FAFSA Student Loans Forgiveness

The Free Application for Federal Student Aid (FAFSA) is important for many American students seeking financial assistance for higher education.

However, after graduation, navigating student loan repayment can be daunting.

While the FAFSA itself doesn’t directly handle student loans forgiveness, several federal programs can help borrowers have their debt discharged under specific circumstances. 

FAFSA Student Loans Forgiveness

The FAFSA primarily focuses on determining your eligibility for federal grants, scholarships, and work-study programs to fund your education.

However, some federal student loans forgiveness programs exist, allowing borrowers to have their remaining loan balance eliminated after meeting specific requirements.

These programs are separate from the FAFSA application process but can greatly impact your loan repayment journey.

How do I know if my student loans will be forgiven?

Several federal programs offer student loans forgiveness, each with its own eligibility criteria. Here are the two main categories:

  1. Income-Driven Repayment (IDR) Forgiveness: This program forgives any remaining balance on your federal student loans after you’ve made a certain number of payments (20 or 25 years) under an IDR plan. IDR plans base your monthly payment on your income and family size, making repayment more manageable for borrowers with financial hardship.
  2. Public Service Loan Forgiveness (PSLF): If you work full-time for a government or non-profit organization, you may qualify for PSLF. This program forgives the remaining balance on your Direct Loans after you’ve made 120 qualifying monthly payments (equivalent to 10 years of repayment).

There are additional, less common forgiveness programs for specific situations, such as teacher loan forgiveness and borrower defense to repayment. 

It’s important to explore all your options and determine which program might be the best fit for you.

Which loans count for student loans forgiveness?

Not all student loans qualify for federal student loans forgiveness programs. These are the eligible ones:

  1. Direct Loans: These are federal loans issued directly by the Department of Education. They are generally the most eligible for forgiveness programs.
  2. FFEL (Federal Family Education Loan) Program Loans: These are federal loans guaranteed by the government but issued by private lenders. Consolidating these loans into a Direct Loan can make them eligible for PSLF, but not always IDR forgiveness.
  3. Perkins Loans: These are federal loans issued directly by your school. Consolidation into a Direct Loan can make them eligible for both PSLF and IDR forgiveness.
  4. Private Loans: Unfortunately, private student loans are not eligible for federal forgiveness programs.

If you’re unsure about your loan type, contacting your loan servicer can clarify your eligibility.

Should you pay off student loans?

While forgiveness programs offer relief, it’s important to weigh the pros and cons before solely relying on them.

These are some factors to consider:

  1. Length of repayment: IDR forgiveness takes 20 or 25 years, potentially extending your debt burden.
  2. Tax implications: Forgiven loan amounts may be considered taxable income by the IRS.
  3. Debt security: Forgiveness programs can change or be eliminated in the future.

If you have the financial means, aggressively paying off your loans can save you money on interest and offer peace of mind.

However, if repayment creates financial hardship, checking out forgiveness programs can be a valuable strategy.