Conditions for Repayment of Federal Student Loans

Trying to pay for college can be a delicate balancing act. You want to maximize the amount of financial aid and minimize the amount of student loans you use to cover expenses.

Student loans can provide a huge boost to your financial prospects


When lent wisely, student loans can provide a huge boost to your financial prospects. After graduation, when these loans become due and paid, some alumni find that they have a difficult time securing a job that pays enough to enable them to honor their financial commitment.

Budget and long-term credit prospects


This can jeopardize their budget and long-term credit prospects. Fortunately, there are some conditions in which you do not need to repay federal student loans, either for a fixed period or permanently. Here are 10 options that can be applied to your financial situation:

  1. Deferred Credit: A deferral is a period in which the repayment of the principal and interest of your loan is deferred. Although interest rates continue to accrue, the federal government may pay interest depending on the type of loan you have. You may be entitled to a deferral if you continue to take approved classes, attend grad school, become unemployed, join the Peace Corps, or serve in the military.
  2. Loan repayment amount: You may be able to cancel your payment or reduce your monthly payment by up to 12 months; however, interest will continue to accrue on your subsidized and unpaid loans. You may qualify for dependency due to illness, financial hardship, participation in a medical or dental residency, enrollment in certain public service programs, and certain military services.
  1. Closed school: You may be eligible to meet your federal student loan if your school closes while enrolled or shortly after you withdraw. This happened with the nonprofit closing the school.
  2. Public Service: You may be able to obtain loan forgiveness under the Good Finance Investment Corporation (GFIC) if you are employed by a government or nonprofit organization. This program forgives the remaining amount on your federal direct student loans after making 120 qualifying monthly payments under a qualifying repayment plan while working full time for a qualified employer.
  1. Missing a Teacher Loan: If you teach full-time for five complete and consecutive academic years in certain primary and secondary schools and educational services serving low-income families and other qualifications, you may be eligible to forgive up to a combined total of USD 17,500 on your Federal Direct Subsidized and Non-Directional Loans and your Federal Stafford Subsidized and Non-Directional Loans.
  2. Cancellation of Perkins Federal Credit Teachers: You may be entitled to cancel credits for full-time teaching at a low-income school or for teaching in certain subjects. You can also qualify for deferral through these qualified teaching services.
  3. Government-backed study loan forgiveness programs: Many states offer teacher-training programs, especially if you teach in high-need areas. The American Federation of Teachers has a search base you can search to find state and local forgiveness programs that you may qualify for.
  4. Disability: Certain physical and mental impairments may qualify you for complete and permanent disability on federal student loans.
  5. Credit Beneficiary Protection: Borrowers may be eligible for forgiveness of their federal student loans if they are misled or violated by the law. This may apply to borrowers who attended Corinthian Colleges – Everest, Heald, and WyoTech – with the first date of attendance from July 1, 2010, to September 30, 2014.
  1. Death: The loan is automatically canceled if a federal student loan borrower dies. Private student loans may not provide the same protection.

Apply only to federal student loans

If you think you may be eligible for one of these options, contact your credit service provider to determine the steps to take. Please note that these options officially apply only to federal student loans.

You need to check with each of your private loan officers to determine if they have similar programs. It may take some time, but it may be worth your effort.

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