If you’re behind on your student loans, there’s a chance that they may be forgiven in the future. Will refinanced student loans be forgiven? Many factors go into student loan forgiveness, and not all of them are good news. In this article, you’ll explore how refinanced student loans could affect your ability to qualify for forgiveness and what happens if you go bankrupt while still having debt.
What is the standard forgiveness program for student loans?
If you’re a public service employee, the most well-known forgiveness program is the Public Service Loan Forgiveness program.
The Public Service Loan Forgiveness scheme is for federal student loans and is only available to government employees or those who work directly for a nonprofit organization. The goal of this is to encourage individuals to enter careers in public service by reducing their student loan debt burden by having some or all of their remaining loan balance forgiven after they make 120 on-time payments while working full-time at their eligible position.
As per SoFi professionals, “Forgiveness will be available only to individuals paying down federal loans, not just private loans.”
Can a refinanced student loan be forgiven?
A student loan refinance is one of the many ways to consolidate your federal and private loans into one new loan with a lower interest rate. It’s also an option for students or graduates who are struggling with their monthly payments and want to save money on interest.
Refinancing federal student loans can sometimes eliminate the forgiveness program altogether. For example, if you refinance through a private lender, that lender will take over payment collection and repayment plans in place by your original lender(s). And if those original lenders had anything special going on (like forgiving part of your balance), they won’t be able to do that anymore when they lose control over the account.
Instead, it’ll fall under their standard terms which doesn’t include any special programs like forgiveness or income-based repayment plans. Such plans could reduce what you owe each month by lowering monthly payments based on income level instead of just principle balance amount owed plus interest accrued every month until paid off completely.
What happens to refinanced student loans if you file for bankruptcy?
If you’re considering filing for bankruptcy, you must understand how this will affect your student loans. There are two types of student loans: federal and private. Federal student loans cannot be discharged during a bankruptcy proceeding unless the borrower can prove undue hardship as defined by law (which is extremely difficult).
Private student loans are dischargeable in bankruptcy under certain conditions. In order to determine which type of loan(s) you have, contact each lender directly or check their website for more information on eligibility requirements for forgiveness programs such as Income-Driven Repayment Plans (IDRPs).
The bottom line is that refinanced student loans can be forgiven only if you qualify. And if you do qualify, the process of getting your loan forgiven can be slow and confusing. Suppose you are considering refinancing your federal student loans. In that case, it’s important to know the benefits and drawbacks of doing so before making any final decisions about whether or not this option would work best for your financial situation.