Federal Student Loan Forgiveness: True vs. False
FEDERAL STUDENT LOAN FORGIVENESS:
TRUE VS. FALSE
We hear a lot of questions regarding student loan forgiveness. We get it, it’s confusing.So here’s a very straight forward TRUE vs. FALSE list, noting all the facts vs. scams.
FEDERAL STUDENT LOAN FORGIVENESS CAN BE ACHIEVED OVER NIGHT OR OVER A PHONE CALL:
On the contrary, student loan forgiveness takes quite a long time How long? Well different loans have different timelines: Public Service Loan Forgiveness: 10 years before for forgiveness. Pay As You Earn (PAYE): 20 years for forgiveness. Revised Pay As You Earn (REPAYE): 20-25 years for forgiveness. More importantly, nor a private person, private company, nor school, give you federal student loan forgiveness. So anyone who is calling, mailing flyers, or claiming to do so is probably a scam.
TO QUALIFY FOR FED STUDENT LOAN FORGIVENESS I NEED TO PAY A COMPANY TO SIGN ME UP:
Different plans have different list of qualifications to be approved for loan forgiveness. For example;
Public Service Loan Forgiveness, forgives federal student loans for borrowers who are employed full-time (more than 30 hours per week) in an eligible federal, state or local public service job or 501(c)(3) non-profit job who make 120 eligible on-time payments. If you leave your public service role, you may not qualify for student loan forgiveness.
Pay As You Earn (PAYE): You just have to pay your federal student loans for 20 years. If you miss a payment, you will have to start from the beginning. For example, let’s say you’ve made regular payments to your debt for 10 years, and one month, you miss a payment, those ten years are now erased, and you start counting down to 20 years from scratch. Word of advice: autopay! At the closing of the 20 years if you have not missed a payment, your loan will be forgiven.
Revised Pay As You Earn (REPAYE): This federal student loan repayment program is an income-driven repayment plan for undergraduate and graduate student loans, and forgives your student loans after 20 years and 25 years, respectively. Similar to PAYE, you can’t miss a payment, or the countdown on the 20-25 years, restarts.
DO I HAVE TO PAY TAXES ON THE FORGIVEN LOAN AMOUNT?
That’s right, uncle Sam is watching! So if you achieve loan forgiveness you’ll have to pay taxes on the money that was not paid back. So think about this as an exchange of loan debt for tax debt. The caveat is that if you achieve student loan forgiveness due to a Public Service Loan Forgiveness program, you are not taxed on any student loan amount forgiven. Pretty pretty pretty sweet.
THERE ARE PRIVATE COMPANIES THAT HAVE ACCESS TO AN OBAMA ERA PLAN THAT FORGIVES STUDENT LOANS, YOU JUST HAVE TO PAY AN APPLICATION FEE TO SIGN UP.
Any mail from a private company claiming to be associated with the federal government is a scam. Plain and simple. There is absolutely no such thing as an Obama Loan Forgiveness program. Don’t fall for the scam, you’ve been warned.
MY SCHOOL CAN FORGIVE MY FEDERAL STUDENT LOANS:
Your school cannot forgive your federal student loans. Read over number 1 and 2 on this list to see how federal student loan forgiveness actually works.
FEDERAL STUDENT LOANS ARE FORGIVEN IF I DON’T GRADUATE