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Last updated: September 26. 2013 11:23PM - 1250 Views
JOSEPH PISANI AP Business Writer



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NEW YORK — Wish you could make your student loans disappear?


Student loan forgiveness programs can make it happen, but there’s a problem.


“There needs to be more awareness about these programs,” says Betsy Mayotte, director of regulatory compliance at American Student Assistance, a nonprofit that helps borrowers manage their student debt.


So the organization released a student loan forgiveness guide earlier this year on its website. The Consumer Financial Protection Bureau, a government watchdog, released its own guide last month to bring attention to the programs.


Here’s a snapshot of several options.


PUBLIC SERVICE PROGRAM


This program is for those who work in federal, state or local government jobs, or at a nonprofit that’s been designated as a 501(c)(3) tax-exempt organization. The CFPB estimates that a quarter of the country’s workforce falls into those categories. Individuals must also have high student loan balances relative to their income.


Only those with federal Direct Loans will qualify for this program, but some loans, such as the Federal Family Education Loan (also known as FFEL) and the Perkins Loan can be consolidated into a Direct Loan. If you don’t know what type of federal loan you have, you can find out at nslds.ed.gov.


The Department of Education offers more guidelines: http://1.usa.gov/18sELJS .


INCOME-BASED REPAYMENT


Under this program borrowers can qualify for reduced monthly payments, and after 25 years the remaining balance is forgiven. It is important to note that the forgiven amount is taxed as income, which means you will likely have to pay a sum to the IRS that’s lower than the amount forgiven.


The program is for those whose federal student loan debt is high relative their income and family size. Your lender will ultimately decide if you are qualified, but you can see if you would benefit from this program by using this online calculator: http://1.usa.gov/1bIO1yw .


There are other rules, such as which types of federal loans qualify. The Department of Education has a helpful tip sheet: http://1.usa.gov/19JJVQA .


PAY AS YOU EARN PLAN


Borrowers can apply to have their monthly payments reduced, and after 20 years of payments, the balance is forgiven. Any forgiven amounts are taxed as income. This program is for those with a high level of federal student loans compared to their income, and who took out their first federal student loan after Oct. 1, 2007.


Use the Department of Education’s online calculator to see if you qualify: http://1.usa.gov/194F7V0 .


OTHER PROGRAMS


Depending on your job, you may be able to get help with your loans.


American Student Assistance put a list together of over 60 programs. Some are based on type of job, others are state programs. You can see them here: http://bit.ly/15xGpNs . Some state programs even help with private loans. Mayotte of ASA recommends an Internet search to see if your state or job qualifies for some sort of student loan help.


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