Student Loan Forgiveness & Repayment Programs
An education loan is the only option for many students wanting to undertake college eduction. Often this loan runs into hundreds or thousands of dollars. An eduction loan can therefore be stressful on college graduates, especially since most students take up jobs with entry-level salaries. In such a scenario, the burden of the loan increases.
To ease the burden, graduates can opt for a Student Loan Forgiveness/ Repayment Program. This is a method for reducing the repayable amount thereby making it easy for students to overcome debt. These programs can help in eliminating the debt by a few hundred/thousand dollars in return for choosing certain careers, voluntary work or even military service.
What are Loan Forgiveness & Repayment Programs?
A loan forgiveness programs is backed by the Federal Government. According to this program, if a student fulfills certain criteria, a part of the loan amount or the entire amount payable, may be waived.
A student loan repayment program is different from a loan forgiveness program. This program may be used to reduce any type of loan. It enables the provision of additional funds, through which a student can repay his loan. Sometimes, the payment is directly made to the lender on behalf of the borrower.
Both programs are extremely helpful in student loan debt management. However, the amount eliminated under these programs is considered as a taxable income. While this may be discouraging, these programs are quite beneficial, and carry more value than the tax incurred through them. If you do not want the repayments to be taxable, it is better to opt for student loans which provide for forgiveness. But this provision is available only when you work with certain professions and for certain employers for a required time period. For example, loan repayments under National Health Service Corps (NHSC) program are tax-free. Likewise, state programs which qualify for funding from the Public Health Services Act are considered tax-free.
Here is a list of institutions that provide the option of reducing/ eliminating student loans:
- The American Federation of Teachers
- The Association of Medical Colleges
- The American Bar Association
- AmeriCorps
- Peace Corps
A student loan debt management program is a resourceful tool to reduce debts. Make sure that you avail these benefits. Choose your option wisely. If you want additional provisions, opt for the programs which offer them. There might be some expenses in the form of taxable income. However, from a broader perspective, the program is more profitable and outweighs the costs incurred.
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