6 Reasons Not to Pursue Student Loan Forgiveness

6 Reasons Not to Pursue Student Loan Forgiveness.

Student loan forgiveness sounds great. It can be an excellent way to get out of debt and start fresh. However, there are a lot of things you need to think about before deciding that this is the best solution for you. For instance, what if you owe more than $57k? What if you only have five years left on your repayment plan and want to switch it up? We’ll talk about these six reasons why student loan forgiveness might not be worth it in our blog post today!

Student Loan Forgiveness
Document with title student loan forgiveness.

Student loan forgiveness options

Student loans can be forgiven in bankruptcy under some circumstances. However, student loans are rarely discharged by the courts even if you file chapter 13 or chapter seven bankruptcy. In order to have your student loan debt dismissed through a court proceeding, you must prove that payment of the debt would cause an undue hardship on yourself and your dependents. The test for determining whether repayment of student loans constitutes an “undue hardship” is stringent and not easy to meet so it might be best to avoid this option all together.

If you work full time as a teacher at certain organizations, such as Peace Corps or Americorps then your federal student loans will likely qualify for Public Service Loan Forgiveness (PSLF). The student loan debt will be forgiven after 120 payments over a period of ten years. However, only student loans that are federal direct student loans qualify for this forgiveness program and you must work full time at one of the aforementioned organizations in order to get your student loan debt discharged under this option.

If you can prove undue hardship then it might be possible to get your student loans discharged through bankruptcy proceedings. It is very difficult to meet the stringent standards required by the courts so we do not recommend pursuing this path unless it is truly impossible for you to repay your student loans.

If you have worked as a teacher or other public service worker and made 120 on time payments while working full time then any remaining balance on your student loans will be discharged after you have made your time in full. You must work for a public service organization to qualify and the student loan debt that is eligible for this type of forgiveness must be federal direct student loan debt, so it might not cover all of your student loans.

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Reasons Not to Pursue Student Loan Forgiveness

  1. It could cause you to lose your benefits (like deferment or forbearance) -You may not qualify for forgiveness due to the types of loans that you have taken out and whether they were federal, private, etc. -The IRS considers student loan debt as “discriminatory” and you could be faced with a hefty tax bill after forgiveness -Your credit score may drop due to the amount of debt that is “forgiven.” This can push your monthly payments up when you try to get another mortgage/car loan, etc. -The process for student loan forgiveness is not easy or quick
  2. You may have to spend more money on your student loan debt after the repayment is complete. Do you know how much it will cost?
  3. The student loan debt that is forgiven will be treated as income by the IRS, so you may have to pay taxes on it.
  4. These are six reasons why student loan forgiveness might not be worth pursuing for your federal student loans! We recommend checking with a student loan lawyer before making any final decisions about what to do with your student loans. For more information check out our website at Clearpointlawgroup.com today!
  5. Any remaining balance on your student loans may be forgiven if you are an active duty member or veteran with the military who has served our country honorably for at least three years during war times or other designated periods (such as Peace Corps volunteers). If you meet these requirements then any outstanding student loan debt left over can be canceled through this program under some circumstances. However, only qualifying federal direct student loan debts will qualify here; student loans do not apply under this student loan forgiveness program.
  6. If you work in a public service organization and make 120 on time student loan payments while working full time then any remaining student loans will be forgiven after ten years of consecutive payments under this student loan forgiveness option for federal direct student loans. This is the only student loan repayment plan that allows you to get your debt discharged through making timely student loan repayments, so it might be best if you are not eligible for other types of student loan forgiveness programs or cannot afford to pay back your student loans without help.


So you see, student loan forgiveness might not be the best option for everyone. If you are interested in student loan repayment options, give us a call at (888) 458-6933 or visit our website today! We can help you determine if student loans will work for your budget and what student loan repayment plan is right for you.

Thanks for stopping by. Please visit our website often for more academic tips. Do not forget also to share this article on social media platforms and leave a comment behind. We are ever ready to serve you.

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