If you’re like most college graduates in the last 10 years, you have had to take out student loans to finance that spiffy degree.
What you might not know is more than 25 percent of graduates qualify for awesome programs that can forgive your student loans.
Student loan forgiveness is a broad term for the group of plans the federal government and individual states provide and industry groups that eliminate part of your student loans (usually as a reward for serving the public in some capacity).
Student loan forgiveness benefits are mostly tax-free, making them a very lucrative and helpful benefit for people performing public services, serving needy areas of their state or filling highly-needed industry roles.
Public Service Loan Forgiveness
Public Service Loan Forgiveness (PSLF) is the most broadly applicable and generous forgiveness plan.
It is a federal plan, and you are eligible to receive PSLF if you have federal student loans and are working for a qualifying institution anywhere in the US.
All levels of government organizations — federal, state and local — qualify for PSLF.
Any 501(c)3 non-profit qualifies, as do private non-profits that provide public services, like Head Start programs, law enforcement, emergency management and public education.
If you are working at a qualified organization, you must have federal loans issued through the Direct Loan Program.
Private loans, federal loans issued through the FFEL program (prior to 2010)or Perkins program and Parent PLUS loans, which your parents took for you, do not qualify.
However, you can consolidate FFEL and Perkins government loans into the Direct Loan Program at no cost to gain eligibility.
Finally, you must be enrolled and making payments on an income-driven repayment plan.
You can only receive the PSLF benefit after you have made 120 qualifying payments (10 years) on your student loan.
The income-driven repayment plans reduce your student loan payment to a percentage of your disposable income, so if you are making a low salary, this can be a windfall for you.
If you meet these criteria, you need to then fill out a Certification of Employment to demonstrate your employer is, in fact, qualifying.
You submit this form to your student loan servicer, who then checks the information to make a determination.
All qualifying payments made after July 1, 2007 count toward your 120 needed payments, so the first people eligible for PSLF can claim their benefits in August of 2017.
State Level Loan Forgiveness
There are many state-level programs that provide an annual debt payment for service in qualifying locations and occupations.
The most common qualifying professions are education, health services, social work, legal services and veterinary services.
Check with your state's higher education authority to find out if a state level student loan forgiveness plan is offered.
Perkins Loan Cancellations
Perkins Loans are for students with financial need, made directly by colleges and universities.
These loans can be “canceled” for graduates who are employed in a range of public service fields, including education, public safety, active duty military, public defense and health services.
See the full list of professions eligible for Perkins Loan cancellation here.
Military Loan Forgiveness
The Air Force, Army, the Navy and the National Guard offer some level of student loan forgiveness benefits for servicemen and women who have loans.
There are also additional programs for reservists and military veterans who enter the health services field.
As mentioned previously, if you served in the military on active duty, you are eligible to have part or all of your Perkins loans canceled.
Profession Specific Loan Forgiveness Programs
The SEMA organization (aftermarket automotive association) offers annual loan forgiveness benefits to employees of qualifying organizations.
The USDA offers up to $25,000 per year for three years of veterinary service in a high-need area.
Finally, there are four specialized, national programs for loan forgiveness for health service workers in various fields and areas.
The Nurse Corps program covers up to 60 percent of total loan payments for registered nurses and advanced-practice nurses who work in high-need areas.
The National Health Service Corps provide up to $50,000 for a two-year commitment to licensed primary care medical, dental and mental and behavioral health providers who are working at high-need sites.
The Indian Health Services Loan Repayment Program provides up to $20,000 per year for the first two years of service to practice in certain health professions full-time at an Indian health program site.
The site must provide quality healthcare services to American Indian and Alaska Native communities.
The Faculty Loan Repayment Program is available to degree-trained health professionals from disadvantaged backgrounds serving on the faculty at accredited health profession colleges and universities.
We hope this list is helpful, and you are able to take advantage of one of these programs if you are serving the public.