount would be forgiven under this program. But you must remember that the forgiven amount of loan would be considered as your income under the current tax laws and would be tax suitably. So, don’t get surprised if you get a large tax bill, it is a much lesser headache compared to the repayment burden.

Who is eligible for this program?

To become eligible for this student loan forgiveness program your payment must be lower than what it could have been under the Standard Repayment Plan. If you have a large debt burden compared to your earning then, you can easily qualify for this program. You must also intimate the borrower as and when your income changes.

What types of loans qualify for this program?

To be eligible for this student loan forgiveness program your loan must be either a direct subsidized or Unsubsidized Loan, a Direct Grad PLUS loan, a subsidized or unsubsidized FFEL Stafford Loan, a consolidated Federal Perkins Loan, or a Direct Consolidation Loan on the condition that there are no unpaid loans made to parents.

Forgiveness with pay as you earn

This program is similar to the Forgiveness With Income-Based Repayment program. Here too you become eligible for forgiveness after a certain period. Here too the monthly repayment amount is capped at 10% of your disposable income. You also need to make consistent repayments for 20 years. After this period the balance of the loan may be forgiven. Not surprisingly, the tax treatment is also the same. This means that the amount of loan forgiven is considered as your income and taxed accordingly.

Forgiveness with revised pay as you earn

In this Student Loan Forgiveness program, your loan repayment amount would be capped at 10% of your disposable income. If you have taken the loan for an undergraduate program, then you have to make consistent repayment for 20 years. If you have taken the loan for a graduate program, then you have to make consistent repayment for 25 years. However, under this category, there is no strict eligibility criterion regarding earnings of the borrower. If the loan qualifies for the program, then you qualify for the program.