As of 2020, American college students owe a total of $1.55 trillion in student loans, according to the Federal Reserve Bank of New York. Nearly 44 million students carry an average student loan balance of $39,350.
For graduates of service-oriented programs such as social work, this debt level creates a significant financial burden. Social workers earn a median annual salary of $51,760, according to the Bureau of Labor Statistics. This figure exceeds the median annual salary of $41,950 for all occupations. However, many social work graduates take years to pay off their student loans. Student loan forgiveness programs can help ease this financial strain.
This guide includes information on loan forgiveness for student loans. This page also specifically covers federal student loan forgiveness and student loan forgiveness for social workers.
What Is a Loan Forgiveness Program?
Whether students get their loan forgiven, discharged, or cancelled, they are no longer required to make payments. Loan forgiveness or cancellation often requires working in a high-need field or region after graduation. The federal government allocates funds for education-for-service programs in several arenas, including social work. When a student loan is discharged, the school has typically closed or the payee has become permanently disabled.
Loan Forgiveness and Repayment Options
Public Service Loan Forgiveness
The PSLF Program benefits students with loans under the Ford Federal Direct Loan Program. Only full-time U.S. government employees at federal, state, local, or tribal agencies qualify for this student loan forgiveness program. Some nonprofit employees may also qualify for this type of loan forgiveness for student loans. The program forgives the remainder of the loan amount after the applicant has made at least 120 qualified payments under an approved income-driven repayment plan.
Social workers, teachers, nurses, and other healthcare providers who meet the criteria above often qualify for this public service loan forgiveness program.
Temporary Expanded Public Service Loan Forgiveness
Students who made payments for their Direct Loan under a non-qualifying repayment plan may apply for loan forgiveness reconsideration under TEPSLF. Applicants interested in this loan forgiveness for student loans must show a 10-year employment history with a qualifying employer. The TEPSLF program only accepts applicants who have not defaulted on their Direct Loan payments.
Loan forgiveness applicants must make at least 120 qualifying payments under TEPSLF before the loan can be cancelled. Debtors must make the payments under a qualifying repayment plan. The program features limited funding and ends when funds are exhausted.
National Health Service Corps Loan Repayment Program
Medical, dental, and mental health/behavioral practitioners (including social workers) who work in designated areas for at least two years may qualify. They can use funds to repay any outstanding qualified educational loans. Practitioners with two years of full-time service receive $50,000. Part-time practitioners receive $25,000. Recipients do not pay federal income tax on NHSC loan repayment amounts.
NHSC also offers a program specifically for practitioners in the substance abuse field. Professionals focused on serving the health and educational needs of rural communities can also apply.
Perkins Loans Cancellation and Discharge
The Federal Perkins Loan program was discontinued in 2017. Students can no longer apply for financial assistance through this program. However, students with a Perkins Loan can still apply for cancellation or discharge of payments.
The program does not require debtors to make a minimum number of payments for the loan to be discharged. Instead, the program cancels a portion of a student's loan each year they qualify. Qualification criteria depends on a student's employment field or volunteer history. Many service-oriented fields qualify, including social work. Social workers may qualify for 100% loan forgiveness under the program.
Indian Health Service Loan Repayment Program
Practitioners working in Indian Health Service facilities serving the American Indian and Alaska Native communities can apply. In exchange for a minimum two-year service commitment, the program pays participants up to $40,000 to repay their qualified educational loans.
Practitioners in a field requiring licensure may apply before earning their license. However, they must show proof of licensure before they can fully participate in the program. Participants can extend their initial two-year contract annually until they fully pay off their student loans.
State-Funded Loan Forgiveness for Social Workers
Some states offer loan forgiveness programs for social workers who work for qualified employers. For example, New York provides up to $26,000 to help resident social workers pay off their student loans. The program requires applicants to live in the state for at least one year and hold one year of social work experience in a critical service field.
North Carolina provides up to $50,000 for loan repayment for social workers who render at least two years of service to mentally ill patients in the state's underserved areas.
Alternative Ways To Manage Student Loan Debt
Income-Driven Repayment Programs
Students can explore four income-driven repayment programs to help pay off their federal student loans. Payment amounts vary based on a payee's discretionary income and family size.
The repayment period length differs between plans. For example, payees who qualify under the Revised Pay As You Earn Repayment plan pay up to 10% of their discretionary income for up to 20 years for a bachelor's or 25 years for a master's. Payees who qualify under the Income Contingent Repayment plan pay up to 20% of their discretionary income. They can take up to 25 years to pay off their loan.
Student Loan Refinance
Students can refinance educational loans from private lenders. Most do so when interest rates dip below a loan's original rates. Borrowers can explore many refinancing options from various lenders. A high credit score can qualify debt consolidators for a lower interest rate. Most lenders require documents such as proof of employment, tax returns or W-2s, recent pay stubs, proof of residency, and loan statements from other lenders.
Students should continue to repay their existing loans until the lender approves and implements their refinancing plan.
Deferment or Forbearance
A deferment or forbearance temporarily allows debtors to delay payments on federal student loans. A loan under deferment does not accrue interest. However, a loan under forbearance accrues interest. Qualifying criteria for each one differs.
Generally, debtors should choose deferment when unemployed, receiving federal assistance, or earning a monthly income below their state's poverty guidelines. Debtors experiencing a long-term financial downturn benefit most from deferment.
Forbearance serves debtors who foresee their financial difficulty as transitory. Neither one significantly impacts a debtor's credit rating.
Student Loan Resources
Federal Student Aid: Student Loan Forgiveness
Social work practitioners employed by a government agency can take advantage of this program after they have made the required number of payments on their federal student loan.
Forbes: Biden Will Review Student Loan Forgiveness
The Biden administration seeks to lower and simplify loan payments, create loan forgiveness programs with fewer requirements, and make student loan cancellation tax-free.
Consumer Financial Protection Bureau
The site provides basic information such as how much to borrow for college, how to compare financial aid offers from colleges and universities, and the different ways to pay off student loans.
Students can learn about the financial aid process, the FAFSA, scholarships and grants, and common student loan misconceptions. The website seeks to assist students in managing student loan debt. Learners can also explore alternatives to taking out loans to pay for college.
The Institute for College Access & Success
The institute advocates for student-centered public policies that make higher education affordable and accessible. Students can access various articles on the most recent research findings and policy development impacting higher education.
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