Best Free Grants to Pay Off Student Loans

Student Loan Debt Crisis Breakdown
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A 2019 study by the Federal Reserve found that more than half of the young adults who attended college in the United States had taken on some form of debt to do so, with roughly 17% of those who owed money being behind on their payments.

The typical amount of educational debt for the nation’s young people was between $20,000 and $24,999, with student loans being the most common form of debt held by young adults and recent graduates. The average monthly payment ranged from $200 to $299 for borrowers making current payments on their loans.

How Grants Can Help

The monthly payments on student loan debt are affecting an entire generation of Americans in terms of their ability to meet other long-term financial goals, like buying a home, building an investment portfolio, or starting a business.

Thankfully, some grants exist to help people in debt pay off their student loans and work toward their financial goals. The total amount of grant aid received by undergraduate and graduate students in 2019–2020 was $140.9 billion.

These funds don’t need to be repaid so long as candidates fulfill their contractual obligations to the grantor. In general, these grants are competitive and based upon the industry a person enters after graduation.

Nurse Corps Grant

The Nurse Corps Loan Repayment Program pays up to 85% of nursing-related education debt for qualified candidates.

To be eligible, debtors must be a licensed registered nurse, an advanced practice registered nurse (like a nurse practitioner), or a nurse faculty member who received nursing education from an accredited school of nursing in the United States. In exchange for repayment, candidates must work at least two years in one of the thousands of critical shortage facilities (CSFs) across the country or serve as nurse faculty (NF) in an eligible school of nursing. This includes hospitals, clinics, and other facilities experiencing a critical shortage of nurses.

National Institute of Mental Health

The National Institute of Mental Health Loan Repayment Program is aimed at health professionals who want to pursue research-based careers, like biomedical, behavioral, social, and clinical research projects.

This grant program will repay up to $50,000 of student loan debt per year in exchange for two years of qualified research funded by a U.S.-based nonprofit organization. It also reimburses federal and state taxes resulting from the repayment award.

Another bonus? These loan benefits are on top of the salary candidates receive for their research.

Public Service Student Loan Forgiveness

Perhaps one of the most well-known student loan forgiveness programs is the Public Service Student Loan Forgiveness grant, which offers loan forgiveness on Direct Loans (a federal student loan under the U.S. Department of Education) after a candidate has made 120 qualifying monthly payments.

Do note that this program isn’t for everyone; it’s meant for those who work full-time for a U.S. federal, state, local, or tribal government or for a not-for-profit organization. Candidates need to be on an income-driven repayment plan, and there are additional guidelines for what constitutes a qualifying monthly payment.

Debt forgiven through this program is not taxable.

While forgiven debt is typically considered taxable income by the Internal Revenue Service, student loan debt that is forgiven between Jan. 1, 2021, and Dec. 31, 2025, will not be considered taxable, according to the provisions of the American Rescue Plan Act of 2021.

Contraception and Infertility Research Grant

Another option for those who work in the medical field is the Contraception and Infertility Research Loan Repayment Program, which distributes up to $35,000 of the principal and interest of a participant’s educational loans for each year of commitment, not to exceed one-half of the remaining loan balance.

Recipients must be licensed and certified to work in a laboratory (or within the field of clinical research) and be pursuing a master’s, doctoral, nursing, research fellow, or clinical degree. Candidates must also commit to two years of contraception or infertility research.

John R. Justice Repayment Program

The John R. Justice Student Loan Repayment Program provides student loan repayment assistance for local, state, and federal public defenders who commit to extended service in those roles.

Every year, available funds are calculated by the Bureau of Justice Statistics and dispersed to each state, including the District of Columbia, with a minimum base allocation of $100,000. Requirements are a three-year commitment to work full-time as a state prosecutor or state public defender in order to receive the funds.

Army Loan Repayment Program

Grant aid for veterans, which grew from $9.2 billion (in 2019 dollars) to $12.9 billion over the decade, increased from 20% of federal grant aid in 2009–2010 to 31% in 2019–2020.

The Army Loan Repayment Program (LRP) is a great option for those currently in or retired from the military to pay off a chunk of a student loan.

For Regular Army: Active Duty, for example, candidates need to have been enlisted for at least three years and have the Army Loan Repayment Program mentioned specifically in their contract. Recipients need to have a high school diploma, score a 50 or higher on the Armed Services Vocational Aptitude Battery Test, and decline other education repayment bills, such as the Montgomery GI Bill.

The Army will repay 33 1/3% of the outstanding principal balance each year, with a minimum of $1,500 and a maximum of $65,000. Loans must not be in default before entering active duty or during the repayment process.

The Veterinarian Medical Loan Repayment

The Veterinarian Medical Loan Repayment Program pays grantees up to $25,000 a year toward their qualified student loans, given they serve in a veterinarian shortage area for three years. Keep in mind that the shortage area must be officially designated by the National Institute of Food and Agriculture (NIFA).

Some of the shortage areas in 2020 include Alaska, Alabama, Arkansas, California, Georgia, Hawaii, Iowa, and almost every other U.S. state.