Student Debt Forgiveness Programs Skyrocket

May 6, 2014

by Suada Kolovic

Unless you plan on paying for your college education out-of-pocket, completing the FAFSA and applying for scholarships are essential in your quest for financial aid. But have you considered federal programs that forgive student loan debt almost entirely? It’s an increasingly popular option: According to reports, government officials are trying to rein in federal programs that forgive some student debt, amid rising concerns over the plans’ costs and the possibility they could encourage colleges to push tuition even higher.

The fastest-growing plan requires borrowers to pay 10 percent a year of their discretionary income in monthly installments. The unpaid balances for those working in the public sector or for nonprofits are forgiven after 10 years while those private-sector workers see their debt wiped clear after 20 years. And while there is currently no limit on such debt, the Obama administration has proposed to cap the amount eligible for forgiveness at $57,500 per student. The cost? A report last week from the Brookings Institution estimated that the plan could cost taxpayers $14 billion a year! “Loan forgiveness creates incentives for students to borrow too much to attend college, potentially contributing to rising college prices for everyone,” the study said. The authors went on to recommend the forgiveness provisions to be scrapped entirely. (For more on this story, click here.)

Share your thoughts on federal student debt forgiveness programs in the comments and check out our financial aid section for more information on how to fund your college education.

And remember, there’s no need to rely on expensive student loan options to pay for your college education. For more information on finding free scholarship money for college, conduct a Scholarships.com free college scholarship search today, then apply and win! It’s that easy!

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Discuss

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Comments (4)

Michelle S  on  5/9/2014 1:01:17 PM commented:

I think this is a great idea and they should stick with it. I had to go back to school because I was stuck to much experience not enough schooling to move up. I am a single parent and working barely keeps up with the bills. Let alone my student loans. At some point I'm sure I'll be able to pay some of it back but honestly if I am obligated to pay all of it I will be in the same boat I'm in now. Barely keeping my head above water. Some people need help most students are single parents or parents struggling to make ends meet. Just trying to get a education and get into a career and support themselves. And technically in the end if it gets paid for by taxes them we are helping pay it as well... And Lynette I will pray for you the best of luck in your journey and for your children...

 on  5/7/2014 7:27:02 PM commented:

Are we selling our son short by sending him to a college we can afford (Public University)? We can borrow and send him to his first choice then reneg on our obligation??? We know life is unfair but this is Nuts.!!

Kiana L  on  5/7/2014 8:56:39 AM commented:

Students that have abundant amounts of debt clearly did not count the cost before borrowing the loans. This program gives hope for the students that were not trained and taught adequately by those leading the way for them in the financial transition from high school to college.

Lynnette W  on  5/6/2014 5:20:20 PM commented:

I am hoping that someone will pass the law on the student loan, because there is a cap on how much you can borrower. Going to a 4 years college coast around $60.000 to $70.000, like myself I am to the limit on borrower from Strafford loan. My graduation date and year was for 09/5/2014 This is not going to happen, because I have no way on how to pay for the rest of my class. Students like me needs help on paying for our schooling. I know that anyone who is reading this will saying, " What about getting a job" I do not mind working, that why I am in school, however I have 2 disable kids that live with me, one 17, and the other 10. Both need me around the house now. when my oldest turn 18, that will take a lots off of me, because he need help the most, my 10 years old need me as well, however, I can still work in the morning. So don't be little me, just pray for me. Just because I don't have any money today, to pay for my school, my life can and will change in the blink of your eye, for the better, because I am God child and he do look out for his children.