Posted by Fletcher Accounting and Tax Service Inc.

Student Loan Forgiveness Dos and Don'ts

Student Loan Forgiveness Dos and Don'ts

In case you are paying an attention to the student loan forgiveness do's and don'ts, you would be on a right track.

Here is what you actually have to understand regarding student loan forgiveness do's and don'ts.

What is the Student Loan Forgiveness?

In case you got the student loans then you aren’t alone. There are almost forty-four million people who actually owe 1.5 trillion dollars.

Many of them who are borrowers of the student loan expect the student loan forgiveness. But, everyone would not qualify. You must need to consult a tax preparer to get advice about the student loan forgiveness.

There’re 3 primary forms of the student loan forgiveness. The federal government actually offers these for the federal loans for students:

  • Public Service Loan Forgiveness or PSLF
  • Income-Driven Repayment Plan or IDRP
  • Teacher-Student Loan Forgiveness or TSLF

There’re also some other kinds of the student loan forgiveness that include through the state programs as well as other organizations.

Don't #1: Do not think that you could borrow the student loans and then you might have forgiven the student loan.

The student loans forgiveness isn’t an automatic process. First, you need to be qualified for every kind of the student loan forgiveness.

Do #1: Must see the basic requirements of every program as well as determine in case you are qualified.

Every program of student loan forgiveness has many requirements. Hence, you need to spend your time in order to get basic know-how. Then, you actually understand your time commitment, pros, and cons.

For instance, the PSLF program is the federal program which forgives the federal student loan for borrowers. They’re employed full-time (that is more than thirty hours every week) in the eligible local, federal or state public service job. You can also say that they are employed under 501(c) (3) nonprofit job. It actually makes one-hundred and twenty eligible payments on-time.

Don't #2: Do not assume that you can qualify depending on the job

You do not need to think that you can qualify for the PSLF just because you are working in the public service.

Must remember that it is your employer who actually matters and not just your role.

So, for instance, if you are working with some non-profit organization, but you are also employed through the private company then this won’t qualify for the public service loan forgiveness.

Do #2: Must complete the Form of Employment Certification

You need to fill the form of Employment Certification and then resubmit this form every year to the Department of Education. Hence, the public service employment could be properly tracked.

Don't #3: Do not forget consolidating the student loans in case you’ve FFEL student loan

This is quite tricky, especially in case you do not have the Direct Loans.

In case you have got the FFEL or Federal Family Education Loans then you could not get the PSLF without undergoing the student loans consolidation. It is a very crucial step that you could not overlook.

Do #3: Must notice that you do not need to consolidate the direct student loan

You need to remember that in case you do not have the FFEL Loan then you need not consolidate the student loan to get the forgiveness. While you are consolidating the FFEL Loan then you get the Direct Consolidation Loan by the federal government. Also, you can select the income repayment plan.

Don't #4: Do not think that your every student loan is forgiven

Remember it: these’re programs of the federal student loan forgiveness. Hence, just federal student loan could be generally forgiven.

There are several people who think that their every student loan would be just forgiven by the income repayment plans or public service loans forgiveness.

Do #4: Have some student loans repayment action plans for the private student loan

In case the private student loan could not be just forgiven then you need the action plan in order to repay the private student loan.

Don't #5: Do not think that the student loans forgiveness is totally free

The student loans forgiveness isn’t free at all. You would have to make some minimum monthly payment that is based on the income as well as other elements.

Do #5: Do remember that the student loans forgiveness could result in the tax payment

In case you get the student loans forgiveness by the income repayment plan just like REPAYE or PAYE then you would likely owe the income tax on the student loans forgiveness.

Fletcher Accounting and Tax Service Inc.
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