Your Guide to Student Loan Forgiveness in Alabama

If you attend college in Alabama, there's a good chance you'll take out educational loans to pay for your education. According to The Institute for College Access and Success (TICAS), 51% of Alabama's 2019-2020 college graduates left campus carrying a student loan debt balance of $30,996. The majority of Alabama student loans are from federal student aid.

Your student loan debt doesn't have to be a burden, especially if you qualify for a federal or state-specific student loan forgiveness program. Keep reading to learn more about loan forgiveness options available to Alabama borrowers.

Student loan forgiveness in Alabama

Federal student loan forgiveness has been a hot topic recently, but often, some states sponsor loan forgiveness programs, too.

These special programs typically provide loan repayment to residents who serve the community, typically in specified professions, such as healthcare or teaching. Alabama currently has only one state-specific loan forgiveness program available for borrowers.

Here’s a look at student loan forgiveness programs currently available in Alabama and eligibility requirements.

Alabama Math and Science Teacher Education Program

The Alabama Math and Science Teacher Education Program (AMSTEP) is a loan forgiveness program for public school math and science teachers. Similar to other states, the program was created to improve Alabama's education system.

By providing loan forgiveness, program sponsors hope to encourage graduates to accept math or science teaching positions within the state's public school system, especially in areas with a shortage of teachers.

To qualify for the program, applicants must:

• A U.S. citizen or legal permanent resident.
• An Alabama resident for 12 months before applying.
• Have outstanding federal student loans.
• Be a graduate of an approved baccalaureate or master's math or science degree. program at a qualifying school (from Spring 2018 or after).
• Hold a valid Alabama professional educator certificate endorsed in secondary math or science (or both).
• Teach math or science full-time in an Alabama public school or approved charter school.

AMSTEP is sponsored by the Alabama Commission on Higher Education (ACHE) and the Alabama State Board of Education (ALSBE). The assistance program provides up to $7,500 in loan repayment annually for a maximum of four years.

Interested teachers can contact the Alabama Commission on Higher Education for more details and to apply for the program.

Federal student loan forgiveness programs for Alabama residents

There's no need to fret if you don't qualify for an Alabama state-specific loan forgiveness program. Alabama borrowers also have access to several federal loan forgiveness programs through the U.S. Department of Education.

These programs offer student loan repayment relief for federal student aid received. The federal government currently offers three federal student loan forgiveness programs:

• Public Service Loan Forgiveness Program
• Teacher Loan Forgiveness
• Income-driven repayment loan forgiveness

Each federal program carries its own requirements and application process. To receive forgiveness through federal programs, you'll need to make five to 25 years of qualifying payments and meet other program requirements.

Depending on your situation, other loan repayment options may help you reach a zero loan balance sooner than federal forgiveness programs. Here's an overview of each federal student loan forgiveness program.

Public Service Loan Forgiveness Program

The Public Service Loan Forgiveness program provides tax-free loan forgiveness for qualified borrowers who work in the public sector, such as government organizations or nonprofit organizations.

To receive forgiveness, you must make ten years of qualifying payments under an income-driven replacement plan while completing ten years of full-time service with a qualifying employer. Payment months during the recent administrative payment pause count towards your PSLF monthly payment total. Your remaining loan balance after meeting the 10-year program commitment is forgiven tax-free.

Many physicians will qualify for this program. And if you do, then look at Alabama physician home loan programs if you're also looking to buy a house.

Teacher loan forgiveness

Teachers serving for five years in a qualifying school, such as those designated as low-income schools, can receive up to $17,500 in student loan forgiveness. Forgiveness amounts depend on your subject area.

Teachers working in the STEM field (science, mathematics, engineering, and technology) and Special Education are eligible to receive the full forgiveness amount. Qualified teachers outside those subject areas can still qualify for a maximum of $5,000 in loan forgiveness.

Income-driven repayment (IDR)

Even if you don't work for one of the qualifying employers listed above, you can still receive loan forgiveness through a lesser-known option — IDR forgiveness.

To qualify, you need to sign up for one of the four federal IDR repayment plans:

• Saving on a Valuable Education (SAVE) — formerly REPAYE
• Pay As You Earn (PAYE)
• Income-Based Repayment (IBR)
• Income-Contingent Repayment (ICR)

IDR plans allow borrowers to lower monthly payments considerably, especially earlier in their careers when many people are earning entry-level income. IDR plans limit payment amounts to 5% to 20% of discretionary income with a maximum repayment period of 20 to 25 years, depending on the program. Any remaining balance after that period passes is forgiven.

Unlike PSLF, you may be on the hook for taxes on the forgiven balance, although you have at least a couple of decades to prepare for it.

Pursuing student loan forgiveness in Alabama

While there aren't many state-specific options for student loan forgiveness, Alabama borrowers still have plenty of ways to receive help with outstanding loans. Analyze your situation and loan balance to determine whether you qualify for state or federal loan forgiveness programs.

Unfortunately, you don't qualify for federal loan forgiveness if you have private student loans. Instead, you can potentially reduce your total loan debt by refinancing your student loans. With good to excellent credit, you may find a lender offering lower interest rates than your current loans.

If you're unsure about the right repayment path, you can book a consultation with a student loan expert for personalized support. We've helped thousands of borrowers save money and craft customized repayment plans for each borrower's unique situation.