We’ve all got the emails and seen the ads of companies looking forward to forgive your student debt if you meet certain criteria.
To fully convince you take immediate action, the message is usually accompanied by testimonials from people who’ve benefited from similar programs and who are forever grateful for the services of the companies in question.
Should you trust these companies and enroll for their debt relief services? Is it possible for your thousands worth of student debt to be erased and completely forgotten?
The Short Answer is – Probably
Yes, in some way, your student loan can be forgiven. Yes, at the end of the day, you may not have to repay the whole amount projected when you initially took out the loan. But, erasing the entire loan such that you end up not paying a single cent? That doesn’t happen often.
One expert sums it up nicely on her blog by saying: “As with Santa Claus, Tooth Fairy, and Easter Bunny, loan forgiveness is simply another tall tale. We all wish it was true; and we certainly enjoy the periods when it appears so. But, at best, it’s a fantasy.
What Forgiveness Really Means
The forgiveness process is a long and complicated path. First off, not everyone qualifies. You need to meet a ton of requirements to be accepted. Secondly, even if you’re accepted, you never know for sure whether you’re in the right program or a scam. And, finally, if you’re lucky enough to end up in a legit program, only part of the loan will be forgiven.
Let’s begin with the rules
The federal government states clearly that student loan forgiveness is available only if you meet the following criteria;
- You must be a poor and minority college student
- New borrowers are only accepted after 20 years
- Private borrowers are not eligible
Now, the Scams
Knowing that many people who’ve recently come out of college are struggling to repay their student debt, a number of financial institutions have come up, offering to relieve that burden in the click of a button. All you have to do is complete some paperwork and wait as your loans are cleared.
These companies are notorious for using language such as: “You are now eligible to receive total forgiveness of your student loans” and “Act immediately to qualify before the program is discontinued.”
It gets worse, thousands of people have been conned into believing such scams. When you become a victim, often, you’ll be asked to pay a small processing fee. This “small” fee can range from a few to several hundreds. Be warned, you’re being scammed.
And, finally, how you could genuinely benefit
If you meet the requirements, avoid the scams, and enter a legit loan forgiveness program, don’t expect miracles. What actually happens is that all your student loans are combined into a new loan that offers different income-driven repayment plans.
So, Don’t be Fooled
Student loan forgiveness exists; but it’s not some kind of magic, even though it can still be helpful.