Great Lakes Student Loan Forgiveness and Repayment Plans
Using federal student loans instead of other sources such as private loans offered by banks, offer borrowers benefits that aren’t available elsewhere. The ability to qualify for loan forgiveness which means the government forgives a portion or all of your federal student loans is one of those benefits.
There’s also a possibility of qualifying to have your student loans either discharged or canceled. This benefit is reliant on you fitting into certain situations. A few of the common programs that offer loan forgiveness and discharge include the teacher loan forgiveness, public service loan forgiveness, and closed school discharge.
As you may have gathered, there’s a big “but” when it comes to qualifying for student loan forgiveness or discharge. To qualify for one of these programs, you must meet specific requirements and be able to provide the necessary information to verify your qualifications.
Who is Great Lakes?
Great Lakes is a student loan servicer that was approved by the Department of Education to service federal student loans. They are a non-profit that was recently purchased by Nelnet, which is another student loan servicer. Great Lakes still operates separately from Nelnet.
They help students go to college and work with over 6,000 schools and 1,000 lenders. More than 7.5 million borrowers with over $232 billion in student loans in 2018 use Great Lakes as their servicer.
Over 1,600 employees help Great Lakes operate their services. Their headquarters is based in Madison, Wisconsin.
What Services Does Great Lakes Provide?
They don’t offer student loans like other servicers do. Student loan-related services such as repayment plans, federal consolidations, and student loan forgiveness programs are offered by Great Lakes.
Eligible borrowers have several Great Lakes student loan forgiveness programs available to them through its partnership with the Department of Education.
Who Qualifies For Student Loan Forgiveness or Discharge?
A discharge from student loans is generally offered when the borrower can’t repay their loan because of extreme circumstances. This program is different from forgiveness programs that cancel loans because the borrower is working in a qualifying profession or public service. There are a few ways that you can become eligible for a discharge that is explained below by the specific program.
Types of Loan Forgiveness Programs Offered by Great Lakes
It’s important to keep in mind that the list of programs is not complete and there are others that are available. These programs are the most common that are offered by Great Lakes. To determine if you qualify, read over the information below and find out more about all the requirements and information that’s necessary.
Teacher Loan Forgiveness
The teacher loan forgiveness program is meant for those who teach full-time and have completed five consecutive academic years at a low-income elementary, secondary school or educational service agency.
Those who are eligible could be forgiven up to $17,500 with the FFEL program or Direct loans. This benefit can’t be received for the Teacher Loan Forgiveness and Public Service Loan Forgiveness programs for the same period of service or qualifying payments.
To learn more about the eligibility requirements and applying for the Teacher Loan Forgiveness program, refer to the U.S. Government's website.
Public Service Loan Forgiveness (PSLF)
Full-time volunteers of Peace Corps and AmeriCorps or full-time public employers might be eligible for the Public Service Loan Forgiveness (PSLEF). Full-time employment is defined by the Department of Education as working at least 30 hours per week with the qualifying employer or otherwise meeting the definition of full-time by the employer.
Other requirements include that you have qualifying loans for Public Service Loan Forgiveness that are with Great Lakes. AT least 120 consecutive, on-time payments must be made on these qualifying loans before you are eligible for forgiveness.
Those who are approved for PSLF will have their qualifying loans moved to FedLoan Servicing. This will allow those loans to be processed for completion of the PSLF forgiveness program.
Temporary Expanded Public Service Loan Forgiveness
If you have previously been denied for PSLF, although meeting the qualifications, you can contact the Temporary Expanded Public Service Loan Forgiveness (TEPSLF) program. This program was launched as a result of the Consolidated Appropriations Act of 2018 to help borrowers in this situation.
There is limited funding available in the TEPSLF program so requests are evaluated on a first-come, first-serve basis. If you only have loans which are nonfederal, private, Federal Perkins Loan program, or Federal Family Education Loan (FFEL) program, you aren’t eligible for TEPSLF.
Closed School Discharge
For borrowers who attended or enrolled in a school that was closed and had taken out federal student loans, you may qualify for a discharge. To be eligible for discharge you must have been enrolled for at least 120 days of the school closing.
It’s possible to qualify for a closed school discharge even if you had a leave of absence approved during that 120-day period. You must be able to provide financial and academic records that show proof of your enrollment. For those who can’t provide this documentation, your state’s licensing agency might be able to help.
Total and Permanent Disability Discharge
A program for permanently disabled veterans or individuals receiving Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI) benefits is the total and permanent disability discharge (TPD). Military veterans must provide documentation from the U.S. Department of Veterans Affairs (VA) that shows they are eligible for TPD discharge through their unemployable status. Those who receive Social Security must provide their notice of award for SSDI or SSI benefits.
A physician that you’re unable to participate in a significant gainful activity and certify that you’re totally and permanently disabled. Physical and/or mental impairments which have lasted at least 60 months and are expected to continue or possibly result in death, for another 60 months or more may also qualify.
Once you’ve been approved for TPD, your eligible loans will move to Nelnet, the exclusive service of the program.
Will I Owe Taxes on Forgiven Student Loans?
The short answer to whether you will owe taxes on forgiven student loans is that it depends. With the numerous programs that are out there for student loan borrowers, there are some that are considered taxable events while others are not.
Generally speaking, when a consumer’s debt is canceled, that amount is reported to the IRS as “income”. That typically results in the borrower paying income taxes on the canceled debt like they had earned that amount as income. Canceled debt is usually sent as a Form 1099-C for debts canceled from the previous year.
Programs like the PSLF and TPD that are offered for federal student loan borrowers are not taxable. The TPD program had recent changes to taxability that went into effect on January 1, 2018, to become a tax-free discharge. An important note is that some private student loan lenders offer a disability discharge however those are often not tax-free.
Great Lakes Student Loan Repayment Plans
Borrowers who are not eligible for a forgiveness program may have other options available to them. For instance, you might be able to consolidate your loans or refinance them so they are eligible for a Great Lakes student loan forgiveness program. There are also income-driven repayment plans that can also help you qualify which include the ones below.
Income-Based Repayment (IBR) Plan
To qualify for IBR, you must have federal student loans that meet the requirements. Private loans and parent loans do not qualify for the IBR. Additionally, federal student loans that originate on or after July 1, 2014, are also not eligible. The eligible student loans types include:
Another qualifier for the IBR plan is that you must demonstrate a partial financial hardship . Your Adjusted Gross Income (AGI) is compared against 150 percent of your state’s poverty level for your family size to make this determination.
The IBR plan works by capping your monthly student loan payments to 15 percent of your discretionary income. This is determined by your annual salary, size of your household, and your state’s poverty level. The amount is revised annually so that any changes can be reflected.
Those with IBR plans also don’t have to worry about their monthly payments being higher than the amount on a 10-year repayment plan. Check the Federal Student Aid website to learn more about IBR plans.
Pay As You Earn (PAYE) Repayment Plan
Another program that’s available is the Pay as You Earn (PAYE) which is designed for graduates and former students who had federal student loans that originated before or on October 1, 2007. To be eligible for PAYE, you must meet several qualifications.
To begin determining your eligibility, your student loans need to be:
Alternatively, you could qualify if your disbursement or consolidation of your loans occurred after or on October 1, 2011. Direct or FFEL loans that were made before the October 1, 2007 deadline aren’t included.
You must also be able to prove Partial Financial Hardship to qualify for the PAYE repayment plan. You do this by showing that your eligible loans are less than the payments made on the 10-year Standard Repayment Plan but greater than your household’s annual discretionary income. Additionally you must show that you meet poverty line requirements outlined by your state and size of household.
Your payment is calculated by taking your adjusted gross income (AGI) and subtracting it from your state's poverty level at 150 percent. That amount is determined as the discretionary income of your household if you qualify for the PAYE repayment plan.
Your new student loan payment will be 10 percent of your discretionary income through the PAYE repayment plan moving forward. This amount will remain the same until you reach the end of the PAYE repayment plan’s 20-year term or have paid off the balance.
Any balance that remains after 20 years can be forgiven or discharged as long as you have not missed any payments over this time. Taxes on the forgiven amount must be paid through this program.
Revised Pay As You Earn (REPAYE) Repayment Plan
An extension of the PAYE program was signed in 2015 that opened the opportunity for more federal student loan borrowers to pay off student loan debt. This program which is known as the REPAYE repayment plan has less restrictions while keeping the benefits the same as the PAYE program.
Anyone with eligible federal student loans can participate in the REPAYE repayment plan no matter when the loan was originated. Eligible federal student loans in the REPAYE program are:
Private student loans, PLUS Loans in your parent’s name, and Consolidated Loans that were used to repay loans to your parents are not eligible.
Just like the PAYE Program, borrowers can receive a reduced monthly payment that’s capped at 10 percent of their discretionary income. Your household’s adjusted gross income (AGI) is subtracted by 150 percent of your state’s poverty level (based on the size of your household).
The amount that you make on an annual basis will determine what your monthly payments will look like. This is reassessed every year to adjust your monthly payment for the next year. Your spouse's income and their existing federal student loan debt can also be used to make this calculation. The size of your monthly payment is currently not capped.
You have two options for student loan forgiveness which are based on your level of education. Undergraduates on the REPAYE program can have their student loans forgiven if they make all their payments for at least 20 years.
If you have a graduate or professional degree, you are eligible for student loan forgiveness after 25 years of meeting the requirements for the REPAYE program. This includes making all of their payments for the 25-year period.
Any balance that is forgiven by undergraduate, graduate, or professional federal student loans can be taxed.
Income-Contingent Repayment (ICR) Plan
The Income-Contingent Repayment Plan (ICR) is one of the oldest repayment programs that are available. It uses your income to calculate how much you can afford to pay monthly on your student loans.
Borrowers who don’t qualify for other loan repayment plans can benefit from the ICR Plan. Borrowers can receive lower monthly payments as well as the possibility of earning loan forgiveness.
There are less restrictions for the ICR program which allows borrowers who have federal student loans that don’t qualify for other plans the opportunity to be approved. Parent PLUS loan borrowers are also eligible for the ICR program, making it the only one that’s currently offered to provide this.
The ICR program’s eligible loans include:
THE ICP program doesn’t have an income requirement. That makes it a good option for those whose career pursuits have lower income potential such as social work or other rewarding paths.
Income Sensitive Repayment (ISR) Plan
If you have an eligible FFEL program loan and you need a plan with lower payments, the income sensitive repayment (ISR) plan might be right for you. Payments will increase or decrease in this plan based on your annual income.
Eligible federal student loans include:
Direct Loan program borrowers do not qualify for the ISR plan. Monthly payments under the ISR plan are determined using a percentage of gross income instead of other plans which use a percentage of discretionary income.
The payment amount is a fixed percentage between 4 and 25 percent of your gross monthly income. The new interest rate must be less than the monthly payment amount. Another rule is that no payment can be more than three times any other payment.
The term is based on a maximum period of ten years. If loans are consolidated, depending on the amount that’s owed, the repayment term can be 10 to 30 years long.
Repayment accommodation forbearance might be offered by lenders for up to five years of payments. This is in cases where the borrower can’t repay their debt while under the income-sensitive repayment plan by the maximum repayment period.
The pursuit of higher education is an important goal that’s worth pursuing. There are many programs that are available to help borrowers manage their student loan debt through more manageable repayment plans, forgiveness, and discharge programs. These programs generally have many conditions and restrictions which should be reviewed carefully to make sure that you’re eligible.