This post is from our regular contributor, Kristi.
Please note: This post presents only a general summary of information regarding student loan forgiveness opportunities. It does not presume to be authoritative or complete, as student loan information changes periodically.
Not having enough savings for college, combined with skyrocketing tuition costs means that college students are looking at an average of $30,000 in debt by the time they receive their degree. As reported by CNN Money 40 million Americans and counting are saddled with student loan debt.
Those high costs of tuition can have a negative effect on certain job markets. No one wants to graduate college with $30,000 in debt only to take a $30,000 a year job in low paying or high risk public service job. In order to fill these necessary community roles, federal student loan forgiveness opportunities have emerged as a way to entice new workers into less than appealing job markets.
Most student loan programs require a minimum period of employment in exchange for debt repayment, cancellation, or forgiveness. Exchanging two or three years of employment for a less than stellar job opportunity may be the answer to your student loan debt repayment problems. Keep in mind that you will not be eligible for any of the below student forgiveness programs if you aren’t current on your payments or if your loans are in default.
That being said, here is a list of careers and their programs that offer student loan forgiveness opportunities.
Public service workers with Federal Perkins Loans
Federal Perkins Loans offer loan cancellations for full-time public service employees, whose loans have not been consolidated. Family and child services employees, law enforcement and correctional officers, and public defenders can all seek cancellation of their Perkins loans.
Public Servants with loans other than Federal Perkins Loans can see loan forgiveness through the Public Service Loan Forgiveness Program (PSLF). The PSLF is available to any worker of a government organization at any level (federal, state, local, etc.), tax exempt organizations, or for-profit organizations with a qualifying service. Workers for labor unions, political parties, and for-profit organizations that don’t offer a qualifying service are not eligible for PSLF.
In order to receive PSLF as a public servant with a qualifying loan, you need to have made at least 120 qualifying monthly student loan payments. Even if you have reached 120 qualifying payments, PSLF is not guaranteed, and you will still need to apply. The PSLF program is still being developed, and the applications will be available prior to October 2017. Debts forgiven through the PSLF program are not considered income, so you will not be held liable for tax on the forgiven amount.
Federal Agency Employees
Federal agencies that are having a hard time finding new employees are allowed to offer student loan repayment assistance. New employees who are hired with loan assistance provisions must work for the federal agency for a minimum of three years. The agency is allowed to pay up to $10,000 per year per employee, but the total assistance given cannot exceed $60,000.
Volunteer organization workers
Certain volunteer organizations offer loan forgiveness. For example, AmeriCorps, Peace Corps, and Volunteers in Service to America (VISTA) all have student loan awards or repayment options after you have completed your term of service to the organization. Visit their websites to learn more about student loan programs for volunteers.
Teachers
Teacher Loan Forgiveness Program:
Teacher loan forgiveness is for Direct Subsidized Loans, Direct Unsubsidized Loans, Subsidized Federal Stafford Loans, and Unsubsidized Federal Stafford Loans.
If you have any of the above loans, and you teach in a low income school district, as a special education teacher, in an underemployed subject area, or in a teacher shortage area, you may be eligible for the Teacher Loan Forgiveness Program through the federal government. Depending upon your skill set and years of service as a teacher, you could receive between $5,000 and $17,500 in loan forgiveness through the Teacher Loan Forgiveness Program.
Teacher Cancellation Program
If your student loans were obtained through the Federal Perkins Loan Program, you may be eligible for the Teacher Cancellation program. If you’re eligible for the Teacher cancellation program, you could potentially receive cancellation of up to 100% of your Federal Perkins Loan.
In order to qualify, you need to teach at a low income school, teach an under-employed subject area, or serve as a full-time elementary or secondary school special education teacher.
Once you qualify, you will receive a 15% cancellation of your loan for the first and second years of teaching, 20% cancellation for the third and fourth years, and 30% cancellation for the fifth year. Each amount canceled per year also includes the cancellation of any interest that accrued during the year.
Visit the Federal Student Aid website to learn more about whether you could qualify for student loan forgiveness or cancellation.
Nurses
Registered nurses, advanced practice registered nurses such as nurse practitioners, and Health Professional Shortage Area (HPSA) facility nurses all may be eligible for student loan repayment through the Nurse Corp Loan Repayment Program. Preference for this loan repayment program is given to nurses with the greatest financial need, the type of facility at which they work, and the HPSA designation of their employer.
Nurse Corps Loan Repayment Program participants will be given 60% of their qualifying student loan balance, in exchange for a minimum 2-year service commitment. Qualifying participants may receive an additional 25 percent off of their original loan balance for a third year of service. The full loan award amount is taxable, so bear that in mind if you apply for the program.
Download the Nurse Corps Loan Repayment program PDF to better under the qualifications and fine print of the program.
SEMA – Automotive aftermarket industry manufacturers
Automotive aftermarket industry manufacturers who are employees of the Specialty Equipment Market Association (SEMA) can apply for the SEMA Loan Forgiveness Program.
SEMA members can apply to receive a minimum $2,000 award to apply for any outstanding student loans. The top recipient picked each year receives a $5,000 award.
To be eligible to apply for the program, you must have been a SEMA employee for at least a year, hold a degree or certificate of completion from a college or technical school, have at least a 2.5 GPA, and you must have at least $2,000 of outstanding student loan debt.
The next application process for the SEMA Loan Forgiveness Program begins November 1, 2015.
A new career could help you pay off your loans faster
It can feel impossible to understand student loan repayment and forgiveness options, because each program has their own convoluted set of qualifications and eligibility requirements. Really make sure you do your research and truly understand your options before making any decisions about pursuing a student loan forgiveness program.
Qualifying for one of these student loan debt forgiveness programs through your employer could be a life-changing way to unsaddle yourself from burdensome student loan debt. If you don’t qualify for any of these opportunities, perhaps you consider a career change as a way to pay off your student loan debts.
If you aren’t sure what types of loans you have or what debt forgiveness programs you may be eligible for, login to My Federal Student Aid to find out the information you need to know about your debt.
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Have you ever applied for a student loan debt forgiveness program through your employer? Would you consider changing careers to become eligible for cancellation of your debt?
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This is a great roundup! I would never advise that someone stick in an unsatisfying job just to pay off loans, but if you like your position (and especially if you could move somewhere with a similar deal), I think it can be important to consider. Especially if you’re facing crippling levels of debt.
There are so many good programs out there for forgiveness! I think this really lays out the options well. The hardest thing I’ve heard from people who are actually doing this is feeling locked in for 10 years. Particularly women who actually do it for about 3-5 years then realize they want to stay home. The interest has compounded and to pay it all off after 3-5 years of income-based is really hard.
Like Hannah said, I wouldn’t recommend someone to stay in a job they didn’t like to get the loans paid off. But, if that’s not the case it can be a great option to look at. My brother looked seriously at several programs to pay off his loans as hie’s a teacher. Unfortunately many of the programs are in pretty small and remote towns – which he really wasn’t interested in.
I worked in a Federal Agency but unfortunately that agency did not offer student loan forgiveness. I think I might have stayed if there was. I work in state government and I believe when I looked into it my job would qualify for forgiveness. I researched it years ago but it wouldn’t have worked out because of the rules. The 120 “qualified” payments have to be based on the 10 year standard payment, IBR, and some other ones. Well based on the 10 year standard plan…that’s 120 payments right?? So what is there to forgive if it’s paid off. And for IBR…it was based on you and your spouses income (and my spouse did not have student loans) so after the calculation, if I chose the IBR…I’d be paying the 10 year standard payment and after 120 payments, I’d be finished paying it off.
I’m currently in the PSLF plan, but I don’t know if I can make 10 years in the public sector. I suppose that’s why they’ve made it 10 and not 5! ;)
Financegirl SO agree with you on this! I’ve been in the PSLF plan for almost 4 years, and I’m just dreading the next 6. However, getting possibly 40k paid off (and no tax penalty) is a huge incentive, so do you spend 6 years at a job and get $40K forgiven, or do you leave that job and have potentially 20 years to pay off your entire amount? It’s definitely a conundrum and a hard decision for some families to make!
Hannah UnplannedFinance I agree! 3-5 years of suffering a job that you consider mediocre or not quite ideal could be well-worth the financial advantage of getting out of student loan debt to pursue more attractive career options.
sunburntsaver Financegirl I agree, it’s definitely a tough decision. Sometimes it boils down to picking your own version of the lesser of the two evils.
FrugalRules Some of the biggest disadvantages of forgiveness programs are that they are only for positions in remote or underfunded areas. If you’re willing to stick it out though, it’s definitely a good option.
Andrew LivingRichCheaply I hear you, some of these programs are a catch-22 at it’s finest. I think that the 120 qualified payments are much more attractive incentive for people facing more than $30,000 in student loan debt.
sunburntsaver Ha! I wouldn’t doubt it!
moderatemuse Andrew LivingRichCheaply I had about $90,000 in student loan debt with undergrad and law school though mainly law school. At the time of graduation, my wife and my combined income was around $90,000 and she had no loans. Using the IBR calculator, I don’t exactly remember, but I would have paid the standard payment or close. And of course if our income rises then I’d be paying the standard payment…there is an option to file separately but then there are tax implications. Fortunately, most of my loans are very low interest so it isn’t too bad.
This is a very comprehensive list on student loan forgiveness options! I remember being envious of those eligible for student loan forgiveness when my debt was at a all-time high. We now owe very little (relatively speaking) on student loan debt which is such a relief.
Mrs Crackin the Whip Paying off student loan debt is such a struggle. Congratulations on getting to the point where you are now!