Best Ways to Approach Repaying Student Loans
Graduating with a student loan in the tens of thousands is never fun, but there's more than one way to erase the number of zeros at the end of the line.
1. Public Loan Forgiveness Service program: Put in place by the federal government, the PLFS can forgive, cancel or discharge a loan under special circumstances. Not everyone will qualify, as the parameters are very strict (e.g. Stafford and Perkins loans), but it's worth applying for.
2. Income-Based Repayment: Graduates being squeezed out of the job market can take solace in the government letting them repay back their loans proportional to their income, with the rest of the balance forgiven after 25 years. One thing to keep in mind, though, is the forgiven amount is taxed as income by the IRS, and a payment to them is likely in order (although it's usually less than the forgiven amount.)
3. Pay as You Earn: Thought of as a newer version of IRB, Pay as You Earn adopts the same method of reduced monthly payments, with 10% of monthly income going to repayment and the balance forgiven after 20 years. This option is only available to borrowers who received aid after October 1, 2011.
The following programs apply to specific occupations.
4. Teachers: Graduating with a degree in education can open the door to their own loan forgiveness, but they had to have had been working for five consecutive years, along with other conditions viewable on the federal site.
5. Teachers: If recent teacher graduates don't want to take part in the above program, they can always look to Teach for America for help, with two years of service garnering a maximum of over $10,000. Note: previous work for AmeriCorps may disqualify participants from Teach for America.
6. Lawyers: Pursuing an education in law can be an extremely expensive choice, but there are also many options for debt relief.
7. Nurses: The NURSE Corps Loan Repayment Program helps registered nurses pay off their loans to the tune of 60% in the first two years, with an option for 25% in the third year. In return, registered nurses agree to work at one of thousands of designated facilities in needy communities.
8. Doctors and Dentists: Along with mental and behavioral medical professionals, doctors and dentists can seek loan repayment assistance through the National Health Service Corps. For two years of service at a Health Professional Shortage Area of 14 and above (Tier 1), graduates can receive up to $50,000. The number drops a bit to $30,000 if they choose to put in their two years in a HPSA of 13 and below.
The last two entries are volunteer-based loan repayment assistance options.
9. AmeriCorps: For a year of volunteer work at a specific, designated organization, graduates can receive thousands of dollars to go towards repaying their loans.
10. Peace Corps: Depending on the term of service, graduates who volunteer with the Peace Corps may be eligible for partial loan cancellation, as well as existing federal loan deferment. The stipulations for private loans are a little stickier, so it's best to check with the Peace Corps and the lender.
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