Student loan debt can affect nearly every part of your life. The average U.S. borrower with federal student loans owes about $37,000. For undergraduate degrees alone, the average is closer to $21,500. Unlike many types of debt, student loans are very hard to erase—even bankruptcy usually doesn’t clear them.
The good news is that there are programs and strategies that may help lower what you owe or even forgive part of your balance. Here are seven options to consider if you’re struggling with student loan debt:
1. Loan Forgiveness Programs
If you have federal Direct or FFEL loans, you might qualify for programs that can forgive large amounts of what you owe. One of the best-known options is Public Service Loan Forgiveness (PSLF). This program is available to people who work for government agencies or nonprofit organizations. If you qualify, the remaining balance on your Direct loans can be erased, and the forgiven amount is not taxed. To be eligible for PSLF, you must:
- Be employed by federal, state, local, or tribal government or work for a 501(c)(3) nonprofit
- Work full-time (average at least 30 hours a week) for that employer
- Have Direct Loans (or consolidate your other loans into a Direct Loan)
- Repay your loan using an income-driven repayment plan or a 10-year Standard Repayment Plan
- Make a total of 120 monthly payments
Note: Recent legislative changes have affected PSLF policies. You can find the most up to date information about PSLF on the Federal Student Aid website.
Another option for public student loans is income-driven repayment (IDR). There are four IDR programs:
- Pay As You Earn (PAYE) repayment
- Income-Based Repayment (IBR)
- Income-Contingent Repayment (ICR)
- Saving on a Valuable Education (SAVE) plan
Each program has slightly different terms and qualifications, but all of them can lower your monthly payment. A huge benefit is that your debt is forgiven at the end of an IDR program—20 or 25 years of payments, depending on the specific plan. However, forgiveness under an IDR is counted as taxable income.
2. AmeriCorps
AmeriCorps offers a path into public service by placing members in nonprofit roles for up to two years. While serving, you receive a modest living allowance (about $24,200 a year).
You can place your federal student loans into forbearance during your service, which pauses your payments. Interest still builds, but those months count toward Public Service Loan Forgiveness (PSLF) if you qualify.
When you finish your service and enroll in the National Service Trust, you may earn the Segal AmeriCorps Education Award. This award can help repay federal or state student loans or cover new education costs. The award amount equals the maximum Pell Grant for the year you served. Some schools also offer AmeriCorps Matching Programs, which can double the award’s value.
3. Peace Corps
The Peace Corps is another option for public service. Volunteers commit to two years of overseas service plus three months of training, for a total of 27 months. You can extend your service if you choose to do so.
During service, you can request a student loan deferment, which pauses payments and prevents interest from building. However, deferment time does not count toward Public Service Loan Forgiveness (PSLF). A stronger option for many borrowers is enrolling in an income-driven repayment (IDR) plan while serving. This allows you to make reduced payments—even as low as $0—and still earn up to 24 qualifying PSLF payments.
After completing two years, you receive a readjustment allowance of more than $10,000, which you can use to pay down student loans or save. If you have Perkins Loans, up to 30% of your balance may be canceled after service, with the possibility of 70% canceled if you serve longer. The Peace Corps also offers the Coverdell Fellowship, which provides financial support for graduate school along with professional experience.
Volunteers also gain hiring benefits. For 12 months after service, you receive non-competitive eligibility (NCE) for federal jobs, giving you access to roles that are only open to government employees. Under the Peace Corps Hiring Benefit, you also receive preferential hiring at the Peace Corps itself for up to three years. Both benefits can help you secure employment that qualifies for PSLF.
4. Teach for America
Teach for America is a partner organization of AmeriCorps, specifically for teaching. You commit to teaching in an under-resourced K-12 school for two years. While you serve, you earn between $32,000 and $72,000 per school year directly from the school you work in.
Since Teach for America is an AmeriCorps partner, you get the same benefits. You can get a forbearance on your loans, with months in forbearance qualifying for PSLF. In addition, you may receive educational awards from AmeriCorps. A common use for that award is to pay for a teaching certificate.
Teach for America requires a bachelor’s degree, but you may be able to get help while you’re still in school. You can get up to $4,000 a year through the Teacher Education Assistance for College and Higher Education (TEACH) Grant Program. This requires a commitment to four years of teaching in a high-need field at a school serving low-income students.
5. Medical Research
If you have a doctorate degree in the health field and are engaged in research, you may be able to get loan repayment grants from the National Institutes of Health (NIH). NIH offers Loan Repayment Programs (LRP) for researchers, even if you don’t work at the NIH. If you’re approved, the LRP will repay 25% of your student debt per year, up to $50,000. The eligibility requirements are:
- Citizenship: You must be a U.S. citizen, U.S. national, or permanent resident by the award start date.
- Qualifying Degree: You must have a doctoral degree in medicine, nursing, or dentistry. If you work at NIH, you can also be a Physician Assistant.
- Educational Debt: The amount of your debt must be 20% or more of your salary at the time of award.
- Qualified Research: If you work at the NIH, your research may qualify under categories like AIDS, Clinical Research for Individuals from Disadvantaged Backgrounds, or General. The Loan Repayment Committee makes the final decision. If you work outside the NIH, your research must follow federal laws and NIH policies, and you need to spend at least 20 hours a week on it.
- Qualified employment: You must work for the NIH, a domestic nonprofit organization, university, or U.S. government agency.
6. Moving
You can get help repaying your loan simply by relocating to a different city or state. It’s one of the easiest ways to get help with your student loan debt. Some places that offer programs for student debt repayment include:
- Kansas: The Kansas Rural Opportunities Zones program offers up to $15,000 of student loan repayment over five years if you move to a designated county.
- Maine: Maine offers the Student Loan Repayment Tax Credit, which offsets your state income taxes by the amount you pay on your student debt, up to $2,500 a year. If that means you owe negative taxes, you get a refund.
- Maryland: The SmartBuy 3.0 program is an opportunity to pay off your student debt and buy a house at the same time. To qualify, you must have at least $1,000 in student debt. The state will then give you a mortgage to buy a home plus up to 15% of the home purchase price to repay your student loans. Maryland also offers a Student Loan Debt Relief Tax Credit, giving you up to $5,000 off your state income taxes
- Michigan: Michigan repays up to $300,000 of student loans over ten years for healthcare providers that enter (up to five consecutive) two-year work commitments in a “Health Professional Shortage Area.” The state also has a Student Loan Repayment Program open to public school teachers in the state.
Reflexiones finales
Student loan debt can feel like a heavy burden, but you’re not without options. From forgiveness programs and income-driven repayment plans to service opportunities and state-level incentives, there are many paths that can reduce what you owe. Exploring these choices can help you find the right fit for your situation and make repayment more manageable.
