Student loan debt has dominated headlines recently – specifically at the federal level. The Supreme Court has heard oral arguments for Biden’s forgiveness plan, and we’ll await the outcome. For US borrowers, the impact will be felt. Sure, it makes receiving scholarships and grants all the more important. If you’re a PA resident, you obviously will be awaiting the news. But what about forgiveness options within the state? In this blog post, we’ll discuss three significant sources of student loan forgiveness for PA residents: federal student loan forgiveness, Pennsylvania programs for student loan forgiveness, and how to make the most of these programs.
Federal Student Loan Forgiveness
There are numerous federal programs available for student loan forgiveness. The list is substantial, and there are a few different categories that are available. Let’s unpack a few of them here:
Biden Student Loan Forgiveness Plan
*Disclaimer: This proposal is currently being held up in federal court. It’s expected the Supreme Court will issue a ruling in summer 2023.
President Biden announced in the summer of 2022 that he would be signing an executive order for student loan forgiveness. The plan forgives Direct Student Loans, Perkins Loans, and certain FFEL loans. For any Pell Grant recipients, that amounts to $20,000 of debt forgiveness. For any non-Pell Grant recipients, it’s $10,000. There are income requirements, and for anyone filing single your Adjusted Gross Income must be below $125k. For couples who utilize the Married Filing Jointly filing status, it’s $250k.
A full release can be found here.
Repayment Plan Forgiveness
When it comes to federal loan forgiveness, there are four programs that you can enter into to have these loans (eventually) forgiven. These four programs are:
- Income-Based Repayment Plan (IBR Plan)
- Pay As You Earn Repayment Plan (PAYE Plan)
- Income Contingent Repayment Plan (ICR Plan)
- Revised Pay As You Earn Repayment Plan (REPAYE Plan)
These plans break out to much more specificity, but some high level items of note:
- Monthly payment is generally 10-20% of your discretionary income.
- Payment plans can be held for a maximum of 20-25 years, at which point forgiveness can occur.
- It’s very important to make sure you recertify income & family size annually. Failure to do so could remove you from a plan or change your monthly payment.
Career-Based & Military Service Student Loan Forgiveness Options
Additionally, there are numerous programs that allow for you to have loans forgiven. These options include the most popular, Public Service Loan Forgiveness. Under this plan, your direct loans are forgiven if you make 120 qualifying monthly payments under a qualifying repayment plan. But you must be working full-time for a qualifying employer.
That said, there are many other options out there. For a comprehensive list, check out this site and the links to each of the options available.
Pennsylvania Programs for Student Loan Forgiveness
The state of PA also offers several programs for student loan forgiveness, including:
Pennsylvania Primary Care Loan Repayment Program
Considering a career in healthcare? There is a loan repayment program that could be right for you. This plan centers around the idea of providing care to designated Health Professional Shortage Areas or serve a minimum of 30% low income patients. Being that it can be hard to recruit individuals to serve in communities that have this criteria, the state offers a great benefit.
Specifically, 2 years of full-time service commitment can provide up to $80k of loan repayment. This is an incredibly rewarding benefit for service-minded students. The state, thankfully, recognizes that. The information you’d need to know can be found on the state website. There’s also a great fact sheet which describes eligibility requirements, in addition to eligible professions.
Pennsylvania Bar Foundation – PA IOLTA Board Loan Repayment Assistance Program
Law school is expensive. It’s an arduous process and not for the faint of heart. But much like the medical profession, there are great benefits available for individuals considering a career more inclined toward service. The Loan Repayment Assistance Program (LRAP) is dedicated to helping attorneys wanting to remain in public service. While the pay may not be great, the loans can be offset.
This program is an interesting one. It can provides funding to pay off existing loans on a quarterly basis, but the attorney must provide proof of employment at an eligible organization. Continue to meet the eligibility requirements, continue to receive the funding.
While many go to law school and reap a reward that is considerable once employment begins, this is a benefit that can give attorneys a reason to stay in public service.
Conclusion
Student loan debt has been a major topic of conversation in our country for decades now. Unfortunately, the cost of college does not appear to be trending anywhere but upward. The onus is on the student and parents to make sure a plan is in place to get ahead. Attending college and/or graduate school is important these days. But improper planning can set an individual or the parents of that individual back. By understanding the options for student loan forgiveness for PA residents, you will put yourself ahead of schedule. In combination with other ways to pay, it can be incredibly beneficial.
