How to Challenge Your Student Loans and How to Get Your Student Loans Forgiven

Student loans are a huge burden but they don't necessarily have to be. It's possible to lower your monthly student loan payment with the right tips.

If you feel burdened under the weight of student loan debt, you’re not alone. In 2019, the average student loan debt total per person was more than $31,000. The good news is that you may be able to get part or all of your student loans forgiven. You also have the right to a fair and accurate credit report, and you can challenge the accuracy of information about your student loans as well. Here’s how to challenge student loans and how to get your student loans forgiven.

Note: Recent COVID-19 Stimulus Acts may affect your student loan repayment requirements.

In This Piece

How to Challenge Student Loans on Your Credit Report

Disputing student loans doesn’t mean that you can argue your way out of paying what you legitimately owe. But you can present documentation to prove that information on your credit report is inaccurate. The credit bureaus are required in most cases to investigate and correct information on your report if they find that the data is not correct.

1. Review Your Credit Reports

You can challenge the accuracy of information on your credit reports whenever you find it. Regularly review your credit reports for inaccuracies, keeping in mind that many negative items fall off your credit report after seven years. You can request your credit report from each bureau for free once a year. (Credit reports are currently available for free weekly through April 2022.) If you want more detail, sign up for ExtraCredit to get 28 FICO scores plus your credit reports from all three bureaus right in one place.

2. Write a Credit Dispute Letter

If you find inaccurate information, write a letter to challenge those inaccuracies. Send the letter to the credit reporting agency that has the incorrect information on file. If all the major agencies—TransUnion, Equifax, and Experian—have the wrong information, send the letter to them all. If you don’t have the time or energy to challenge errors yourself, you can hire a credit repair agency to do it for you.

3. Keep Paying on Time

If your lenders are reporting everything correctly, there’s nothing to dispute and you still owe the money. While it may not be the answer you were hoping for, student loans on your credit report can be a good thing for your credit score! On-time payments are one of the best ways to build and maintain your credit. Keep paying your loan back on time, and your credit score will reflect your smart credit habits.

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    How to Get Your Student Loans Forgiven

    Student loan forgiveness is very different from a credit report dispute. Disputing errors about your student loans on your credit reports corrects information about your credit history. Student loan forgiveness potentially wipes out the remaining debt that you owe.

    In 2017, the Consumer Financial Protection Bureau released a report estimating that up to one in four Americans may be eligible for the Public Service Loan Forgiveness program, for example, but only a small percentage are actually using it. In fact, according to the latest PSLF report from June 2019, only 1,216 people have received loan forgiveness through the program since its inception.

    Many loan forgiveness programs exist for different careers. Here are a few ways you may be able to get your student loan debts forgiven.

    1. Public Service Loan Forgiveness Program

    You may qualify for forgiveness through the Public Service Loan Forgiveness program if you are employed by a federal, state, local, or tribal government or not-for-profit organization. If you have made 120 qualifying monthly payments while working for a qualifying employer, the PSLF program may forgive the remaining balance on your Direct Loan. 

    2. Perkins Loan Cancellation and Discharge

    While schools no longer offer new Perkins Loans, those who have already received them may be able to qualify for loan cancellation or discharge. To qualify, you need to prove that you have worked in a qualifying public service job. Depending on the type of job you have, you could get 100% of your loans forgiven after five years. The cool thing about Perkins loan forgiveness is that you can apply for a percentage to be forgiven as soon as you’ve completed your first year of full-time work in a qualifying position.

    Perkins loans may also be discharged in certain situations, including bankruptcy, death, and disability.

    3. Disability

    If you become disabled, there are a few loan forgiveness options that can help.

    • Military-Related Disability. Veterans can qualify if the US.Department of Veterans Affairs (VA) has determined that you cannot work because of an injury incurred during your military service.
    • Social Security Disability. People who receive Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI) may also qualify to have their student loans discharged.
    • Medical Disability. If a doctor determines that you’re unable to work due to a mental or physical disability, you may be able to get your student loans discharged. The disability has to have lasted for more than 60 months or be expected to last for more than 60 months.

    4. Programs for Health Care Professionals

    If you’re a health care professional, you could get a significant amount of your student loans forgiven in exchange for your service. Here are just a few options.

    • The Health Professionals Loan Repayment Program. This program is for health care professionals who serve in the military. You could get up to $40,000 of student debt forgiven for each year of military service.
    • National Health Service Corps Loan Repayment Program. Licensed health care providers may receive repayment assistance in exchange for working in areas with a shortage of health professionals.
    • ·      Nurse Corps Loan Repayment Program. Registered nurses, nurse practitioners, and nurse faculty members who work in critical shortage areas serving high-need populations can get up to 60% of their student loans paid over two years of employment through the Nurse Corps Loan Repayment Program.

    5. Programs for Military Service

    Military service opens up many different opportunities for student loan forgiveness. If you obtained loans before enlisting, the Servicemembers Civil Relief Act may reduce the interest rate on your loans while you’re on active duty. You can also defer your student loan payments while you’re on active duty.

    • Military College Loan Repayment Program. This program is an enlistment incentive for new recruits, so if you’ve already attended school and taken out loans, this won’t be helpful for you. Under the CLRP, the military will repay a portion of your eligible student loans, with a maximum repayment amount of $65,000. Each branch of the military has their own maximums, so reach out to your local recruiting office for specifics.

    6. Programs for Teachers

    In addition to PSLF and Perkins loan forgiveness programs, there are a number of other loan forgiveness options available for teachers who work in underserved areas. Some are state-specific and others are federal programs, so check your eligibility requirements in your specific location and field.

    • Teacher Loan Forgiveness Program. This program was designed to encourage people to enter the education field. If you’ve been a full-time teacher for five consecutive years in a designated school or agency, you may be able to have up to $17,500 of certain loans forgiven.

    7. Programs for Volunteers

    Some federal student loan forgiveness programs are related to volunteer work instead of your 9-to-5 profession. If you’ve got a penchant for community service, you might be able to get a little help with your student loans from these organizations.

    • AmeriCorps and VISTA. When you volunteer for AmeriCorps or VISTA (Volunteers in Service to America), you can qualify to suspend your student loan payments for the duration of your service. You can also earn time that will help you qualify for the Public Service Loan Forgiveness Program.
    • Peace Corps. If you want to volunteer across the globe, the Peace Corps can help you make a difference and move you closer to paying off those student loans. Volunteers receive forbearance of loan payments during their service, and they earn over $8,000 of readjustment allowance and partial Perkins loans cancellation upon completing their service.

    Student Loan Forgiveness Methods and Your Taxes

    Getting your student loans forgiven can be a huge financial windfall, but it’s not without its potential downsides. Current tax laws state that the forgiven amount of a student loan debt can actually be taxed as if it were income. This means that borrowers of student loans may actually end up owing the IRS a percent of the total amount of the forgiven loan. If you receive a 1099-C form at tax time, consult with a tax attorney.

    The Bottom Line

    If you’re having trouble paying off your student loans, it’s important to find a workable solution so you don’t default on them. Falling behind on your payments can hurt your credit and may even lead to wage garnishment.

    If you’re worried that your student loans might be affecting your credit, get a free credit report so you can see exactly what’s going on. For even more insight, check out ExtraCredit. For $24.99 per month, you’ll get access to 28 FICO® scores, exclusive discounts, and cash back rewards.

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