6 Reasons Student Loan Forgiveness Might Not Be Worth It

Student Loan Forgiveness

You may be able to get your student loans forgiven, which sounds great. However, there are a lot of things you need to think about before deciding that this is the best solution for you. For instance, what if you owe more than $57k? What if you only have five years left on your repayment plan and want to switch it up? We’ll talk about these six reasons why student loan forgiveness might not be worth it in our blog post today!

The Basics

Let’s start with the basics. There are some 3.8 million people currently in federal student loan repayment plans, and one in nine Americans have student loans. As you can imagine, debt is at an all-time high, which is making the idea of student loan forgiveness seem like a great idea for some. The problem? Only two types of student loan borrowers are eligible for this type of assistance: Federal Direct Subsidized Loans : These are the loans you borrow for school and go through the federal government. These loans are guaranteed by the government and are only used for undergraduate or graduate degrees. Federal Direct Unsubsidized Loans : These are the loans you borrow but go through private lenders.

The Student Loan Forgiveness Program

There are several options for you to look into, but there is only one true program for federal student loans. You must have one of these loan options to qualify. They include Direct Loans Direct PLUS Loans Federal Family Education Loan Federal Grad PLUS Loans Parent PLUS Loans Forgiveness under the Direct Loan Program You can choose from two options when it comes to your Direct Loans. The first one is the standard 10-year plan, which is at the low end. You can choose to keep this plan or switch to a flexible repayment plan if you qualify. Depending on your income and resources, you may be able to choose a Pay As You Earn (PAYE) repayment plan. You may be able to pay less than what you’re currently paying. You can also earn a federal income tax credit for those payments.

Loan Cancellation

One of the most popular reasons for student loan forgiveness is called loan cancellation, which basically allows you to have your loan payments forgiven, and start over with a different loan. This happens when your financial hardship is great enough that your income qualifies you for forgiveness. The process is tricky and should be handled by an experienced and knowledgeable person. The forgiveness money you’re offered can be spent however you want, and you will have to repay the original student loan back to the government. That’s the only way you can receive the money you’re owed. For instance, imagine that you’re only required to repay the amount of student loan debt that you already owe (if that’s all that you can afford), and you put in a request to have the payments forgiven.


If you’re serious about paying off your student loans quickly, you may want to consider refinancing your loans. You can combine them into one loan and pay off your loan sooner. But, you can’t do this through income-based repayment or forgiveness. You must consolidate to have all the loan income match and get your loan paid off sooner. Void in Certain Countries If you want to apply for federal student loan forgiveness, you must be in the United States. However, there are a number of countries where the student loan forgiveness does not apply. It varies from country to country, but you should be aware that this will not apply if you have a foreign student loan.


In some cases, debtors may be eligible for bankruptcy and if you get the right score, your student loans can be discharged. Your loan servicer may contact you if they have this information. However, bankruptcy is an expensive process, and if you’re not sure if your student loans will be discharged, there’s no reason to go bankrupt. A bankruptcy lawyer can help you through the process to determine whether or not you will be eligible. Bankruptcy is the best way to recover assets, especially if your assets are tied to your student loans. If your student loan debt is below $500, then you don’t have to file for bankruptcy. As you get your debt paid off, your bankruptcy lawyer will need to assist you with the next steps.


The thing is, you can’t guarantee your loan balance will be forgiven. The type of debt you have or how old you are is the biggest thing to consider. For example, you’ll be forgiven on any undergraduate debt, but not on the current student loan you still owe after that undergraduate degree. If you currently owe student loans that are forgiven when you graduate, you’re not guaranteed student loan forgiveness when you have to take out your second or third undergraduate degree. Furthermore, a lot of employers in these situations do not want to hire someone who is currently under a repayment plan.