Federal Loan Forgiveness Programs have become widely used all over the country in response to an increase in college graduates and others who are having trouble paying back their loans. The types of forgiveness policies include Student Loan Forgiveness and Volunteer Loan Forgiveness.
Public loan forgiveness was set up in 2007 by The College Cost Reduction And Access Act to discharge debt to graduates who have worked in public service for at least 10 years. To qualify to have their debt discharged, an individual must have already made a minimum of 120 payments on the loan. Payments made before October of 2007 did not apply to this deal.
For those who have never worked in public service but have loans they can’t pay off, after they make payments for 25 years they are eligible to receive loan forgiveness.
The Volunteer Work Loan Forgiveness extends scholarships to Peace Corps Members. They are also eligible to apply for reduced tuition and academic credit. Those who have served at least one year in the Peace Corps can apply to have their loans deferred. They can also receive a partial cancellation on certain loans, absolving them of having to pay those loans off.
Forgiveness programs are being used more frequently than they were in the past due to the declining economy and already over saturated job market. More and more people are finding themselves with financial troubles that they struggle to overcome. The federal government has been doing its part to help people recover.
When it comes to student loans, many people end up in debt. Proper management of this debt is critical in helping a recent college graduate to become financially stable. Student loan consolidation is recommended to everyone who has a hard time paying off their loan once they have graduated from college.
A student loan should be used as a last resort if all other possible options have been exhausted. Any student that needs help paying for college should first look into free sources of financial aid, such as a scholarship, work-study program or grant. It is also recommended that a student first calculate the amount they can comfortably afford to pay back when the time comes. They should also figure out how much their monthly payment will be so they are prepared to make those payments in full and on time.
When it comes time to pay off a student loan, the process is much easier if the student has built a good credit history. If the status of a student loan changes, the student is urged to contact the institute that granted the loan. This is a necessity if the student will be moving, changing their name or graduating.
Private education loan consolidation is important for students who want to consolidate several student loans into one convenient package. Although the interest paid over the life of the loan may increase, this is an excellent option for students wishing to lower their monthly payment amount or refinance student loan debt and based on credit scores, the monthly interest rate may even decrease.