About Student Loan Debt Forgiveness

Student loan debt forgiveness refers to a set of programs initiated by the US Federal government to help recent college graduate and professional school graduates start strong in the post-student world without having worry about paying back their student loan debt. 

Student Loan Debt Forgiveness or Repayment?

Student loan debt forgiveness specifically refers to the forgiveness of government-sponsored student loans, such as a Stafford Loan or Perkins Loan. Through these certain programs, the government will literally wipe away any debt you accumulated through government-sponsored student loans. Student loan debt repayment refers to a wider set of programs that are designed to help graduates pay off student loans that were not necessarily provided by the government, such a private loans or loans from the educational institution. Either way, the government helps you to pay down or completely erase your student debt in exchange for service-based work.

How Student Loan Debt Forgiveness Works

There are a number of ways that you can become eligible for student loan debt forgiveness or repayment. Depending on your qualifications, you may be able to take a government-sponsored job in your specific field and thereby have your student loan debt waived. Some of the more common options for college graduates with no special training are the Peace Corps or joining the military. For specially trained professionals, such as recent medical school graduates, law school graduates, and graduates who are qualified to become full-time teachers, there are other program options. These programs focus on the specific specialty of the recent graduate, whether it means that you will work as a public service lawyer or a teacher in a low-income school district.

Taxing Forgiveness or Repayment

It is good to be aware of the fact that you may be taxed for all or a portion of the funds you receive as part of a student loan debt forgiveness or repayment program. For example, if you have a $6000 loan forgiven or repaid in any given year, your earned, taxable income for the year may include the $6000 boost you received. Though this may be a frustrating prospective, the benefits of getting help repaying or eliminating your student loan debt will far outweigh extra taxes, in the long run and even the not-so-long run. 

How Long Is the Commitment?

In order to participate in one of the student loan debt forgiveness or repayment programs, you will need to make a commitment of time. For employment programs, such as being a public service lawyer or public health medical official or teacher in a low-income school, the commitment is typically about ten years. Commitment time changes for those who choose to participate in programs like the Peace Corps and usually much less than ten years. 

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