How College Student Loan Forgiveness Programs Work

Most students today need to take out some kind of student loan in order to be able to finish their education. With modern prices of college costs, this amounts to a lot of money - which can take many years to repay. For some people who are working in specified fields, you may have the opportunity to have some of that debt forgiven - written off. Here are some things you need to know about student loan forgiveness to determine if you are eligible.

What Is Student Loan Forgiveness?

Student loan forgiveness is a program that was started by the Federal government as long ago as 1958. At that time it offered the incentive of reduced education loans for those working in certain fields. Since then, it has greatly expanded the fields of those who may apply to have their education loans reduced. It applies only to Federal education loans such as the Stafford or Perkins loans.

How Do the Forgiveness Programs Work?

Student loan forgiveness programs work one of two different ways:

1. They reduce your student loan incrementally with service

If you go into certain areas of service, such as in specified areas of teaching, you may qualify for student loan forgiveness. With each year of service in that field, the government will reduce your student loan by so many dollars at the end of each year. The amount of reduction often increases as you remain in that field up to a maximum amount after about 3 years.

2. They reduce your loan after 10 years of repayment

This one also applies to those who are working in specified fields of service. If you have student loans that still have a balance after 10 years of continual repayment, you may be eligible for a partial reduction, or total, depending on the amount of the balance. Of course, you should see if you are in one of these fields, and then seriously consider lengthening the time of repayment to gain the benefit.

Who Can Get Student Loan Forgiveness?

The student loan forgiveness programs are primarily open only to those who are working in specific fields - or in the National Guard. The conditions are also specific because it is the goal of the loan forgiveness program to encourage people to go into these specialized fields. These fields are:

Teachers - Can receive between $5,000 up to $17,500 for more than 5 years of consecutive service in certain fields.

Nurses and Other Medical Technicians - 2 programs are available to repay some of the cost of education in these fields. This may result in repayment of up to $35,000 or 60% from either the Nursing Education Loan Repayment Program (NELRP), or the National Health Services Corps.

Volunteers - serve for at least one year in AmeriCorps, the Peace Corps, or in Volunteers in Service to America (VISTA).

Head Start Staff - volunteers may receive up to 15% of education loan paid back each year until paid.

Law Enforcement - as an active law enforcement officer it is possible to have your whole education loan (Perkins) canceled for continued service.

Family Services - serve in a qualified Family Services Center in low-income communities and you may receive up to 100% loan forgiveness.

Providers of service to disabled children and the elderly - may be able to receive 100% forgiveness.

Armed Forces - active service personnel may be repaid up to $2,500 if they have served between 9-11-01 and 6-30-06. National Guard could receive up to $10,000 in repayment.

What Is the Purpose of Forgiveness Programs?

Student loan forgiveness programs are set up by the government in an effort to direct people to make commitments to specific needy occupations. These occupations are often hard to keep staffed, usually due to conditions or in communities that do not have a lot of public services. Some fields, however, such as the military and volunteer programs, are always in need of new personnel because of a constant turnover.

In order to meet the needs of these fields, the student loan forgiveness programs encourage young people to commit themselves to a specified period of service within those fields. In exchange, the students are helped with their education expenses and the desired services are present where they might not otherwise be available.

Who Is Not Eligible for Loan Forgiveness?

You need to read very carefully the terms of student loan forgiveness before you make any commitments. Generally, the only loans that apply are Federal loans such as the Stafford and Perkins student loans. Also, it may only apply after you have had a continual repayment of your student loan debt for 10 years - depending on the occupation.