How To Get Out Of Student Loan Debt Without Paying?
After mortgages, student loan debt takes the biggest chunk out of a household’s income. With about $1.5 trillion owed by Americans as part of their student loans, it is no wonder that many individuals look for ways to get rid of this financial burden.
You may think that the only way to get out of student loan debt without paying it off completely is through loan forgiveness programs, but they are difficult to qualify for. In this article, we aim to relieve some of your worries so you have more options for what you can do about your outstanding student loans.
How To Get Away With Not Paying Student Loans?
If you’re thinking you might have to fake your own death or get a fake identity, we’re here to tell you that there are legal ways to help you get rid of student loans quickly. There are conditions and limitations of each method, but keep in mind that you cannot simply get away with not paying student loans without having paid off some percentage of it already. Even declaring bankruptcy will not discharge the loan due to you.
How To Get Rid Of Student Loans Quickly?
Despite strict laws and regulations, there are still some measures in place that will allow you to get rid of your student loans. Let’s look at each of these measures for student debt relief.
Student Loan Debt Forgiveness
Debt forgiveness is a difficult way to get your student loans pardoned. You would need to prove in court the reason for applying for a debt forgiveness program. Furthermore, these programs are only for people who received either direct loans or Stafford loans from the federal government. Loans from private lenders are not eligible for forgiveness. Depending on your circumstances, you may choose to go with any of the programs listed below:
- Income-Driven Repayment Plan
Income-Driven Repayment or IDR plans are great for people who have high student loans and a low paying job. Essentially what an IDR does is breakdown your payments over a longer period of time depending on your income and family size. Instead of the standard 10 years that is required to pay back the student loan, you can have the loan stretched up to 25 years and pay only 15-15% of your net monthly income towards the loan per year. Any outstanding balance is forgiven at the end of this time period, though you will have to pay tax on the loan amount forgiven. There are 4 different categories of an IDR plan available for federal students:
– Revised Pay As You Earn Repayment Plan (REPAYE Plan)
– Pay As You Earn Repayment Plan (PAYE Plan)
– Income-BAsed Repayment Plan (IBR Plan)
– Income-Contingent Repayment Plan (ICR Plan)
You can apply for any of the programs on StudentAid.gov. The paperwork is easy and you will not need assistance with the application. There is no application fee for an IDR plan. - Teacher Loan Forgiveness Program
Teachers who took out a student loan after October 1st, 1998 can consider the Teacher Loan Forgiveness program. Qualifying for the program is tough – you need to have taught consecutively at a low-income school or educational facility for 5 years, and should additionally be a high-qualified teacher. A highly qualified teacher is one that has a bachelor’s degree and state certification as well. If you meet the above requirements, you may be pardoned off up to $17,500 from your student loans. However, teachers who are not teaching science and math at the secondary level, or working as special education teachers at the secondary or elementary level are not can only receive up to $5000 in student loan forgiveness. - Public Service Loan Forgiveness (PSLF)
The PSLF program is primarily for individuals who are working in a federal, state, local or tribal government office or a not-for-profit organization. Qualification is comparatively easier – you just need to make a total of 120 payments. You need to be pre-enrolled in an income-driven repayment plan or should have made at least 10 years of payments before you enroll in the PSLF program. Like all other student debt forgiveness programs, only federal student loans or consolidated federal student loans can benefit from this program. It stands out from the other plans in that there is no tax on the amount forgiven. - Federal Loan Cancellation
Federal loan cancellation is only available to recipients of the Federal Perkins Loan. The loan was discontinued after 30th September 2020. Getting student loan cancellation under this program isn’t easy, but it helps if you are a high-risk professional – working as either a firefighter, police, nurse, an armed officer in the military, as a volunteer in the Peace Corp or other governmental or not-for-profit organization, or as a first responder in any other field. Your loan provider or school or college needs to give you permission before you can apply for this loan. The cancellation process itself is not sudden and is rather stretched over a span of 5 years by the Department Of Education. - Total And Permanent Disability Discharge
If you’ve suffered an accident and are unable to pay your loan due to a disability, your entire loans may be forgiven under the Total And Permanent Disability (TPD) Discharge program. Most federal student loan borrowers are eligible to apply, but some are exempt from the TPD discharge program. You will need to prove that the disability is permanent and of such a nature that prevents you from paying off your student loans. In case your loans are forgiven, your health and finances will stay under surveillance by the government for three years. If you are unable to maintain the requirements necessary for the TPD discharge program, the loans become due again. You can look up the application process at disabilitydischarge.com.
These are some of the ways to get student loan forgiveness. Still need more options? You’re in luck. Like we said at the start of this article, there are many ways to get student loan forgiveness. Some more alternatives and profession-specific options are discussed below.
Student Loan Forgiveness: More Options
The armed forces offer much more than a life-changing and challenging career serving your country. If you are a part of the military and burdened by a load of student debt, you may have quite a few options at hand to help you out.
The Servicemembers Civil Relief Act (SCRA)
If you’re on active duty, you can benefit from the SCRA. Introduced in 2003, the Act aimed at providing financial and legal protection to duty members. The SCRA limits the interest on the loan you took before enlisting in the military to 6%. You can start benefitting from the SCRA as soon as you start your active duty and can keep it up 30 – 90 days after you get off duty. Just apply with your loan servicer along with a copy of the original orders for your active duty, or request an authorized report from the military database. The SCRA is applicable for all loans taken on or after 14th August 2008.
The Military College Loan Repayment Program (CLRP)
The CLRP is one of the most effective ways to get rid of your federal student loan debt since it offers up to $65,000 to help you out. This amount varies in each branch of the military, and each branch also has its own criteria for the CLRP. Additionally, it is only applicable for loans taken out prior to enlisting and are offered to military personnel, not officers, without any previous military experience.
The CLRP does not pay the interest on the loan, any fees accrued in the past, or defaulted loans. Payments are made directly to the lender. Each branch has a minimum number of years of enlistment and if you change your branch before hitting the minimum, you will have to pay back the extra amount paid in loans. For instance, the army requires that you enlist for a minimum of 3 years, while the air force and navy need only 4 years of active duty enlistment.
The military CLRP has the following branches under it.
- The Army Student Loan Repayment Program
Starts after completing 1 year of service.
Minimum Requirement = Enlist for at least 3 years and score 50 or higher on the Armed Services Vocational Aptitude Battery test
Payment per year = 33.33% of the loan balance or $15,00, whichever is the greater amount.
Maximum amount offered = $65,000 - The Navy Student Loan Repayment Program
Starts after completing 1 year of service.
Minimum Requirement = Enlist for at least 4 years
Payment per year = 33.33% of the loan balance or $15,00, whichever is the greater amount.
Maximum amount offered = $65,000 - The Air Force College Loan Repayment Program
Starts after completing 1 year of service.
Minimum Requirement = Enlist for at least 4 years
Payment per year = 33.33% of the loan balance or $15,00, whichever is the greater amount.
Maximum amount offered = $10,000 - The Coast Guard Loan Repayment Program
Starts after completing 1 year of service.
Minimum Requirement = Enlist for at least 3 years
Payment per year = Maximum $10,000
Maximum amount offered = $30,000 - The National Guard Student Loan Repayment Program
Starts after completing 1 year of service.
Minimum Requirement = Enlist for at least 6 years of service in an eligible job and score 50 or higher on the Armed Services Vocational Aptitude Battery test
Payment per year = Maximum $7,500
Maximum amount offered = $50,000
The recruit’s enlistment contract must include the CLRP for it to be applicable. Keep in mind that the minimum requirements and the amount offered in student loan forgiveness may vary for Reserve enlistments. Not every military occupational specialty is eligible for the repayment program, hence talk to your local recruiting office to get more information about each branch and the jobs that qualify for its College Loan Repayment Program for your student loan forgiveness.
Student Loan Repayment Assistance Program (LRAP)
LRAPs are offered to students who are working in low-paying public service or not-for-profit jobs. Either the government, the state, or the organization may offer such programs. For instance, the American Bar Association offers 24 LRAPs in 23 states for lawyers, subject to terms and conditions. Similarly, the National Institute of Health provides a maximum of $35,000 in debt assistance to health officials appointed for research. Check with your institute or state to see if you qualify for any of the LRAP for your student loan forgiveness.
Employer-Based Student Loan Payment Plans
Some companies like Hulu, Penguin RandomHouse, Fidelity Investment, Nvidia, Estee Lauder, and more offer help to their employees to pay off their student loans. This is partly to retain talent for the long term and have their employees perform to the best of their abilities, without the additional worry of having to pay outstanding student loans. It is offered as part of the benefits package, like health insurance. The HR manager of the company can guide you better about the student loan forgiveness packages offered.
How To Get Out Of Private Student Loan Debt
Unlike federal student loans that offer a multitude of options for you to eventually get rid of your loan, private lenders do not have student loan forgiveness options. However, you can work around the loan to make the payments easier and more suitable for your financial status.
The first step is to talk to your loan issuer. Some lenders offer deferment and forbearance, which is essentially little to no payments for a certain period of time, like 48 months. The interest keeps accruing at this time and you may end up paying more at the end. You might also consider refinancing – getting a new loan to help you out with the old one. Make sure to compare rates before you go for a refinancing loan. You’ll only qualify for a refinancing loan if the new lender feels that you have been making payments on the old loan in good faith and will be able to make payments towards the new loan as well. The last resort for reducing your private student loans is declaring bankruptcy. Though your loans will not be forgiven, you may get them reduced or get a better payment plan. Declaring bankruptcy should be your very last option, as it can show up on your credit report for up to 7 to 10 years. A damaged credit report can make taking out other loans very difficult.
How To Get Rid Of Student Loans On Credit Report?
It is not possible to get rid of your student loans from your credit report. You may enter into a dispute with your lender if you feel that the loan has been erroneously entered into the credit bureau’s system. You will need to show where the mistake is for it to be removed. Otherwise, a defaulted loan can stay on your credit report for a long time, with the exception of the Perkins loan, which is removed from your credit report once it is paid off in full.
Conclusion
Student loans are a big source of financial worry for many Americans. If they are keeping you up at night, don’t feel like you’re alone. You have plenty of options available to tackle the debt monster head-on. Pro-tip: do your research before you sign up for a loan so you know your options from the get-go.
