Posted on 18 April 2013.
If you are like most students, you have had to borrow money to complete your college education. Tuition has risen too much to allow most people to be able to pay for college on a cash basis, so many students turn to loans to make up the difference.
According to American Student Assistance, about 60 percent of all college students borrow money annually and about 37 million students have outstanding balances on their loans. There is currently around $1 trillion in outstanding student debt, making it one of the largest single sources of debt in the nation.
You may not be able to help borrowing money to pay for school, but you do have control over how quickly you pay back your student loans. The amount may seem insurmountable, especially if you have been to graduate school; according to Smart Money, the average graduate student debt is $43,524. However, you may have options to reduce or eliminate your school debt if you choose to work in certain jobs in your field that are considered “high need.”
Loan Forgiveness vs. Tuition Reimbursement
There are two common ways to reduce your student loan debt load: loan forgiveness and tuition reimbursement. Loan forgiveness means that a portion or all of your student loan debt is “forgiven” or erased when you complete a certain period of time working in a job that has been earmarked in a critical-need field. There are loan forgiveness programs in the fields of nursing, social work and education and tuition reimbursement programs in almost any field imaginable.
Loan Forgiveness Programs
Your eligibility for student loan forgiveness will depend on what type of loan you have and the field in which you work.
Federal Stafford Loans are repayable through certain volunteer work or public service, your time in the military and practice in the medical field. You can receive up to $4,725 in loan forgiveness for a Stafford Loan for volunteering with AmeriCorps or Volunteers in Service to America, or VISTA. If you join the Army National Guard, you can receive up to $10,000 toward your student loan. Law school students may also earn Stafford Loan forgiveness if they work for a non-profit agency or in a position of public interest such as public defender or prosecutor.
For those with Perkins Loans, you can eliminate 15 percent of your Perkins Loan balance each year that you serve with the Peace Corps. You can also eliminate your loans through teaching. If you are a primary or secondary teacher in a low-income community, you will receive 15 percent forgiveness each for the first and second years you teach, 20 percent for the third year and fourth year, and 30 percent for the fifth year, completely eliminating your debt for five years of service.
You can also have your Perkins and Stafford loans forgiven if you teach subjects such as math, science or special education in qualifying schools.
Many states also have loan forgiveness programs for doctors and nurses who work in under-served areas. Each state’s program is slightly different but all depend on your willingness to work in an area identified as high-need for a specified period of time.
Federal agencies offer up to $10,000 per year to a maximum of $60,000 through the Federal Student Loan Repayment Program. These jobs require you to work in nursing, government, law enforcement, fire safety or social work or to work for certain designated non-profit organizations.
Tuition Reimbursement Programs
While medical, educational and social work degree holders have many loan forgiveness options, there are few available for those in business or finance. While you may be able to get student loan forgiveness by working for a non-profit or a government agency, there may be an easier way to pay off your debt and still earn a good salary in your field.
It is possible that your employer has a tuition reimbursement program of which you can take advantage if you choose to continue your education. Most tuition reimbursement programs are designed for those who want to pursue graduate degrees. While you are working for the company, the employer agrees to reimburse your tuition up to a certain amount for every semester you successfully complete in your graduate program. This is a great way for those who want to pursue an MBA to earn this degree, which is traditionally quite costly, or for prospective legal students to pay for law school. Some employers have limits on this repayment, however, and some require you to work for a certain number of years or repay the tuition reimbursement.
There are many programs than can help you repay your student loans and reach your goal of being debt-free more quickly. More information about loan forgiveness and popular loan forgiveness programs is available through the U.S. Department of Education’s Office of Federal Student Aid. You can also find out more by visiting your college’s financial aid department, your employer’s human resources department, or the web site for your particular type of loan.
Taking out loans for school is the only option for many students to pay for school. However, signing up for a loan forgiveness program may be the best way to gain work experience and decrease student loan debt. When you sign up for a loan forgiveness program, don’t forget to check your credit to make sure any debt that you forgave doesn’t negatively impact your credit score. www.KelCreditRepair.com is a popular site for getting credit advice where you can get free assistance on credit repair letters, and tips on how to improve your credit score.