Student loans can be a massive burden for many borrowers. The average student loan debt for a bachelor’s degree is around $30,000. The debt can be even higher for those who take out loans for graduate or professional degrees.
With rising tuition costs and interest rates, paying off student loans has become increasingly difficult. This is especially true for borrowers who are struggling financially or are unemployed. Fortunately, there are options for getting student loan debt forgiven or discharged.
One such option is Liberty University student loan forgiveness. Liberty University, located in Lynchburg, Virginia, is a private evangelical Christian university. It was founded in 1971 by Jerry Falwell. Liberty has an extensive online education program that serves over 100,000 students.
Like students at many universities, Liberty students often take out loans to help pay for their education. These loans can come from federal or private sources. Liberty students may be eligible for forgiveness or discharge of their national and personal student loans in certain situations.
This blog post will provide an overview of Liberty student loan forgiveness options. We will cover:
- Types of loans eligible for forgiveness
- Forgiveness programs for Liberty students
- Qualifying for loan discharge
- Applying for loan forgiveness
- Tax implications
- Scams to Avoid
We will also provide a FAQ section to answer some common questions about Liberty student loan forgiveness. We aim to explain the key things borrowers need to know about getting their Liberty loans forgiven or discharged.
Types of Loans Eligible for Forgiveness
The first thing to understand is what types of student loans are eligible for forgiveness for Liberty University students. Here is a quick rundown:
Federal Student Loans
Most federal student loans are eligible for some forgiveness program. This includes:
- Direct Subsidized Loans
- Direct Unsubsidized Loans
- Direct PLUS Loans (for parents and graduate students)
- Federal Perkins Loans
If you took out Stafford, PLUS, or Perkins loans from the federal government to attend Liberty, you may qualify for federal student loan forgiveness options.
Private Student Loans
Private student loans from banks, credit unions, or other lenders are generally not eligible for federal forgiveness programs. However, Liberty students may still be able to discharge their private student loans in certain situations, such as bankruptcy or permanent disability.
Liberty offers limited private loan forgiveness as part of its Christian Service Scholarship program (more details below).
In summary, federal and private student loans have some options for Liberty University loan forgiveness, albeit limited for personal loans.
Forgiveness Programs for Liberty Students
Now, let’s discuss some of the main federal forgiveness programs and repayment plans that may be available to Liberty student loan borrowers.
Public Service Loan Forgiveness (PSLF)
One of the top forgiveness programs is Public Service Loan Forgiveness (PSLF). Under PSLF, federal student loans can be forgiven after making 120 qualifying monthly payments while working full-time for an eligible nonprofit or government employer.
Liberty University graduates can access many public service job opportunities that qualify for PSLF. These include jobs in education, healthcare, public interest law, military service, and more. As a nonprofit institution, Liberty itself also qualifies as a PSLF-eligible employer.
To receive PSLF, borrowers must have federal Direct Loans, repay under an income-driven plan, and meet other requirements. Payments made before consolidating into a Direct Loan generally don’t count. Liberty students interested in PSLF may want to reduce ASAP after graduating.
Income-Driven Repayment (IDR) Forgiveness
Income-driven repayment (IDR) plans like Income-Based Repayment (IBR) and Pay-as-you-earn (PAYE) also offer federal student loan forgiveness after 20-25 years of payments. IDR plans cap payments at 10-15% of discretionary income and extends repayment up to 25 years, after which any remaining balance is forgiven.
This option may be suitable for Liberty borrowers who have high debt relative to income and struggle to make payments on the standard 10-year plan but need to qualify for PSLF. One downside is the tax bill on the forgiven amount after 20-25 years.
Teacher Loan Forgiveness
For Liberty graduates who become teachers at low-income schools, the Teacher Loan Forgiveness program offers up to $17,500 on federal Direct and Stafford Loans loan forgiveness. They must teach full-time for five consecutive years in specific subject areas to qualify. This program forgives loans faster than PSLF or IDR.
Liberty University Christian Service Scholarship
Liberty University’s Christian Service Scholarship program allows students to participate in voluntary service while attending Liberty. Students volunteer 200 hours per year in exchange for tuition assistance.
After graduating, volunteers who served at least two years can apply to have up to $10,000 of any outstanding Liberty-funded private student loans forgiven. This incentivizes students to give back and serve Christ through the program during and after college.
In summary, Liberty students can access several federal and Liberty-specific loan forgiveness programs. PSLF, IDR plans, the Teacher Loan Forgiveness Program, and Liberty’s Christian Service Scholarship offer potential paths to forgiveness.
Qualifying for Loan Discharge
Besides formal forgiveness programs, Liberty borrowers may also qualify for a complete discharge of their federal or private student loans in specific scenarios:
Total Permanent Disability Discharge
Borrowers who become totally and permanently disabled can apply to have their federal student loans discharged. To qualify, the disability must prevent them from working to earn income. Private student loans often offer disability discharge programs, subject to medical documentation requirements.
While difficult, it is possible to discharge student loans through bankruptcy. The borrower must prove that repayment would cause undue hardship. This involves filing an adversary proceeding lawsuit to contest the bankruptcy automatic stay on student loans. Qualifying for a bankruptcy discharge of student loans is challenging but possible in extreme cases.
Closed School Discharge
If Liberty University were to close before a student graduates, they could qualify to have their federal loans discharged under the closed school discharge program. This does not apply to private student loans.
Upon a borrower’s death, federal student loans are discharged. Private student loans depend on the lender’s policy, but cosigners or spouses may be able to seek discharge.
Borrower Defense to Repayment
If a school acts illegally or violates state consumer protection laws, student loan borrowers can file a claim and potentially have their federal loans forgiven. This is known as borrower defense to repayment. Cases depend on the school’s misconduct. Private loan discharge requires negotiating directly with the lender.
So, in extreme situations like disability, bankruptcy, death, school closure, or misconduct, Liberty students may qualify for total federal or private student loan discharges. Documentation and other requirements vary based on the situation.
Applying for Loan Forgiveness
The application process for loan forgiveness programs depends on the specific program:
PSLF and IDR Forgiveness
PSLF and IDR forgiveness happen automatically after making 120 qualifying payments (PSLF) or 240-300 lower payments over an extended term (IDR). Borrowers must submit the PSLF form annually and recertify their IDR plan to remain on track.
Teacher Loan Forgiveness
This program requires submitting an application and documentation after completing the five years of qualifying teaching service. Application is made by contacting the student loan servicer.
Liberty Christian Service Scholarship
Liberty graduates must apply for this loan forgiveness program after completing service hours. Applications are submitted to Liberty’s Student Affairs Office with supporting documentation.
Total and permanent disability, school closure, death, and borrower defense discharges require submitting an application and supporting documents to the federal government. Details depend on the situation. Bankruptcy and private loan discharges have separate procedures.
The main takeaway is each forgiveness program has its application process. Following the steps and requirements is critical to getting approval and receiving debt relief. Consult the official guidance or contact your servicer if you need help applying. Don’t pay third-party companies for help using.
Tax Implications of Forgiven Debt
One catch to be aware of is that student loans forgiven through some programs may be taxed as income. Depending on the amount discharged, this tax bill could be substantial.
Loan amounts forgiven under PSLF, teacher loan forgiveness, closed school discharge, death discharge, and total permanent disability discharge do NOT count as taxable income. However, amounts forgiven under IDR plans and private student loan repayment programs typically do.
Borrowers should be prepared to pay income tax on IDR forgiveness amounts. One strategy is to set aside yearly savings to cover the future tax bill, reducing the sting when it comes due. Those eligible for PSLF may want to repay under that program before doing IDR.
Avoiding Student Loan Forgiveness Scams
With so many student loan borrowers in distress, scams offering false promises of debt relief have proliferated. Students must watch out for dishonest companies that charge illegal fees or pretend to provide official loan forgiveness services.
Here are some tips to avoid scams:
- Never pay upfront fees for help. Federal student loan assistance is always free. Private loan mods may charge, but only after services are rendered.
- Refrain from believing ads claiming you can eliminate or consolidate private loans into federal ones. This is not legally possible.
- Avoid companies that pretend to be affiliated with the Department of Education or try to mimic official sites to enroll you in repayment programs.
- Don’t give out your FSA ID. Dishonest companies may try to get this info to fraudulently access your account.
- Verify supposedly approved forgiveness before stopping payments. Scammers often falsely claim loan consolidation or discharge approvals.
- Read the fine print before signing third-party authorization forms that allow companies to act on your behalf. Some are sneaky subscription services.
- Contact your loan servicer directly with any questions. They can walk you through available forgiveness programs and application requirements.
Stick to official government guidance and be wary of unsolicited forgiveness offers. If an opportunity sounds too good to be true, it probably is. Protect yourself and report any suspected scams.
Student loan burdens can feel overwhelming. For Liberty University students struggling with debt, forgiveness programs offer natural relief. Federal options like PSLF, IDR plans, and teacher loan forgiveness are eligible tools. Liberty’s Christian Service Scholarship also rewards graduates giving back through volunteer work.
While limited, even borrowers with private student loans have some options like disability discharge. Those facing extreme hardship may also look into bankruptcy.
The key is understanding the criteria for each program and carefully following official procedures. Avoid scams promising debt miracles. Patience and persistence are required, but forgiveness can make student loans more manageable.
With the correct information and a plan, Liberty students in financial distress can seek the relief they need. Those who continue repaying should also explore ways to pay off loans faster through strategies like refinancing, lump sum payments, and more.
Frequently Asked Questions (FAQ)
What types of Liberty University loans can be forgiven?
Federal student loans such as Direct Loans and Perkins Loans may qualify for forgiveness programs like PSLF, IDR plans, Teacher Loan Forgiveness, and disability discharge. Liberty’s private student loans are eligible for the Christian Service Scholarship forgiveness and may be discharged in cases of permanent disability or death.
How can Liberty students qualify for Public Service Loan Forgiveness?
To receive PSLF, Liberty graduates must work full-time for a qualifying public service employer like a nonprofit or government agency while repaying federal Direct Loans under an IDR plan and submitting employment certifications. Liberty itself counts as qualifying employment. The temporary PSLF waiver relaxes some rules.
What repayment plans qualify for IDR forgiveness?
The income-driven plans that offer forgiveness after 20-25 years of payments are Income-Based Repayment (IBR), Pay-as-you-earn (PAYE), Revised Pay-as-you-earn (REPAYE), and Income-Contingent Repayment (ICR). PAYE tends to provide the lowest monthly payment.
Can private student loans be discharged in bankruptcy?
Yes, but it isn’t easy. You must file an adversary proceeding and prove repaying the loans would cause undue hardship. The success rate is low, so bankruptcy discharge of private student loans is rare. Federal loans are nearly impossible to discharge in bankruptcy.
What should I do if contacted by a company promising Liberty student loan forgiveness?
Be skeptical of any unsolicited offers. Never pay upfront fees for assistance. Verify legitimacy by contacting Liberty or your servicer directly. Check for consumer complaints and reviews online. If it sounds suspicious, report the company to protect other borrowers.
Where can I find the official application for the Christian Service Scholarship forgiveness?
The application is available through Liberty University’s Student Affairs Office. Contact them for the latest form and submission instructions. You must provide documentation confirming you completed the required service hours under the program.
Are amounts forgiven under PSLF or teacher loan forgiveness taxed as income?
No, the canceled debt is not considered taxable income for these programs. However, amounts forgiven under IDR plans and private student loan forgiveness programs typically are taxed. Borrowers can plan by saving each year to pay the tax bill when their loans are ultimately forgiven.