Federal Student Loan Forgiveness: How it Works
The federal government has many programs available to help citizens achieve a college education. One little known program is loan forgiveness, where the government cancels part or all of an educational loan. To receive this benefit, you have to either work for one of a number of government-service programs or work in a low-paying, but important, area subsidized by the government.
Service areas with loan forgiveness options include:
- AmeriCorps. Up to $4725 off your loan, for 12 months of work.
- Peace Corps. Up to 70% off your loans
- VISTA (or Volunteers in Service to America). Up to $4725 off your loans.
Other Loan Forgiveness Options
If you are in the Army National Guard, you may qualify for the Student Loan Repayment Program, which could pay up to $10,000 of your student loans. Repayment, forgiveness … the outcome is the same.
If after graduation, you would consider becoming a teacher in a school serving low-income families, you may have a portion of your Perkins Loans forgiven. The National Defense Education Act calls for forgiving 15% of loans for the first and second years of teaching service, 20% for the third and fourth years, and finally, 30% for the fifth year.
For more information and a list of other loan forgiveness programs for teachers, check with the American Federation of Teachers.
The U.S. Department of Education also has information about programs on its Web site, as well as a database of low-income schools eligible for teacher’s student loan cancellation.
Law students should be sure to check with their school about whether they forgive student loans for those who serve in public interest or non-profit jobs after graduation.
Medicine and Health
Loan forgiveness programs are offered by the National Health Service Corps and the Nursing Education Loan Repayment Program. Physicians and nurses may get their loans forgiven through these programs if they agree to practice for a certain amount of time in areas that have shortages of adequate medical providers, usually due to remoteness or poverty.
The National Institutes of Health also have programs that will repay up to $35,000 per year of student loan debt for graduates who conduct medical research.
Loan repayment programs are many and diverse. For example, hospitals and healthcare facilities use loan forgiveness programs to help them recruit occupational and physical therapists. The American Association of Medical Colleges (AAMC) maintains a database of loan repayment programs for med students.
Vet students should check with the Department of Agriculture’s Veterinary Medicine Loan Repayment Program, which can repay $25,000 per year for three years for vets willing to work in areas with vet shortages for three years.
Don’t forget to check state resources, too. If you live in Maryland and are a state or local government employee earning less than $40,000 annually, you may qualify for a loan repayment program to help you study law, nursing, social work, education, and other professional areas.
And finally, for this article, there is The College Cost Reduction and Access Act of 2007, which created a loan forgiveness program that mandates that after 10 years of work in public service while making federal loan payments every month, a student’s remaining debt will be forgiven. Here are just some of the public service professions that qualify:
- Emergency management
- Employees of tax exempt 501(c)(3) organizations
- Government (excluding time served as a member of Congress)
- Military service
- Public safety and law enforcement (police and fire)
- Public health (including nurses, nurse practitioners, nurses in a clinical setting, and full-time professionals engaged in health care practitioner occupations and health care support occupations)
- Public education
- Social work in a public child or family service agency
It pays to research your loan forgiveness opportunities. You could save yourself thousands of dollars!
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