5 Ways to Get Your Student Loans Forgiven
In certain situations, you can eliminate some or all of your student loans through a student loan forgiveness program. Depending on your degree and your current occupation, you may qualify for one of many student loan forgiveness programs. If you're wondering whether you can have your student loans forgiven through your job, ask someone in your human resources department. Here are 5 ways to get your student loans forgiven:
Certain volunteer organizations offer student loan forgiveness in exchange for a certain amount of your time. If you volunteer for AmeriCorps, Peace Corps, or Volunteers in Service to America (VISTA) you can have up to 70 percent of your student loans forgiven. Visit their websites to find out more information about student loan forgiveness programs.
2. Become a Full-Time Teacher
If you have a Perkins loan, you can have part of it forgiven by working full-time in an elementary, middle, or junior high school that serves children from low-income families. The more years you teach, the more you can have forgiven. Your local school board will have additional information about which schools in your district offer student loan forgiveness under the National Defense Education Act.
Other states have additional student loan forgiveness programs that allow you to have student loans forgiven in additional situations. You can always contact your loan board of education for information about having your student loans forgiven.
3. Join the Military
One of the benefits of joining the military is student loan repayment. Currently, the Army, Army National Guard, Air Force, Air Force National Guard, and the Navy offer student loan repayment programs up to $20,000 depending on the branch. Unfortunately, the Marine Corps, Coast Guard, and Air Force Reserves do not offer student loan forgiveness. For more information about military student loan forgiveness, visit this article on Military College Loan Repayment Program.
4. Become a Doctor or Lawyer
Medical and legal professionals can end up with six-figure student loan debt. Fortunately for these PhD holders, there are several student loan forgiveness programs that can reduce their student loan burden.
- The National Institutes of Health forgives some student loan debt for medical students who complete certain types of medical research including clinical, medical disparities, and contraception research.
- Certain health professionals can receive up to $50,000 of student loans forgiven through the National Health Service Corps Loan Repayment Program in exchange for two years of volunteer service at a clinic that has a shortage of health professionals. You may be able to receive additional forgiveness for additional service.
- Law school graduates may have some of their student loans forgiven by doing some non-profit work. Equal Justice Works has a list of law schools that have a loan repayment assistance program. If your school is on the list, contact your financial aid department to learn how you can have your student loans forgiven.
5. Wait 25 Years or (20 Years for New Loans)
If you have a federal loan and you're on an income-based repayment (IBR) plan, you can have the balance of your student loan forgiven after 25 years, or 10 years if you work in public service. All Federal student loans are eligible except, student loans in default, Parent PLUS loans, and Parent PLUS consolidation loans. Your monthly student loan payments are capped based on your income and family size. For example, a family of 3 with an annual income of $45,000 would only pay $157 a month on an IBR plan.
You can apply for IBR by contacting the lender servicing your loan. Loans taken out after July 22nd 2014, on the IBR plan, will be forgiven after 20 years instead of 25 years. President Obama recently announced plans to speed up that date to 2012. Visit the Federal Student Aid website and IBR Info for more information.
Who Pays for Student Loan Forgiveness
Many people, especially those who've worked hard to repay their loans, oppose student loan forgiveness (at least Federal loans) because it's funded by taxpayers. If the Federal government forgives your student loans, that means taxpayers have paid for your college education. In that sense, it's the same as using government grants to fund your education. Private student loan forgiveness is pretty much nonexistent, but if lenders offered these types of programs, the banks' other customers would end up funding them through fees and interest.
Drawbacks of Student Loan Forgiveness
In certain situations, you're required to report forgiven loans as taxable income. This may increase your tax liability that year and could result in a tax bill when you file in April. Not all student loan forgiveness programs require you to pay taxes on the forgiven debt. Consult your tax preparer for more information.