Graduates working since 2007 in public service are looking forward to next year when their student loans will be forgiven. This will be the first time the government has had to forgive debt under the Public Service Loan Forgiveness program. The program states that individuals who work for ten years in specific careers are eligible to have the remaining balance of their loans erased.
These areas include working for non-profit organizations, libraries, schools, and in government positions. Borrowers will have to make on-time loan payments during the ten years they work in public service. These payments may be made under an income-based repayment plan if the individual qualifies. This can result in huge savings for the borrower and a large amount of debt for the government to forgive.
With as many as 25% of working individuals qualifying, the government may have to forgive more than anticipated. More individuals took advantage of the program than expected, and the average amount of loans carried by those in the program is $60,000. About 30% have debt over $100,000. The government will have to forgive more than $12 billion in student loans between 2017 and 2027.
The Department of Education is considering capping the amount that could be forgiven. There is currently no maximum amount.
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This article was provided by our partners at moneytips.com.