The idea of paying off your student loans through forgiveness might sound like one of those “it seems too good to be true” deals. But the fact is that there are ways to get those student loans wiped out through forgiveness.
According to an article published on TheAtlantic.com, $200 billion student loans are paid through the income-based repayment plan. This is one of the repayment plans that will make you qualify for forgiveness in a couple of years. But beyond that, there are other things that you need to know about getting your student loans forgiven.
It will depend a lot on how much you owe
First, let’s make one thing clear. The options we are about to discuss won’t make much sense unless you owe more than $10,000 in student loans. And you should probably owe a lot more than that.
Why it this?
It’s just a matter of math.
For example, let’s suppose you owe $7,500 on your loans. If those loans are at 6% interest you could get rid of them in six years with monthly payments of just $145.00, which might fit well within your budget.
Loan forgiveness via public service
There are a number of ways to get student loans forgiven. One of these is to work in a public service job. The way our government puts this is, “If you are employed in certain public service jobs and have made 120 payments on your Direct Loans (after Oct. 1, 2007), the remaining balance that you owe may be forgiven. Only payments made under certain repayment plans may be counted toward the required 120 payments. You must not be in default on the loans that are forgiven”.
Public service jobs that would fall into this category include emergency management, public health and safety, law enforcement, social work, childcare, library science and jobs serving people with disabilities and the elderly. In addition to working in one of these jobs you must make 10 years of consecutive, on-time payments on your federal direct loans.
While you might be able to find one of these jobs that pays fairly well that’s usually not the case. The odds are that the ones you will find will pay poorly. So would you really want to work in a low-paying public service job for 10 years to pay off that $7500 debt that you could be rid of in just six years?
When this could make sense
Working in a low-paying public service job could make sense if you owe, say, $30,000. The math on this is if the interest rate on it was the same 6% and you were paying off the loan in the standard 10 years, your monthly payment would be a heftier $333.06 and if you owe $40,000 it would be $444.08, which would certainly put a crimp ion your lifestyle.
Sign up for volunteer work
Another way to earn loan forgiveness is through a volunteer job such as serving in the Peace Corp. If you have a Perkins loan you could get as much as 70% paid off in return for four years of service. The way this works is if you complete a two-year term you would see 30% of your Perkins loan wiped out, another 30% canceled after a third year and yet another 30% after four years of service.
A second way to get student debt cancelled through volunteer work is to join Americorps. This would earn you $4,725 for each year of service. You could apply this to your student loans or future educational expenses. Some companies match these awards so you might end up with as much as $9450 available to pay off your loans and after just one year. If this were the case then serving in Americorp could actually be a better option than paying off that $7500 in monthly installments.
If you would be willing to teach for five years you could get some good help with your student loans. And you’d get even more help if you can teach science, math or special education.
If you teach science or math for five years in a low-income school you could see as much as $17,500 of your federal Stafford loan forgiven. If you can’t teach science or math or special education you could still earn as much as $5,000 off your federal Stafford loan by teaching for those five years in a low-income elementary or high school.
Be a nurse
There is also a loan forgiveness program called the Nursing Education Loan Repayment Program. It repays up to 60% of your student loans if you’re a registered nurse and work full time (32 hours or more each week) for two years. This must be in a non-profit facility that needs nurses. If you work a third year you could have an additional 25% of your loans repaid.
Join the National Health Service Corps
Finally, if you are a doctor, a nurse practioner, a physician’s assistant, a dentist, a dental hygienist or a mental health professional, you could see a big part of your student loans wiped out by working for two years in an under-served community. If you work full time you could see up to $25,000 of your loans forgiven each year of service. If you serve beyond those two years, each one-year amendment could earn you up to $35,000 in loan repayments.
Whether loan forgiveness of any type would make sense for you will depend on how much you owe in student loans, what you would be willing to do to earn forgiveness and your career goals. For example, if your goal is to be a teacher then teaching for five years in a low-income school could be a very good option. This would not only help pay off your student loans but would give you five years of experience that you could then leverage into a much better paying job. If you’ve gone to school to become a nurse because that’s what you want in life then the Nursing Education Loan Repayment Program could be a good choice. So would public service loan forgiveness if your goal is to work in emergency management, public health, and safety, law enforcement, social work or one of the other jobs included in this program.
The important thing is not just how much you owe in student loans but also how you want to spend the next two, three or five years of your life. If you can make the math work and if you’re interested in one of these careers anyway then some form of loan forgiveness could be a great option. Of course, you do have the option to refinance your loan so you can take advantage of better rates. Consider your different options so you can make a smart decision about it.