As Money Farmers, we consider most debt as bad. A debt is a good debt only when it is used to acquire cash flowing assets.
Is the student loan a good debt?
Well it depends.
If the student loan is used to obtain a degree that is mostly guaranteed to land you in a well paying career, then it is a good debt.
But if you accumulate student loans indiscriminately (Say $140,000 debt for a degree in political science or womens studies which may not be useful to lead you to a good paying career), then that student loan is a bad debt.
You can read here more about good debts and bad debts and how to manage them.
OK, but I have a student loan and I am struggling to pay it off. My job is not well paying. What do I do now?
Many times our education system fails to teach our children, basic financial concepts like loans, interests, compound interest etc.
We understand your dilemma and all is not lost.
There are many ways you can manage and sometimes eliminate your student loan debt. Even though there is no easy way to make your student loan magically disappear like a puff of smoke, there are some ways to get your student loan debt forgiven.
One major option available to you to eliminate your student loan debt is the Public Service Loan Forgiveness (PSLF) Program.
What is Public Service Loan Forgiveness program?
Public Service Loan Forgiveness (PSLF) program is a federal government program that helps those working in public sector service jobs and nonprofits, to manage their student loan debt through forgiveness after they complete a minimum threads-hold of prompt re-payment – which is currently set at 120 payments (ten years).
Who is eligible for Public Service Loan Forgiveness (PSLF) Program?
If you are employed with any one of the following types of organizations, then you are qualified to apply for PSLF. Please note that, what do you do on your employment doesn’t matter. You can be a teacher, administrator or a housekeeper, but if you work for any of the following types of employers, then you are eligible for PSLF.
- All government agencies, at any level including federal, state, local, or tribal governments
- All non-profit organizations that are tax-exempt under Section 501(c)(3) of the Internal Revenue Code
- Other not-for-profit organizations that provide certain types of qualifying public services
- Serving in a full-time AmeriCorps or Peace Corps
What do I need to do to apply for the Public Service Loan Forgiveness program?
To verify if you qualify for the program, you can go to the https://studentaid.ed.gov website and submit the public service employment certification form.
What are my options if my employer doesn’t belong to any of the above categories?
If you don’t qualify for PSLF, there are several other loan forgiveness programs.
Please visit the links to learn more about those programs.
- Teacher Loan Forgiveness Program
- Perkins Loan Cancellation Program for Teachers
- State-Sponsored Student Loan Forgiveness Programs