If you are considering student loan forgiveness as an option for your student loans, it is critical that you understand how the program works. That is why I have created this quiz that you can uses to test your knowledge. When you are done taking it, you should have a clear understanding of how student loan forgiveness works and understand if it is right for you!

Student loan forgiveness:

a.) Allows anyone to apply to have the balances of their student loans forgiven after 120 payments
b.) Allows people that work in public service careers who also meet certain other conditions to qualify to have their student loans forgiven after they have made 120 payments.
c.) Allows people with low incomes to have their loans forgiven at any time
d.) Allows public service professionals to have their loans forgiven after 60 payments.

The correct answer is B. The only people that can qualify for student loan forgiveness are those that work in public service professions. This includes emergency workers, public health professionals, public education professionals, government workers, military, public library, firemen, policemen and emergency management.

What type of loans are eligible for loan forgiveness?

a.) Any student loans
b.) Perkins loans
c.) Loans made under the direct loan program or loans that are consolidated under the direct loan program.
d.) Private student loans

The correct answer is C. If your loans were not made under the direct loan program, you will need to consolidate your loan into the direct loan program.

To be eligible for forgiveness, I need to have worked in public service

a.) For at least 50% of the last 10 years
b.) For at least 5 years
c.) For the entire 120 months that I was making payments on the loan
d.) For the last 20 years

The correct answer is C. You must have been a public service worker for the entire time you were making payments on the loan.

Student loan forgiveness benefits:

a.) Only public service workers that also qualify for Income Based Repayment or Income Contingent Repayment plans
b.) All public service workers that have 10 years of employment
c.) Public service workers with lower income
d.) Anyone that qualifies

The correct answer is A. Just because you qualify under the program, doesn't mean that loan forgiveness will help you. Because you must have made 120 payments to qualify and student loans have a 120 month term, the only people that will benefit are those that have qualified for a reduced payment schedule. This means that to qualify you need to have a relatively high debt level for your income.

I am 7 years into repaying my student loan and qualify for the program. I will be eligible for forgiveness:

a.) In 3 years
b.) In 10 years
c.) 10 years after the law was passed
d.) Never

The correct answer is C. Many people will not be able to take advantage of this program, because 120 payments must be made after the law was passed. This means that the first loans will be forgiven in 2017. Unless your IBR is very low, the only people that will be able to take advantage of the program are those that are just beginning to make payments on their loans.

Hopefully by now, you have a good idea of how student loan forgiveness works. It isn't a program that many people will benefit from, but for those that qualify it is a great opportunity to erase student loan debt.