5 Tips to Get Student Loans Forgiven

Whether they are private or federal, you may take steps to get student loans forgiven. The process, however, may be difficult. Loans are not forgiven out of good will. You will only qualify under very strict criteria.

Serve the Public

If you have a direct federal loan, then you may receive complete forgiveness of your debt through working in a public service job. You must work in the job for 120 months, and you must make loan payments for those 120 months. During the entire period, you must be a full-time employee. This option is designed for students who enter a career in public service with high debt and low income. Military service does count, but you must serve full time for the full 120 months.

Qualify under Legal Criteria

If you have private loans or are not looking to enter public service, then you may still be able to gain loan forgiveness if you meet certain legal criteria. A judge will have to make the determination to forgive your loan, based on the following criteria:

  • You have an immediate financial crisis that renders you incapable of meeting the demand of the debt based on your income and expenses, or you have become disabled and are unable to earn an income
  • You made a good faith effort to repay the loan before the crisis occurred
  • The financial situation will not be repaired any time in the near future

Seek a Loan Lawyer

Proving the above facts apply to you is not as easy as it may seem. Loan forgiveness is an actual court ruling, and you will need to understand the your legal rights as a borrower, as well as the lender's rights. Since most laypeople do not understand these issues, hiring a loan lawyer may be in your best interest. This will cost you. However, if you are facing a significant amount of debt, the debt forgiveness will make up for the cost of hiring a lawyer.

Declare Bankruptcy

Simply consolidating or settling your debt is an option, but this will not gain your total loan forgiveness. If you truly cannot pay your loans and still provide for yourself and your family, you may be facing a bankruptcy situation. Declaring bankruptcy is not an ideal solution. However, bankruptcy does provide key legal protections for persons who have taken on too much debt and simply cannot resolve the problem on their own. A judge will still determine which of your loans to forgive, if any, so you will need a bankruptcy attorney to assist you.

Consider Deferral

If you are only facing a temporary hardship, you may be able to defer payments on your loans. You may even be able to have the interest paused during the deferment period. Temporary unemployment, a large medical bill or an expensive move can be a reason for deferment. Most lenders prefer this to total loan default or forgiveness, so they typically will be willing to work with you.

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