Best Free Grants to Pay Off Student Loans
A 2018 study by the Federal Reserve found that more than half the young adults who attended college in the U.S. had taken on some form of debt to do so, with roughly 20% of those who owed money being behind on their payments.
At the time of the study, 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. In the years since, the number of debtors, the amount owed, and the volume of past-due payments have continued to increase.
How Grants Can Help
The monthly payments on student loan debt are impacting 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 2018-19 was $135.6 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 U.S. 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. They also reimburse 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.
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 2 years of contraception or infertility research.
John R. Justice Repayment Program
Recipients can receive up to $10,000 per year to put toward their student loan debt (not to exceed $60,000) with this grant. Requirements are a 3-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 $3.9 billion (in 2018 dollars) to $12.4 billion over the decade, increased from 15% of federal grant aid in 2008-09 to 30% in 2018-19.
The Army Loan Repayment Program (LRP) is a great option for those in (or retired from) the military to pay off a chunk of a student loan.
Each niche has its own requirements and benefits.
- Regular Army: Active Duty
- Regular Army: Retired
- Army National Guard: Active Duty Under Title 10 USC or Title 32 USC (Full-Time National Guard Duty)
- Army National Guard: State Active Duty
- Army National Guard: Drilling
- Army National Guard: Retired
- Army Reserve: Active Duty
- Army Reserve: Drilling
- Army Reserve: Retired
For Regular Army: Active Duty, for example, candidates will need to have been enlisted for at least 3 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 max 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 that 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.
The Federal Reserve. "Report on the Economic Well-Being of U.S. Households in 2018 - May 2019." Accessed March 16, 2020.
CollegeBoard. "Total Grant Aid By Source Over Time." Accessed March 26, 2020.