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3 loan forgiveness methods for students with federal debt

There’s still a silver lining for federal student loan debtors with three loan forgiveness methods

Though President Joe Biden planned to forgive up to $20,000 in federal student loans, the Supreme Court blocked the decision as he isn’t authorized to forgive $430 million debt under the 2003 Act of Higher Education Relief Opportunities.

That said, borrowers can get some relief through Public Service Loan Forgiveness (PSLF), Income-Driven Repayment (IDR), and Teacher Loan Forgiveness. Read below for more about these methods.

Public Service Loan Forgiveness

The PSLF program requires a 10-year time commitment and mandates borrowers to be on an income-driven repayment plan while working in public service. After making 120 qualifying monthly payments, borrowers who qualify can have their federal student loan balances cleared.

However, qualifying for PSLF can be challenging, as borrowers need to stay in a qualifying organization or position for the entire 10-year period, and many eligible professions, like teachers and nurses, are historically underpaid.

Teacher Loan Forgiveness

Teacher Loan Forgiveness targets educators working in schools serving low-income students. To qualify, teachers must be "highly-qualified" and work in qualifying schools or educational service agencies for five consecutive years. Eligible teachers can have up to $17,500 in federal debt forgiven, with certain subject-specific teachers eligible for up to $5,000.

However, payments made under Teacher Loan Forgiveness do not count towards the 120 monthly payments required for PSLF during the same teaching period, but you can get relief through both programs.

A student high-fiving his teacher

Income-Driven Repayment Loan Forgiveness

IDR plans offer loan forgiveness options based on income and loan terms. Borrowers can choose from four IDR options: Pay as You Earn (PAYE), Revised Pay as You Earn (REPAYE), income-contingent repayment (ICR), and income-based repayment (IBR).

Borrowers who make payments on IDR for 20 or 25 years, depending on the plan, and meet other requirements are entitled to cancellation of the remaining loan balances. Monthly payments under IDR plans depend on a discretionary income’s 10% to 20% percentage.

While IDR plans offer flexibility and forgiveness options, borrowers should know that monthly payments can change based on income, with higher earnings resulting in higher payments.

Each program has its own specific requirements, time commitments, and eligibility criteria that borrowers should carefully consider before deciding which option best suits their needs.

Calle Ocho News wishes every borrower good luck! Subscribe to our news publication platform to get daily updates on federal and state decisions that affect the public.

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