One of the hot-button issues of the recent decade has been the skyrocketing costs of college tuition. In a greater manner than ever before, students have been forced to explore alternate routes of payment in order to attend institutions of higher learning. It is estimated that 68% of students who graduated college in 2015 are in debt to various loan programs, with the average financial hit somewhere around $30,000. To students who are going off to college in these turbulent times, the importance of understanding the mechanics of student loan forgiveness programs cannot be overstated. Here are a few options for students to help them escape from the entirety of crushing loan debt upon graduation:
Public Service Loan Forgiveness
This program, orchestrated by the federal government, rewards students who choose to work in the public sector upon graduation. In exchange for their time working in various public service jobs, students will have their loans forgiven over ten years. The option is open to college grads who work for government-based organizations designated by the legal code 501(c)(3), the section of IRS law that allows for tax exemptions for nonprofits. 501(c)(3) organizations are the most common nonprofits in the country and include public and private charities with the exception of religiously based foundations, like churches.
Through the forgiveness program, students are forgiven for 120 monthly payments towards their federal loans, with no cap on repayment. This means that, through this program, you can be forgiven for every dollar paid towards student loans. The caveats are that you must have borrowed the money from a federal program (Perkins, Stafford, etc.) and you must commit to ten years of public service work, although not necessarily in the same office.
Teacher Loan Forgiveness
Possible education majors are often dissuaded from pursuing that particular field due to the fact that teaching is both an expensive aspiration, due to college rates, as well as a generally low-paying job. Despite the amazing commitment they display toward educating our youth, the average young teacher in this country makes under $40,000 a year, only a little higher than the average loan debt. In order to combat this issue and incentivize students to consider teaching as a career, education majors who graduate college and proceed to teach at certain low-income schools are eligible for student loan forgiveness. A list of these designated schools can be found here.
To be eligible for the program, you must be a certified teacher with federal loan debt (Direct or Perkins) who has worked at least five consecutive years at a low income school. The amount eligible for forgiveness depends on your specialty. Most elementary or secondary teachers are eligible for up to $5,000 in forgiveness, but if you teach in certain areas, such as math, science or special education, you can be forgiven for nearly $18,000 in loan debt. It should be noted that these areas are not considered to be “more important” than others, they simply require more certifications or qualifications. Once you have taught in a low income school for five years, you can apply for loan forgiveness to be rewarded for the hard work you have put in towards helping children.
NURSE Corps Loan Repayment
The US Department of Health and Human Services considers nursing to be one of the most important, as well as understaffed, careers that falls under their umbrella of expertise. To reward nurses who work in “underserved” areas, the NURSE Corps, who dedicate themselves by motto to “caring for communities in need,” provide loan forgiveness and repayment for their members. Nursing is a very unselfish career that counts on its practitioners to be caring and available, asking for little in return. Through the NURSE Corps, the wonderful people who help us in our time of need are given the option of financial help.
To be eligible, registered nurses must work at least 32 hours a week at a facility deemed by the HHS to be in “critical shortage” of staffed nurses. These facilities include public or private hospitals, health centers on American Indian reservations, urgent care centers, and nursing homes, among others. During their first two years of working, nurses can cover nearly 60% of their student loan debt, with that number jumping to over 80% after a possible third year.
Pay As You Earn (PAYE)
Some students, upon graduation, find out that, due to their job search or career stability, it is hard to complete student loan payments on time. If this sounds familiar, you should check out the federal Pay As You Earn (PAYE) program. Students who have benefited from Direct Consolidation loans, Stafford loans, and Direct PLUS loans are eligible to apply for the program, with the exception of those who decided on the Parent PLUS plan. Under the PAYE program, graduates will not be expected to pay over 10% of their monthly discretionary income, a.k.a. the money in your pocket each month post-taxes and living expenses.
Other aspects of the plan depend on your career situation, cost of living, and state taxes. If students are eligible for the whole plan, they can get every penny of their loan debt forgiven over two decades. That may seem like a long time, but considering the alternative, it is an awesome option for any student entering the workforce.
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