Reduce Your Debt Through a Loan Forgiveness Program


Loan Forgiveness ProgramsLast year, a record number of students applied for AmeriCorps. Why? For some, the opportunity to serve others while learning valuable skills was enticing, but others joined for an entirely different reason. After completing just one term of service (12 months or less), they were eligible to have their student loan debt reduced by up to $5,500. Unfortunately, budget cuts have made it impossible for AmeriCorps and other service-based organizations to provide this opportunity to everyone who submits an application, but that doesn’t mean there aren’t other options available to students who want to reduce, or even eliminate, their student loan debt. Depending upon a student’s intended career field, he/she may be eligible for one of the many student loan forgiveness programs being offered through federal and state governments, or other organizations. Here are just a few of the programs currently available.

Law Loan Forgiveness ProgramsLAW

It’s not uncommon for law students to graduate with $100,000 or more in student loan debt. Fortunately, many law schools and state agencies offer assistance with paying down that debt through work at non-profit public interest organizations and/or government agencies, or other low-paying legal fields. Programs vary by schools and state agencies, so students should contact the individual programs directly for eligibility and application information.

Medical Loan Forgiveness PregramsMEDICAL

The National Health Service Corp (NHSC) offers a student loan repayment program to allopathic or osteopathic students in their last year of medical school. To be eligible, students must complete a residency within an approved field for the designated number of years to receive payments. Many states also offer loan assistance programs to physicians who work in critical shortage areas. Nurses, who are employed full-time at a critical shortage facility, or are employed at an eligible school of nursing, may apply to the Nursing Education Loan Repayment Program offered through the U.S. Department of Health and Human Services, Health Resources and Services Administration (HRSA). Up to 25 percent of the student’s qualifying loan balance will be paid after two years of full-time service. For those taking care of animals instead of people, the Veterinary Medicine Loan Repayment Program (VMLRP) provides assistance to those who serve in a designated shortage situation for a minimum of three years. Through the National Institute of Food and Agriculture, students can earn up to $25,000 toward qualified educational loans for each year of service provided.

Public Service Loan Forgiveness ProgramsPUBLIC SERVICE

Those who plan to work for a federal/state/local government agency, or a non-profit organization that has been designated as tax-exempt by the Internal Revenue Service (IRS) under Section 501(c)(3) of the Internal Revenue Code (IRC), may have the remainder of their qualified student loans forgiven through the Public Service Loan Forgiveness Program (PSLF), after meeting eligibility requirements and making 120 consecutive student loan payments.  

Loan Forgiveness Programs for TeachersEDUCATION

Students who are pursuing a teaching degree may be able to have portions of their student loans forgiven or even cancelled. If a student has either a Direct Subsidized/Unsubsidized Loan, or a Subsidized/Unsubsidized Federal Stafford Loan, he/she may receive up to $17,500 after completing five consecutive academic years in certain elementary and secondary schools (or educational service agencies) that serve low-income families. Students who have a Perkins Loan may also be able to have the entire loan cancelled (discharged). Students can apply for either program after completing five years of service at a qualifying school and submitting a Teacher Loan Forgiveness Application. Current students may also qualify for a Teacher Education Assistance for College and Higher Education (TEACH) Grant. The TEACH Grant provides up to $4,000 annually for students who are completing (or plan to complete) courses needed for a teaching degree. Students must agree to teach in a high-need field, at a school that serves low-income families, for a minimum of four years (within eight years) after completing the courses that were covered by the grant. It’s important to note that many of these programs have strict guidelines and requirements. For example, those who plan to utilize the PSLF Program must make 120 consecutive, on-time payments. If a student is late just once, it will result in all previous payments being made obsolete and having to start from square one again. Those who use the TEACH grant, but do not satisfy the work requirement, will have their grants converted into a Direct Unsubsidized Loan that must be repaid. Students should carefully review all criteria for their intended program and note when applications and required documentation must be submitted. It’s also suggested that students check with the Human Resources (HR) Department at their employment for any other available resources and/or benefits that may help reduce their current educational expenses and/or student loan debt.

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