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With a few simple questions, the tool takes your unique student loan situation into account which will help you to figure out what options are available for you to reduce the burden and pay it all off faster.

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Public Service Loan Forgiveness (PSLF) is a government program for public service employees with federal loans. Any balance on your eligible loan will be forgiven after you’ve made 120 qualifying payments (10 years). For the most part, this is more relevant to those that have made reduced monthly payments under the income-driven repayment plans including Income Based Repayment, Pay As You Earn, and Revised Pay As You Earn. Unlike forgiveness through income-driven repayment options, you will not pay income tax on the debt forgiven at the end of 10-year term.

Qualifications

  • Work full-time (more than 30 hours a week) in qualifying public service organizations—including government, 501(c)(3), or not-for-profit organizations.
  • Have completed 120 monthly payments (10 years) on a qualified repayment plan.
  • Have completed the PSLF employer certification form for each employer during that 10 year period.
  • Have a qualifying Direct loan.


Pros

  • If combined with an income-driven repayment plan, monthly payments can be significantly reduced and the balance, after 10 years worth of payments, forgiven.
  • The forgiven balance at the end of 10 years is tax free.
  • There is currently no cap on the total amount that is forgiven after 120 payments.

Cons

  • Must be confident that you will work in public service for at least 120 payments.
  • If your loan balances are low, it’s unlikely you will have much of your loans remaining after 10 years.
  • If you aren’t able to reduce your payments through one of the income-driven repayment plans the benefits the benefits of PSLF could be limited.

SoFi Recommendations

Public Service Loan Forgiveness can be a great option for public teachers, government workers, or non-profit employees who are struggling to repay their federal student loans. Doctors working in public hospitals can often take advantage of this program as well. Be sure you’re confident that you will be in public service for at least 10 years and, to maximize the benefits, are able to combine it with one of the other income-driven repayment options.

If you make a significant income (or expect to before 10 years is up), we suggest running the calculations over the 10-year period to make sure this decision makes sense.

As always, you can stay the course with your current loans if this option doesn’t work for your personal circumstances.


How to Apply:

Since PSLF wasn’t a thing until 2007, no one has actually had any of their loans forgiven under this program. Which means there isn’t a Public Service Loan Forgiveness application just yet. It should be available before October 2017.

However, there are a few things you can do now. Complete the "Employment Certification for Public Service Loan Forgiveness" form directly on StudentLoan.gov each year to verify you have the employment required for the program. You fill in some parts and your employer fills in the rest. While this isn’t a requirement, it’s helpful for your servicer to track eligibility.

Income-driven Repayment plans are available for federal loans that are not in default and may help you to manage your monthly payments. Options include Income Based Repayment (IBR), Pay As You Earn (PAYE), and Revised Pay As You Earn (REPAYE). These plans cap monthly federal student loan payments based on your discretionary income and extend the term of the loan to 20 to 25 years.


Pros

  • You may qualify if you have federal loans and meet the income thresholds.
  • May reduce monthly payments.
  • If after a 20 to 25 year term, you still have a remaining loan balance, it may be forgiven.

Cons

  • Depending on income, these plans can be much more expensive over the life of the loan; the total amount of interest may be higher than your Standard Repayment Plan.
  • You will have a longer term (20 to 25 years) which means you’ll be repaying your student loans for longer than your Standard Repayment Plan.
  • Cannot qualify if your loans are currently in default.
  • While repayment plans may allow remaining loan balance to be forgiven after 20 to 25 years, the forgiven balance may be taxable as income.
  • You are required to provide updated income and family size information to your loan servicer annually in order to continue to qualify for these repayment plans. If you forget to provide this information, you may be dropped from your current plan and put on the 10-year Standard Repayment Plan.

SoFi Recommendations

Income-driven plans are good options when you have a large amount of federal student loan debt relative to your income—and you don’t anticipate your income increasing much over the next couple of decades. These plans can be helpful when you’re having trouble making monthly payments; however, they can be very costly over the long-term and result in you paying your student loans for a much longer period of time. Keep in mind that decreasing your payments in the short term may be helpful, but it also means that you’ll have to pay off more debt in the long run. Any balance forgiven at the end of the 20 or 25 year term will be considered as taxable income.

As always, you can stay the course with your current loans if this option doesn’t work for your personal circumstances.

Learn More

Default Repair is the process of getting default student loans out of default. There are a couple of different options for federal loans (consolidation and a rehabilitation repayment plan), but private loan options are more limited. Going through some sort of repair process is necessary before you can resume regular repayment on your loans. Even if you declare bankruptcy, defaulted student loans do not disappear, so you will have to deal with them eventually.

Default repair is usually the place to start. Once you get your loans out of default, the default status will be removed and you will regain eligibility for benefits that were available before you were in default. Collections costs can add a significant amount to the balance of your loan so we suggest starting ASAP. There are three options for you:

Rehabilitate Your Loans

Depending on your loan servicer, you might be able to work with them, or the collections agency, on a plan to make smaller monthly payments that fit within your budget. Reach out to your servicer and explain that you want to get out of default and are only able to pay a certain amount each month. One advantage of loan rehabilitation is that you’ll likely be able to remove the default status from your credit report if you make timely payments for a certain period of time.

If you have Direct Loan or FFEL Program loan, you must agree in writing to make nine monthly payments, make each payment within 20 days of the due date, and, make all nine payments during a period of 10 consecutive months.

With federal loans, the ED or the guaranty agency will ask for documentation of your income and will offer you a payment amount that is equal to 15 percent of your discretionary income. If you are unable to afford this suggested payment amount, you may request that your servicer recalculate the payment amount based on your documented income and expenses.

Once you are successfully out of default, your servicer will instruct the credit bureaus to remove the record of the default from your credit history. (Unfortunately late payments reported before the loan defaulted will not be removed from your credit history.)

You can rehabilitate a defaulted loan only once.

Consolidate Your Loans

If you have several student loans, you may be able to consolidate them into one, which will count as a payment and bring you out of default. Typically you will have to make three on-time payments, work out a payment plan with your servicer, or enroll in an Income-Driven repayment plan before you’re eligible to consolidate. Once you have consolidated your defaulted loan, you will be eligible for benefits such as deferment, forbearance, and loan forgiveness. You’ll also be eligible to receive additional federal student aid. This is definitely the faster way to get out of default; however, consolidation of a defaulted loan does not remove the record of the default from your credit history.

Pay Your Loans Off

The fastest way to get out of student loan default is to pay off your loan in full; however, this is often the hardest solution. If you have a family member who might be able to help by loaning you money at a lower interest rate, or if you qualify for a personal loan, this might be a reasonable option. (Keep in mind getting a loan if you’re already in default is unlikely - and if you qualify the interest rates may be very high.)


SoFi Recommendations

Default repair is one of the only options if you have defaulted loans. Contact your servicer to see which options you qualify for.

If you can’t pay your loans off in full, we suggest rehabilitation as it may have the best outcome for your credit.

As always, you can stay the course with your current loans if this option doesn’t work for your personal circumstances.

When you put your loans into forbearance or deferment, you are temporarily pausing all payments. Deferment is available for borrowers who have federal loans and meet certain criteria; interest may be paid by the government. Forbearance is available for borrowers who have federal loans, and even some private loans; interest typically continues to accrue. A good option if delinquency or default is possible, since both things can harm your credit and may cost you even more in late fees.


Pros

  • Pausing your payments can prevent your loans from going into default and help you manage short-term financial challenges.
  • A deferment will not impact your credit score or credit report negatively.
  • Available for all federal loans and some private loans.

Cons

  • Depending on your loan (and whether you enter deferment or forbearance) you might continue to accrue interest. This can end up being very costly in the long-run as you’ll owe more money than you started with.
  • While in deferment or forbearance, you may not be eligible for some federal loan programs such as Public Service Loan Forgiveness.
  • Forbearance is only available for some private loans.

SoFi Recommendations

Short-term deferment can be helpful if you’re returning to school or an emergency arises where you need some help managing cash flow. Forbearance is best used for short-term emergencies. Before you go through with forbearance, check to see if you’re eligible for deferment.

Since deferment and forbearance can end up costing much more over the life of the loan, we recommend only using these programs temporarily when there is no other alternative. Before going down this path, see if your servicer provides income-driven repayment options or adjustable payment due dates. If you can afford to pay the interest payments while you are in forbearance, that will help to keep your loan balance from growing.

Last, you can always call and talk to your lender about your options. They may be open to you making smaller payments on a regular schedule before they place you into deferment or forbearance.

As always, you can stay the course with your current loans if this option doesn’t work for your personal circumstances.

Learn More

Refinancing pays off your existing federal and private student loans with a new loan at a lower interest rate—and typically ends up saving you money. In fact, SoFi members save an average of $288 per month. With just a few clicks, you can see your potential savings and decide whether or not this is the best option for you. As always, you can stay the course with your current loans if this option doesn’t work for your personal circumstances.


Pros

  • Monthly payments reduced by $288 on average.
  • 5 - 20 year terms can help you pay off debt faster.
  • Federal and private loans consolidated into one monthly payment.

Cons

  • Exempt from taking advantage of federal loan programs, including Public Service Loan Forgiveness and other Income-driven repayment plans.

SoFi Recommendations

Refinancing can be a great decision that leads to even greater savings. Take the first step to simplifying your loan management by checking your rates and potential savings instantly

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With REPAYE, your monthly payments will be tied to your income and set at 10% of your discretionary income. Your loan term will be extended to 20 (for undergraduate) or 25 (for graduate) years, and any balance at the end of this term will be forgiven. The balance forgiven at the end of the term will be considered as taxable income. Unlike IBR or PAYE, there is no cap on the monthly payments and no rule that these monthly payments have to be lower than the Standard Repayment Plan. If your income increases significantly, so too will your monthly payments. REPAYE typically works best for individuals with lower incomes. One other thing to keep in mind, under REPAYE if you’re married, your spouse’s income and student loan debt will be considered when determining the monthly payment regardless of whether you file your taxes jointly or separately.

Qualifications:

All borrowers with Direct Loan, Stafford, and Graduate PLUS loans. Other types of student loans that are consolidated into Direct Loans may also qualify.



SoFi Recommendations

REPAYE is easier to qualify for, so if you aren’t able to qualify for one of the other income-driven repayment plans like PAYE or IBR it may be a good option. However, for long-term forgiveness PAYE or IBR may be better because your payments will never exceed your Standard Repayment amount. If you’re eligible for PAYE, we’d suggest that you stick to the original program which provides a shorter period to forgiveness, a cap on monthly payments, and allows you to remove your spouse’s income from the calculation that determines your monthly payment. Before you jump into REPAYE, we recommend you compare your payment under REPAYE and your Standard Repayment Plan to ensure that REPAYE is lower.

Additional considerations: In 2015, the Department of Education introduced REPAYE as a revised version of PAYE which allows more borrowers to qualify. Under REPAYE, there is no financial hardship requirement and there are no limitations about when you took out your loans. Under REPAYE if you are married, your total household income is used to calculate your discretionary income even if you choose to file separately. Perhaps most important, there are no monthly payment caps like with the other income-driven repayment plans, so depending on your income, your monthly payments could end up being higher than they would on the Standard Repayment Plan.

It’s also important to note that any balance forgiven at the end of the 20 or 25 year term will be considered as taxable income.

As always, you can stay the course with your current loans if this option doesn’t work for your personal circumstances.

How To Apply:

You can apply for REPAYE through your student loan servicer, or you can fill out an “Income Driven Repayment Plan Request” form directly on StudentLoans.gov. You’ll have the option to choose which income-driven plan you want, or the form allows you to opt for the government to select the plan with the lowest monthly payment. The loan servicer is the company that sends you your monthly student loan bills. If you don’t know who your servicer is or would like more information about your loans, such as the balance and interest rates, you can look it up on National Student Loan Data System.

With PAYE, your monthly payments will be tied to your income and capped at 10% of your discretionary income. The term of your loan will be extended to 20 years, and any balance at the end of this term will be forgiven. The balance forgiven at the end of the term will be considered as taxable income. Your monthly payment under PAYE will not exceed the monthly payment amount under your 10-year Standard Repayment plan.

Qualifications:

  1. You have borrowed your first federal student loan after October 1, 2007, and you have borrowed a Direct Loan or a Direct Consolidation Loan after October 1, 2011.
  2. You have to demonstrate partial financial hardship. Your lender will look at two numbers when making this determination. The first one will be your monthly payments under the 10-year Standard Repayment Plan. The second will be 10% of your discretionary income. If the 10-year Standard Repayment Plan costs more than the 10% of your discretionary income, you are eligible for PAYE. If the 10-year Standard Repayment Plan costs less then you won’t qualify for PAYE.
  3. Direct Subsidized and Unsubsidized Loans, as well as Graduate PLUS loans are eligible.


SoFi Recommendations

Pay As You Earn is a great option for borrowers who are struggling to make payments and meet the October 1st, 2007 eligibility requirement. You will make your monthly payments until your loan is paid off—or until you have reached the end of the 20-year term. You could have the remainder of the balance forgiven after 20 years, but you’ll need to make every single payment to qualify. If you miss one, you may not be eligible for forgiveness.

It’s also important to note that any balance forgiven at the end of the 20 or 25 year term will be considered as taxable income.

You will need to prove your income each year. If you are married, under PAYE you can file your taxes separately which lowers the borrower’s total income. Because your monthly payments are based off how much you make, you’ll need to submit paperwork to your lender each year. Your payment can go up as you earn more, but will not be more than 10 percent of your discretionary income and and will never exceed your Standard Repayment Plan.

How To Apply:

You can apply for PAYE through your student loan servicer, or you can fill out an “Income-Driven Repayment Plan Request form directly on StudentLoans.gov. You’ll have the option to choose which income-driven plan you want, or the form allows you to opt for the government to select the plan with the lowest monthly payment. The loan servicer is the company that sends you your monthly student loan bills. If you don’t know who your servicer is or would like more information about your loans, such as the balance and interest rates, you can look it up on National Student Loan Data System.

With IBR, your monthly payments will be based on your income and capped at 10% to 15% of your discretionary income. The cap (10% - 15%) will depend on when you took out your loan. Your loan term will be extended to 20-25 years, and any balance at the end of this term will be forgiven. The balance forgiven at the end of the term will be considered taxable income. Your monthly payment under IBR cannot exceed the amount under your 10-year Standard Repayment Plan.

Qualifications:

You will have to demonstrate partial financial hardship. Your lender will look at two numbers when making this determination. The first one will be your monthly payments under the 10-year Standard Repayment Plan. The second will be 10% or 15% of your discretionary income, depending on when you took out your loans. If the 10-year Standard Repayment Plan costs more than the 10% or 15% of your discretionary income, you are eligible for IBR. If the 10-year Standard Repayment Plan costs less then you won’t qualify for IBR.

  • If you borrowed on or after July 1, 2014: 10% of your discretionary income, term extended to 20 years.
  • If borrowed on or after July 1, 2014: 15% of your discretionary income, term extended to 25 years.
  • All federal student loan borrowers (Direct or FFEL) are eligible.


SoFi Recommendations

IBR is a great option for borrowers who are struggling to make payments and do not meet the October 1st, 2007 eligibility requirement for PAYE. You will make your monthly payments until your loan is paid off - or until you have reached the end of the 20 or 25-year term. You could have the remainder of the balance forgiven after 20 or 25 years. You’ll need to make every single payment to qualify. If you miss even one, you may not be eligible for forgiveness.

It’s also important to note that any balance forgiven at the end of the 20 or 25 year term will be considered as taxable income.

You will need to prove your income each year. Because your monthly payments are based off how much you make, you’ll need to submit paperwork to your lender each year. Your payment can increase as you earn more, but will not be more than 10 or 15 percent of your discretionary income and will never exceed your Standard Repayment Plan.

How to Apply:

You can apply for IBR through your student loan servicer, or you can fill out the "Income-Driven Repayment Plan Request" form directly on studentloans.gov. You’ll have the option to choose which income-driven plan you want, or the form allows you to opt for the government to select the plan with the lowest monthly payment. The loan servicer is the company that sends your monthly student loan bills. If you don’t know who your servicer is or would like more information about your loans, such as the balance and interest rates, you can look it up on the National Student Loan Data System.

A deferment is a period during which repayment of the principal of your loan is temporarily delayed. If you have Federal subsidized loans your interest may not accrue (accumulate). However, if you have unsubsidized loans the interest will continue to accrue and you will be responsible for paying the additional interest once the deferment period is over. If you are in default you will not be able to take advantage of these options. Deferment is not available for private loans.

The following situations may mean you are eligible for deferment:

  • You are enrolled at least half-time in college or graduate school.
  • You are unemployed or unable to find full-time employment.
  • You are experiencing economic hardship (includes Peace Corps service).
  • You are in active military service or you have been on active duty with the military within the last 13 months.
  • You are disabled and enrolled in an approved rehabilitation training program.

How to request deferment

Receiving loan deferment is not automatic. You will need to submit a request to your loan servicer. If you are enrolled in school at least half-time, and you would like to request an in-school deferment, you’ll need to contact your school’s financial aid office as well as your servicer. In some cases, you must provide documentation to support your request.

If you are unable to make your monthly loan payments, but don’t qualify for deferment, your loan servicer may be able to grant you a forbearance. Unlike deferments, forbearances may be available if you are already in default. Forbearance is available for federal loans and some private loans. Interest will continue to accrue (accumulate) on your loans. Forbearance is a tool that can be helpful for temporary relief in times of financial hardship. Every lender is different so be sure to speak with your lender and understand all of the requirements before you take the step.


There are two types of forbearance:

Mandatory Forbearance

If you meet the eligibility criteria for the forbearance you lender is required to grant the forbearance.

You can request a mandatory forbearance for the following reasons:

  • You are serving in a medical or dental internship or residency program.
  • Your total student loan payment each month is equal to 20 percent or more of your total monthly gross income.
  • You are serving in a national service position, like Americorps or Peace Corps.
  • You are eligible for teacher loan forgiveness.
  • You are eligible for the U.S. Department of Defense Student Loan Repayment Program.
  • You are a member of the National Guard and have been activated by a governor, but you are not eligible for a military deferment.

Mandatory forbearance is not automatic, you must apply to receive mandatory forbearance.

Discretionary Forbearance

Your lender will decide whether to grant forbearance or not. You can request discretionary forbearance for the following reasons:

  • Financial hardship
  • Illness

Discretionary forbearance is not automatic, you must apply to receive discretionary forbearance.


How to Request Forbearance

Receiving loan forbearance is not automatic. You will need to submit a request to your loan servicer. If you do enter forbearance, it's smart to pay at least the monthly interest during this period to avoid interest capitalization.

Disclaimer: This interactive Student Debt Navigator was created by SoFi Lending Corp as a self-help tool for your independent use and is intended for educational purposes only. By using this Student Debt Navigator, you understand that SoFi Lending Corp and any of its affiliates or subsidiaries are not liable for any inaccurate statements or information provided in this tool.

This information, in whole or in part, was obtained from Federal Student Aid, An Office of the U.S. Department of Education.