If you’re like many young people and are swimming in student loan debt, here’s some news that might brighten your day. There is actually “free” money available to help you pay off that debt. Unlike other options for paying off student loans such as loan forgiveness or forbearance, these programs give you money – yes, cash money – you use to pay off your debt. Of course, there are strings attached as is the case with many things in life but if you qualify you could get as much as $50,000 to help pay your student loans.
Say hello to an LRAP
This money is available via what are called LRAPs or Loan Repayment Assistance Plans. There are a number of different types of LRAPs available but in general you’ll need to have had a private loan to qualify and not a government-backed loan such as a Direct Federal Loan or Perkins Loan.
Where to look for an LRAP
There are at least four difference places to find LRAPs – your school, your state, the federal government and your employer. What this boils down to is that you’ll have to do your homework to find one for which you might qualify.
LRAPs from the federal government come in a number of different flavors.
National Health Service Corp. Loan Repayment Program
If you are a dental, primary care medical, behavioral or mental health clinician and care for those who are underserved you might be able to get an award of $50,000 after just four years of service.
Armed Forces Student Loan Repayment Program
How much you could get in this program would depend on which part of the military service that you were in. But you could get as much as $65,000 of your eligible student loans repaid.
US Office of Personnel Management Student Loan Repayment Program
This could earn you as much as $10,000 a year you could apply towards loan repayment if you work for a federal agency. The total offered by this program cannot surpass $60,000 for one employee.
Civil Legal Assistance Attorney Student Loan Repayment Program
If you are a certain type of civil legal assistance attorney, you could get up to $6000 a year in student loan repayment for each year of service you complete to a max of $40,000.
Health Professions Faculty
Are you a student from a disadvantaged background and agree to serve on the faculty of an accredited health professions college or university for two years? If so, you could receive as much as $40,000 towards repaying your student loans.
Virtually every state-based LRAP requires that you be an attorney and practice law in what are called “qualifying employment” within the state. As a rule this means you must be involved in public defense, prosecution, civil legal aid or some non-profit legal work.
Many schools offer Loan Repayment Assistance Programs to their graduates who have student loan debt and have taken low-paying jobs. Most of these programs are to help graduates that have gone into public interest or government work. If you think you might be eligible for an LRAP from your school, you will need to discuss this with its financial aid office.
Numerous employers including government employers and nonprofits have LRAPs to help their employees pay off their student debts. A number of these program are meant to help overcome the barrier of lower public interest salaries and to allow employers to recruit and retain qualified people. The availability and specifics of employer LRAPs vary as much as do companies. You will need to ask your employer if it offers an LRAP and if so what are the program’s specifics.
If you feel you might qualify for some type of Loan Repayment Assistance Program, you need to do some math before you sign up. The first thing you should consider is whether or not you have a significant amount of private loans. In this case, an LRAP could likely help. Also, if you have any type of federal debt relief program be sure to check to ensure that an LRAP disbursement would fit the requirements of that program. As an example of this, suppose you are working in a position where you would be eligible for Public Service Loan Forgiveness and have an income-based repayment plan. If you were to get an LRAP, you might be able to use the money to make the payments on your Federal Direct Loan until you’ve made 120 of them and then become eligible for Public Service Loan Forgiveness.
You would also need to know whether the LRAP provides monthly payments or a lump sum payment. Some of these programs provide a lump sum payment in lieu of a number of monthly payments, which would go directly to your loan servicer. If this is the case, that lump sum might be counted as just one payment towards the 120 payments you would need to make to earn loan forgiveness. You could end up having to either make extra monthly payments on your loan or it would take longer for you to earn forgiveness.
Do an analysis
You should do a cost-benefit analysis of any LRAP taking into consideration factors such as how much support you would get from the program versus the cost to apply for it and the obligations that you would be required to assume. Make sure you read the fine print before you sign up for an LRAP because it’s possible that it would not really be that beneficial. You should also check out things such as the minimum and maximum grant amounts and the maximum number of years of assistance you would get. And finally, you need to know which of your loans you could repay, as some LRAPs offer assistance only with loans you received to get professional certifications such as a JD or an MD.
If you don’t feel that you would be eligible for any type of Loan Repayment Assistance Program, there are some other options that would help you with that student loan or loans. For example, if you are a teacher there is Teacher Loan Forgiveness. To qualify, you must have taught full-time for five complete and consecutive academic years in certain elementary and secondary schools or in educational service agencies that serve low-income families. You must also meet a few other qualifications. But if you do qualify, you could get loans forgiven up to a combined total of $17,500.
Second, there is Public Service Loan Forgiveness. This program was created to encourage people to enter into the public service sector. In order to qualify for it, you must have made 120 on-time, full, scheduled, monthly payments on your Direct Loans. You must be employed full time by a qualifying public service organization and must have made your payments under a qualifying repayment plan. As noted above, this program forgives only loans that you received under the Federal Direct Loan Program. If you had a Perkins loan, a Federal Family Educational Loan (FFEL) or any other type of student loan, you will not qualify for this program.
The ultimate solution
The ultimate way to handle a federal student loan is to have it canceled. And yes this is possible. What cancellation does is:
• Completely eliminate your loan balance
• Reimburse you for any payments you’ve made or that have been taken from you through wage garnishments or tax intercepts
• Stop some or all future student loan payments
However, it can be done only certain circumstances. If you were to die or become totally disabled, you could get your student loans canceled. You might also be able to get them canceled if your school closed …
• Before you started attending classes
• When you were enrolled and going to classes but were unable to complete your studies
• Within 90 days after you withdrew from it or
• More than 90 days after you withdrew, and the ED (Department of Education) discovered there were qualifying circumstances that justified that the 90-day period be extended
You might be able to get your student loan(s) cancelled if your school filed a false Certification of Ability to Benefit .If you’re not familiar with a false Certification of Ability to Benefit this is where if you did not have a high school diploma or GED at the time you were admitted and the school did not properly test your ability to benefit from its program.
Also included in the category of False Authorization is if the school forged your signature on loan papers or checks unless the proceeds from the loan paid for charges you owed the school. Or that you were the victim of identity theft.
Finally, you might be eligible for loan cancellation if your school did not pay you a refund you were owed because you didn’t attend it or if you withdrew from the school and were owed a refund at the time you left it.