Student loan debt can be overwhelming, especially for graduates who enter industries that end up not paying all that well. If you find yourself having trouble making your student loan payment – or if you just want to speed up the process of getting rid of the debt – it’s worth considering debt repayment, forgiveness, and cancellation programs.
These programs, which help reduce or eliminate student loan debt in exchange for your services and expertise, frequently involve working in under-served communities. For those who give back to society, the following programs can give a little bit back to you.
Student Loan Forgiveness Programs to Consider
It’s important to note that all of the programs listed below have important tax implications. Typically, when you are forgiven debt, the IRS considers it taxable income. However, if your debt was repaid or canceled as part of a job-specific student loan forgiveness program (like many of the programs listed below), it’s untaxed.
The major caveat is that if your student loan balance was canceled due to total disability, it’s then considered taxable income and you’re on the hook to the IRS. There are exceptions to every tax rule though, so be sure to see a tax professional to discuss your specific situation.
1. Public Service Employees
The Public Service Loan Forgiveness Program (PSLF) was designed to encourage folks to enter and remain with a public service job, and as a consequence, it likely covers the most careers of all such programs.
- Applicable Careers. It encompasses careers such as public teaching, military service, social work, public safety, law enforcement, public health services, public library services, public interest law services, and public service for individuals with disabilities and the elderly.
- Qualifications. To qualify, you must have made 120 on-time, full monthly payments (10 years) after October 1, 2007 while working full-time at a public service employer. With a start date of October 1, 2007, you are not eligible for student loan forgiveness until October 2017. If you plan on staying with a public service career, circle that date on your calendar and take advantage when the time comes. Once you reach 120 monthly payments, the maximum amount your loan can be reduced is $17,500.
- Loan Types. Federal student loans that qualify for loan forgiveness include Stafford, Ford, PLUS Loans, and direct consolidation loans. Other federal loans become eligible for forgiveness if they are consolidated into a Direct Consolidation Loan. These include federal Perkins Loans, federal PLUS Loans, and FFEL consolidation loans. It’s important to note that once consolidated, only payments made on the new Direct Consolidation Loan count toward the 120 monthly payments needed to take advantage of the PSLF program.
Educators in the United States do some of the most important work in the country, yet often do not receive commensurate pay. Thus, they are often left with student loan debt that’s not easily paid off. By entering these student loan forgiveness and cancellation programs, teachers are in a stronger position to work in low-income schools educating children that need the most help.
- Federal Teacher Loan Forgiveness. If you teach full-time for five consecutive academic years, you may be eligible for loan forgiveness up to $17,500 through the Federal Teacher Loan Forgiveness Program. However, you must work at a qualifying school that serves low-income families and qualifies for Title I funding. In addition, your loan must have originated after October 1, 1998, and you cannot be in default without having set up satisfactory repayment arrangements. To perform a school eligibility search, visit this directory.
- Federal Perkins Loan Cancellation Program. If you received a Federal Perkins Loan, you may be eligible for complete cancellation of your debt via the Federal Perkins Loan Cancellation Program. You need to be currently working as a special education teacher or at a school serving low-income families. Eligible educators must teach math, science, bilingual education, foreign language, or must work in any field deemed in short supply by that particular state.
- State- and City-Sponsored Loan Forgiveness Programs. Be sure to research state and city loan forgiveness programs available to you – the American Federation of Teachers (AFT) is an excellent resource.
3. Healthcare Workers
The student loan debt incurred by healthcare professionals, including doctors, nurses, clinicians, and even veterinarians, can be staggering. While the potential for higher salaries exists in these fields, it can still take years to repay education debts.
Fortunately, the following debt repayment programs can quickly alleviate the burden to healthcare workers. The majority of these programs require a one- to two-year commitment in an under-served community.
- National Health Service Corp (NHSC). According to the National Health Service Corp (NHSC) website, “Primary care medical, dental and mental/behavioral health clinicians can get up to $50,000 to repay their health profession student loans in exchange for a two-year commitment.” You would be required to work in an under-served area and would be compensated upfront so you can quickly pay down debt. To search for an under-served facility in your area, or to see if you currently work at one, check out the NHSC search feature. Both part-time and full-time options exist, with forgiveness amounts varying accordingly. In other words, even if you work part-time, you may still be eligible to have a portion of your debt forgiven.
- Nurse Corps Loan Repayment Program. The Nurse Corps Loan Repayment Program pays off 60% of your unpaid loan balance in two years, plus an extra 25% of the original loan balance in an optional third year. In return for the loan payments, you are required to work in a low-income, rural, or urban location, and would be eligible for the same competitive wages as regular nurses. You must also be a U.S. citizen and a licensed full-time nurse at an eligible “critical shortage facility.”
- Veterinarian Medicine Loan Forgiveness Program. If you’re willing to work as a vet for three years in a NIFA-designated area with a shortage situation (NIFA stands for “National Institute of Food and Agriculture”), you’re eligible for up to $25,000 in loan forgiveness through the Veterinarian Medicine Loan Forgiveness Program. Applicants must be U.S. citizens and have a doctorate in veterinary medicine (DVM).
- Indian Health Services Loan Repayment Program. The Indian Health Services (IHS) loan repayment program pays up to $40,000 if you’re willing to sign a two-year commitment to practice in a health facility serving American Indian and Alaskan Native communities. Once your two-year commitment comes to an end, you have the option to extend your contract until your qualified student debt is fully paid. Also, if you are an American Indian or Alaskan native, you get priority consideration.
- Health Professions Loan Repayment Program (California). If you live in California, you may be eligible for up to $50,000 via the state-sponsored Health Professions Loan Repayment Program. You must be a certified nurse midwife, clinical nurse specialist, dental hygienist, dentist, nurse practitioner, or physician assistant. You also have to work directly with patients for 32 or more hours per week and have an outstanding loan from a commercial or U.S. governmental lending institution.
4. Active Military
If you choose to enter the military and have student loan debt looming over your head, you may have some relief with the following repayment programs.
- Army Loan Repayment Program. The Army Loan Repayment Program is a special incentive offered to specific newly enlisted personnel. If accepted, the Army pays one-third of your outstanding loan debt or $1,500 annually, whichever is greater (up to $20,000 total). Popular student loans that are eligible include Parent Loans for Undergraduate Students (PLUS), Supplemental Loans for Students (SLS), Stafford loans, Perkins loans, William D. Ford loans, and state-funded loans.
- Navy Loan Repayment Program. Similar to the Army’s repayment program, the Navy pays one-third of your outstanding loan debt or $1,500 annually, whichever is greater. The maximum total repayment is $65,000. Your first loan repayment is not eligible until after your first year of active duty service. Loans that qualify include federally insured student loans, subsidized or unsubsidized Stafford Loans, Perkins Loans, consolidated loans, and PLUS Loans.
- Air Force College Loan Repayment Program. The USAF pays up to $10,000 in total, broken up into annual payments of $1,500. To qualify, you must have no prior military experience, agree to enlist for at least four years, and forfeit your GI Bill benefits. Depending on your eligibility and duty status, GI Bill benefits could include full tuition costs, a housing allowance, and up to $1,000 annually for books and supplies. Be sure to seek professional assistance before you decide if giving up your GI Bill benefits is the right decision for you.
5. Lawyers (Public Service)
Dozens of law schools, including Harvard, Yale, Stanford, and NYU, offer loan repayment assistance programs – see the full list of schools that currently participate. Programs generally require you to have full-time employment at a public service law firm and have an adjusted gross income of less than $60,000.
The amount of student loan debt that law schools repay varies widely. For example, the University of Notre Dame Law School repays up to $12,000 annually for three years, while Rutgers Law School contributes between 15% and 25% of a graduate’s annual debt payment for five years. The types of loans that the majority of participating law schools repay include Stafford, Perkins, and private education loans.
Certain volunteering opportunities can also provide help with your student loans. Essentially, these involve getting paid by “sponsors” for your expertise or skill in performing certain tasks. The payments then go toward your student loans. The great thing about the following options is they can typically be done in your spare time, and are often very rewarding experiences.
- SponsorChange.org. If you are a recent college graduate with significant student loan debt and are willing to volunteer your time to perform specific skills-based projects, SponsorChange.org is worth a look. It’s a service that connects volunteers with sponsors, folks now known by a new moniker – “philanthroteers.” Projects include digital marketing, event planning, and content development.
- Zerobound. A motto like, “Where student loans end, and inspiration begins,” is sure to get any loan-saddled graduate excited. Once you’re registered with ZeroBound, you set up crowdsourcing campaigns around your current volunteer work, or look for volunteering opportunities on the Zerobound website. Sponsors can then choose how much they want to give toward your efforts. The money you raise goes directly to your student loan debt – the more sponsors, the more potential to reduce your debt. Sponsors include family, friends, inspired strangers, organizations, and companies.
- Volunteers In Service to America (VISTA). Sponsored by the AmeriCorps program, VISTA is a program created to fight poverty in the United States by placing volunteers in nonprofits, schools, public agencies, and faith-based groups. Examples of VISTA projects include organizing shelter and job opportunities for victims of disasters and creating an adult literacy awareness campaign. Programs typically include a living allowance, but the biggest perk of fulfilling a one-year term of service, before or after college, is the Segal AmeriCorps Education Award. You can use this to pay educational costs at eligible post-secondary institutions – and to repay qualified student loans. The dollar amount of the award for full-time service in 2015 is $5,730, and $2,865 for part-time. The award is very flexible and you may apply a portion to existing student loans and save the remainder for college costs a few years down the road.
In many cases, you may already be working at an under-served school, healthcare facility, or public service employer that qualifies for one of these programs. If so, spending some time researching whether or not you are eligible is a no-brainer. If circumstances don’t currently allow you to take advantage of these programs, they may be tempting enough to make you consider switching jobs or changing careers. The idea of serving Americans who need help, all while getting assistance with your student loan debt, just might resonate with you.
Have you ever qualified for any type of student loan forgiveness?