Federal Loan Forgiveness
There are government programs for college students who want to have part or all of their federal student loans to be canceled. The technical name is federal loan forgiveness. You have to meet certain qualifications to receive federal loan forgiveness. The government realizes some students may have difficulty in paying back all of their student loans so they started federal loan forgiveness programs. Here are some of the more popular programs available to receive federal loan forgiveness.
To qualify for federal loan forgiveness you must do one of the following:
1. Teach in certain types of communities
Students who become full-time teachers in an elementary or secondary school and the school they work for must serve students from low-income families. By working at the school they can have a portion of their Perkins Loan forgiven under The National Defense Education Act.
The longer they continue to work at the school the higher percentage of the Perkins Loan will be forgiven. The program will forgive 15% of your loan for the first and second year of teaching service. The percentage increases to 20% for the third and fourth year of teaching service and 30% for the fifth year. This is a great federal loan forgiveness program because up to 30% of your loan would be forgiven. With this program a teacher is essentially receiving a 30% bonus on top of their regular pay as a teacher. This is a great benefit to people who are studying to become teachers.
2. Qualify for public service loan forgiveness
Congress created the Public Service Loan Forgiveness Program to encourage people to work in public service jobs. Under this program a borrower may qualify for the remaining balance due on their federal student loans forgiven after making 120 payments on their loans. To qualify you must not be in default on any federal student loans for which you are seeking federal loan forgiveness. After you have made the necessary 120 payments the borrower can apply for forgiveness of the remaining balance. In addition you must be a full time employee in a public service job.
Here are some of the departments you could work for to qualify for federal loan forgiveness:
A federal, state, local, or Tribal government organization, agency, or entity (includes most public schools, colleges and universities), a non-profit organization and public family service organization.
In addition to the pay you receive from working for the state or local government many offer great health and retirement benefits. Most government positions only require you to work 30 years before you receive a pension.
3. Military Service
Students who decide to join the armed services can qualify for federal loan forgiveness. Student who enlists in the Army National Guard receive up to $10,000.
4. Perform Volunteer Works
There are several volunteer organizations, which will forgive part of your federal student loans.
The first organization you can do volunteer work for is Americorps. They require you to work for them for 12 months. While serving for Americorps they will give you a stipend of up to $7,400 plus $4,725 towards your student loans.
The second organization is the Peace Corps. Volunteers can apply for deferment of Stafford, Perkins and Consolidated Loans. In addition they could receive cancellation of Perkins Loans. The Peace Corps will cancel 15% of your Perkins Loans for each year of service.
The third organization is the Volunteers Service to America (VISTA). VISTA asks you to volunteer for private and non-profit groups that help eliminate hunger, poverty and illiteracy. They want you to volunteer for 1700 hours of service and you will receive $4,725.
5. Practice medicine in certain communities
The National Health Service Corps offers federal loan forgiveness to physicians who practice for a set number of years in remote or economically challenged areas.
Many hospitals and healthcare facilities offer federal loan forgiveness as a way to recruit occupational and physical therapists. The high cost of medical school this is a great option for many medical students to have part of their federal loan forgiven.
Depending on your field of study there are a number of programs available to you for have part or your entire federal loan forgiven. Loan forgiveness is another option to make student loans more affordable.
These are just some of the government programs that offer federal loan forgiveness. There are other organizations, which offer similar offer of loan forgiveness programs.
Many of these programs are offered to people who have a passion for their field of study such as teachers and physicians. If one of these areas happens to be your field of interest why not look at having part of your federal loan forgiven? The benefit you receive on top of the pay is doing what you want to do as a career. This could be a win/win for you and the organization, school or hospital.