According to The Project on Student Debt, in the class of 2011, the average student loan borrower graduated with $26,600 in loan debt. Thankfully, though, according to the Consumer Finance Protection Bureau, an estimated 25% of the U.S. workforce is eligible for student loan forgiveness programs. With some early planning and awareness, college students can steer toward careers in which they can take advantage of these programs with public student loan forgiveness.
Student loan forgiveness programs are government programs that eradicate outstanding federal loan debt for qualifying students. Students who participate in these programs will have their federal loans (such as Perkins or Direct/Stafford Loans) forgiven, all or in part, once the program’s specific criteria are met. Because student loan forgiveness programs are intended to encourage new grads to choose careers in public service, students who want to qualify should pursue work in fields such as nursing, teaching, or even volunteering.
Here are just some of the careers that are eligible for public student loan forgiveness:
Elementary or Secondary School Teachers
In exchange for working full-time for five years in a school that serves low-income students, teachers who have Perkins or Direct/Stafford Loans can have up to $17,500 (depending on their subject area) of their student loan balances forgiven under the Teacher Loan Forgiveness Program. Teachers with Perkins loans (given to students with exceptional financial need) can qualify to have their entire loan balance canceled.
The NURSE Corps program pays off 60% of a nurse’s student loan balance in the first two years of employment and an additional 25% in an optional third year for nurses working in designated needy communities in the United States.
The Public Service Loan Forgiveness Program applies to a variety of public service jobs, including law enforcement, emergency management, early childhood education, public health, public education, public library service, school library service, and military service. The program forgives remaining loan balances after 10 years of scheduled payments have been made.
AmeriCorps offers several programs in which volunteers who perform a year of service are eligible for a loan reimbursement (currently $5,500), but a volunteer can complete additional years of service to be eligible for additional loan reimbursement awards. The number varies by the specific AmeriCorps program. Peace Corps volunteers with Perkins loans may be eligible for loan forgiveness for each of their first four years of service, up to a total of 70 percent of the loan balance. While they are serving, volunteers are eligible to defer certain loans, as well.
Army National Guard
Students who enlist in the Army National Guard for six-year terms after college may be eligible for the National Guard’s Student Loan Repayment Program, covering up to $50,000 in federal student loans. An additional program called the Healthcare Professional Loan Repayment Program covers loan repayments ranging from $25,000 to $40,000 per year, depending on the health care position.
Legal and Medical
There are a number of additional programs related to public service in the legal and medical areas. If you are interested in attending law school or medical school, the schools can provide more information on those. The National Institutes of Health, for example, has a program to repay up to $35,000 per year in student loan debt and the National Institute of Food and Agriculture has a Veterinary Medicine Loan Repayment Program to pay up to $25,000 per year in student loan debt. Both programs require specific time committments.
One thing to keep in mind for all federal student loan forgiveness programs is that the amount forgiven is typically subject to federal income taxes. With good planning, you can make sure that you are prepared for the associated increase in your tax bill.
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This article originally ran 9/25/2013.