Student Loan Forgiveness – Not Much

Frequently you’ll see articles with “Student Loan Forgiveness” in the title.  I believe the student loan power players keep putting out this information in the hope that most people will not realize how terrible the system really is.  They want to lull the public into thinking “Things can’t be that bad.  Look at all the student loan forgiveness out there.”

Nearly always, these pieces are promoting a very limited type of forgiveness that has been available for years.  Let’s look at some circumstances under which loans may be forgiven.  These are from the Department of Education website, https://studentaid.ed.gov/sa/repay-loans/forgiveness-cancellation#public-service  Check it out if you want more details.  Here are some situations where student loans may be forgiven:

  1. Death  (this is the only one that always works, at least for the person who died.  Not for any cosigners.)
  2. Becoming totally and permanently disabled to the point where you can’t work.  (Even this one has many qualifications)
  3. If the school falsely certified the loan (only under very specific circumstances)
  4. If the school closed before you graduated (only under very specific circumstances)
  5. If the loans was falsely signed for, due to identity theft

There is a program called Public Service Loan Forgiveness, which sounds good, at first.  But after reading further, here is how it works.  The person must be working in specific types of jobs, the full ten years.  They must make ten years of full payments, only on certain types of loans, and only on certain payment plans.  Then they can apply for loan forgiveness.  This may or may not be approved.  The Department of Education has also come out and said that they make no guarantee that the program will still be in existence after the borrower completes ten years of payments!  Not much hope of relief there.

There is more, but you get the idea.  Having the loans discharged when you die is certainly no help to the people who need relief while they are alive.  The other conditions only pertain to a very small percentage of these loans.  The website specifically says: “Note that a Department loan cannot be canceled because a borrower is experiencing financial hardship and can’t afford his or her loan payments.”  Apparently in the Department of Education’s world, financial hardship is always temporary.  If only it were true.  And “experiencing financial hardship” sounds so much milder than “struggling to keep a roof over their heads.”  Which is exactly the situation that many with these loans find themselves in.  Especially seniors.

There is no meaningful help for seniors who can’t afford to pay their loans, yet are forced to pay anyway.  This is wrong.

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