60 ways to wipe out your student debt
(MoneyWatch) Indebted college graduates may be able to make their student loans disappear, without paying them and without ruining their credit, according to American Student Assistance, a non-profit that aims to educate young people about money and publisher of an eBook called 60 Ways to Get Rid of Your Student Loans (Without Paying Them).
That's because both federal and state governments, as well as a handful of non-profit organizations, offer generous loan "forgiveness" programs that zap debt -- sometimes in huge increments. All you need to do is work for the right employer or in the right profession. A surprising number of professions qualify.
Consider, for example, if you aspired to become a district attorney after accumulating a ton of debt in law school. If you become a DA or a public defender, you could apply for the John R. Justice student loan repayment program. This program pays off up to $4,000 a year of an eligible applicant's debt to a maximum of $60,000 per graduate.
For health professionals, the National Health Service Corps offers an even more generous program that repays up to $60,000 in debt in just two years for those working in medicine, dentistry or mental health in underserved communities. The National Institutes of Health also has a loan forgiveness program that could eliminate up to $35,000 in debt per year for those willing to work part-time on medical research.
- Student loan defaults rising despite a way out
- Court decision offers student debtors hope
- Seeking solutions to the student aid mess
And those programs are just the start. Fire fighters, teachers, nurses, librarians, speech pathologists and employees of non-profits all qualify for various federally funded loan repayment programs that ask graduates for a few years of service, rather than cash. These programs don't require that you volunteer your time. The qualifying jobs are all paid work. But, in some cases, you might not earn quite as much as you would in another profession or for another employer. However, the value of the loan repayment is likely to more than compensate for the lost opportunity.
Indeed, some state programs are incredibly generous. Consider California's offer to those willing to work in health care in an underserved community. With a two-year commitment, the program promises to pay off up to $160,000 of your debt. A similar program in Delaware requires a three-year commitment, but it will pay off $105,000 in debt.
"I answer a lot of consumer questions and the one I get most often is, 'Is there a forgiveness program for me?'" says Betsy Mayotte, ASA's director of compliance. The answer is often "yes," she added, but there has never been a single comprehensive listing of loan forgiveness programs.
Even ASA's eBook doesn't claim to hit every loan forgiveness program, Mayotte says. The organization scoured the web for as many pay-off programs as they could find, but she says the programs are so varied and fragmented that it's impossible to know what they might be missing. The best thing indebted graduates can do, besides getting the eBook, is ask around. Some employers and trade organizations have programs to help repay graduates debts -- or pay for additional education.
However, the most sweeping program of all is the new "pay-as-you-earn" student loan repayment plan, which resets the graduate's loan repayment rate each year based on what the individual can afford. In some cases, the repayment amount can be reduced to zero, but the graduate still gets credit for paying. Moreover, after 20 years in the program, any remaining loan balance is forgiven. (See related story: Student loan repayment options offer hope.)
