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Loan Forgiveness

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Under certain circumstances, the federal government will cancel all or part of an educational loan. This practice is called Loan Forgiveness. To qualify, you must:

  • Perform volunteer work
  • Perform military service
  • Teach or practice medicine in certain types of communities
  • Meet other criteria specified by the forgiveness program

See also FinAid's Public Service Loan Forgiveness section.
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Volunteer Work

These volunteer organizations offer loan forgiveness:

AmeriCorps. Serve for 12 months and receive up to $7400 in stipends plus $4725 to be used towards your loan.

Peace Corps. Volunteers may apply for deferment of Stafford, Perkins and Consolidation loans and partial cancellation of Perkins Loans (15% for each year of service, up to 70% in total). Volunteers make a real difference in the lives of real people with two years of service in more than 70 developing countries.

Volunteers in Service to America (VISTA). Volunteer with private, non-profit groups that help eradicate hunger, homelessness, poverty and illiteracy. Provide 1700 hours of service and receive $4725.

Military

Students who are in the Army National Guard may be eligible for their Student Loan Repayment Program, which offers up to $10,000. (Note, the military and veterans' associations provide many scholarships and tuition assistance programs. See the section on Military Aid for details.)

Teaching

Students who become full-time teachers in an elementary or secondary school that serves students from low-income families can have a portion of their Stafford or PLUS loans forgiven under The National Defense Education Act. This program forgives up to $17,500 of the remaining loan balance.

The American Federation of Teachers maintains a list of other loan forgiveness programs for teachers.

The American Federation of Teachers maintains a list of other loan forgiveness programs for teachers.

Legal and Medical Studies

Many law schools forgive the loans of students who serve in public interest or non-profit positions. For more information, contact Equal Justice Works. The American Bar Association (ABA) also has a summary of Loan Repayment Assistance Programs (LRAP), Directory of Law School Loan Repayment Assistance Programs (LRAP) and State Loan Repayment Assistance Programs.

The US Department of Health and Human Services offers loan forgiveness programs through the National Health Service Corps and the Nurse Corps Loan Repayment Program. These programs offer loan forgiveness to physicians and registered nurses who agree to practice for a set number of years in areas that lack adequate medical care (including remote and/or economically depressed regions).

The US National Institutes of Health's NIH Loan Repayment Programs repays up to $35,000/year of student loan debt for US citizens who are conducting clinical medical research.

The US Department of Agriculture's Veterinary Medicine Loan Repayment Program (VMLRP) offers loan forgiveness of $25,000 per year for three years for veterinarians who commit to work in a veterinary shortage area for three years.

Many hospitals and private healthcare facilities use loan forgiveness to recruit occupational and physical therapists. Contact the American Physical Therapy Association or the American Occupational Therapy Association.

Other loan repayment programs for medical school students include:

The American Association of Medical Colleges (AAMC) maintains a database of state and other loan repayment programs for medical school students.

Federal Government Loan Forgiveness Programs

See the US Department of Education's pages on Cancellation/Deferment Options for Teachers. Also, the US Department of Education maintains a database of low-income schools eligible for teacher loan cancellation for Perkins and Stafford loans.

Visit the HRSA web site for information on Nurse Corps Loan Repayment Program

The Federal Student Loan Repayment Program allows federal agencies to establish loan forgiveness programs to help recruit and retain employees. This is technically a loan repayment program and not a loan forgiveness program, as the agencies make payments directly to the loan holder and the payments represent taxable income to the employee. The agencies can repay up to $10,000 in Federal student loans per employee per calendar year, with a cumulative maximum of $60,000 per employee.

See also FinAid's Public Service Loan Forgiveness section.

Some, but not all, loan forgiveness is excluded from income. See Taxability of Student Loan Forgiveness for additional details.

 

 
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