5 (Mostly Realistic) Life Events That Would Erase Your Student Loan Debt

graduation cap, diploma, cash
Everyone knows college is expensive. | iStock/Getty Images

Wouldn’t it be nice to erase your student loans immediately? There was a collective hurrah when news broke that as much as $5 billion in student loans were being wiped away because of an apparent paperwork snafu by lenders.
Although it proved too good to be true, it got us thinking. What would have to happen for your student loan debt to be erased?

Life events that could erase your debt

There are some awful scenarios in which your student loan debt would plummet to zero: your school closing, your bankruptcy proceeding, or your death.
None of those are as lighthearted as a lender misplacing your files. To keep looking on the bright side, let’s review five situations where you could pay off (or finish paying off) your loans in an instant. Will any of these apply to you?

1. Scoring a big raise at work

person hands someone a check
Sometimes you just have to be lucky. | AndreyPopov/iStock/Getty Images

This scenario requires more effort. Nobody likes to hear advice about increasing your salary because it’s not so simple. Climbing the career ladder might start with years of education and continue with networking and a lucky break — and that’s just to secure an entry-level position.
But scoring a big raise at work is the kind of realistic event that could help you drop your debt to zero faster, if not overnight. High-performing professionals could expect a raise of as much as 6% to 8% in 2017, reported The Society for Human Resource Management. You might be able to increase your pay even more by hopping to another employer.
If a big raise isn’t on the horizon, consider what is under your control. Examples include:

  • Working to position yourself for a promotion at work
  • Negotiating for a market-rate salary every year
  • Generating extra cash by picking up side hustles
  • Developing passive income streams

You can also, in effect, give yourself a raise by keeping more of your paycheck in your pocket. A strict budget is a good start to accomplishing that.

2. Winning the lottery

lottery tickets
Your chances aren’t great. | Saul Loeb/AFP/Getty Images

Hitting the jackpot could set you free from your federal and private student loan servicers. That’s easier said than done, of course. Your chance of winning the Powerball jackpot is about 1 in 292 million. There are smarter ways to spend your money than buying lottery tickets, such as, say, making extra student loan payments.
But let’s face it. Everyone likes to make a harmless gamble once in awhile, especially when it could lead to the end of your money troubles. The hard truth of winning the lottery is 70% of the lucky few end up broke within a few years, according to the National Endowment for Financial Education. Hopefully, 100% of them paid off their student loans first.

3. Getting help from family

dish for change with sign that says student
You can ask your family for money or hope someone left you something. | iStock/Getty Images

There are few financial windfalls that could pay down your debt as quickly as help from family. Sure, a big tax refund can help make a dent in your debt, but a four- or five-figure transfer of wealth could take you all the way to zero.
Unfortunately, an inheritance from a parent or grandparent is the likeliest scenario. Although we’re not saying you should get the pompoms out when a loved one passes away, it might be wise to prepare for the reality.
However, the fact is we’re all living longer. Men who made it to 65 in 2015, for example, are expected to live an additional 18 years, according to the latest data from the Centers for Disease Control and Prevention. If Social Security benefits remain intact, hope instead that your older loved one is willing and able to share their wealth while they’re still around. Then, they’ll get to enjoy your financial freedom with you.

4. Qualifying for federal loan forgiveness

student loan form
Lots of people would love to be forgiven their loans. | iStock/Getty Images

This sudden life event is more of a long-anticipated reward for making timely loan payments and working as a teacher, law enforcement officer, or another public service-oriented professional. More than 550,000 public service professionals hope to receive Public Service Loan Forgiveness in fall 2017, according to The Washington Post. The plan would, almost immediately, erase the collective debt of those applicants who made 10 years of loan payments while working in a qualifying job.
The relief offered by other loan forgiveness programs arrives gradually. A full-time math teacher in a low-income school district, for example, could have 100% of their debt erased over a five-year period via the Perkins Loan Forgiveness program.
If you’re not close to achieving debt forgiveness, you might try using a loan forgiveness calculator to estimate how much further you have left to go. Seeing the numbers just might inspire you to keep chugging along.

5. Making 20 (or 25) years of federal loan payments

If you call your 240th or 300th monthly student loan payment a life event, add this one to the list. Making timely payments on an income-driven repayment plan isn’t the cheapest way to pay off your student loans. These plans limit your monthly loan payments to 10% to 15% of your discretionary income and extend your extend your repayment term to 20 or 25 years. The bad news? More interest accrues in the process.
But it’s a solution nonetheless for professionals who are paying down big debt on a small salary. After you dutifully make your payments for two decades (or more), any remaining balances are forgiven under the following repayment plans:

student loan forgiveness chart
Student loan forgiveness | Student Loan Hero

As you can tell, in some cases, getting your student loan debt erased can take quite a bit of time and effort. But if you’re determined to end your relationship with student loan servicers, you can find the right path of repayment for you. Unless some luck is involved, it probably won’t be the path of least resistance.
But once your student loans are behind you, there will be plenty of cool opportunities to use your extra money.