Services – Forgiveness Programs

Accepted Forgiveness Industries/Jobs

Volunteer Work Loan Forgiveness

Working in the Peace Corps or AmeriCorps VISTA (Volunteers in Service to America) allows you to use your knowledge and skills to help needy people in the United States and internationally. In the Peace Corps, volunteers make a real difference in the lives of real people with two years of service in more than 70 developing countries. The Peace Corps asks members to make a two-year commitment, but you can work longer if you desire. Peace Corps members can receive scholarships, reduced tuition, and academic credit toward advanced degrees at many universities. In the Peace Corps, after a year of service, you can apply for deferment of Stafford, Perkins, and consolidation loans, as well as partial cancellation of Perkins Loans-fifteen percent for each year of service, up to seventy percent total. On the other hand, AmeriCorps VISTA programs provide opportunities for people to serve through a network of partnerships with local and national nonprofit organizations. During a year of AmeriCorps service, you might: Tutor disadvantaged youth, Fight illiteracy, Provide health services, Build affordable housing,  teach computer skills, clean parks and waterways, Operate after-school programs, and  respond to disasters If you have not yet gone to college, AmeriCorps VISTA will award you $1,200 that can be applied to your college expenses. When you serve full time with AmeriCorps VISTA after college, you’ll receive $4,725 (1700 hrs.) toward payment of your federal student loans. Part-time workers get a partial award. Visit www.americorps.gov or www.peacecorps.gov for complete details on applying for a service position.

Public Service Loan Forgiveness

The federal government’s new Public Service Loan Forgiveness Program helps employees in public services jobs pay their student loans. The College Cost Reduction and Access Act of 2007 established a new public service loan forgiveness program. This program discharges any remaining debt after 10 years of full-time employment in public service (See Eligible jobs http://www.finaid.org/loans/publicservice.phtml). The borrower must have made 120 payments as part of the Direct Loan program in order to obtain this benefit. Only payments made on or after October 1, 2007 count toward the required 120 monthly payments. (Borrowers may consolidate into Direct Lending in order to qualify for this loan forgiveness program starting July 1, 2008.) Keep in mind that this is different from the loan forgiveness of the remaining balance after 25 years of repayment under the income-contingent and income-based repayment plans for borrowers who are not employed full time in public service jobs. Visit Public Service Loan Forgiveness or The SmartStudent Guide to Financial Aid for additional details.

Teaching Stafford Loan Forgiveness

The federal government created the Stafford Loan Forgiveness Program to encourage teachers to work in low income schools or schools in areas with teacher shortages. Teachers who serve in certain low income elementary or secondary schools for five years and who have an outstanding Direct Loan or FFEL loan balance can apply for loan reduction after completing their fifth year of teaching. This program forgives 15% of your loan for the first and second years of teaching service, 20% for the third and fourth and 30% for the fifth. Contact your school district’s administration to see which schools are eligible for federal loan forgiveness. Students who majored in education and teach in Mississippi may be eligible for the William Winter Teacher Scholar Loan. This program forgives one year of your loan in exchange for one year of service (it forgives two years of your loan if you teach in a shortage area). For more information about teacher forgiveness programs, go to The American Federation of Teachers.

Stafford Loan Forgiveness for Medical Studies

The National Health Service Corps and the Nursing Education Loan Repayment Program both offer loan repayment programs for medical professionals who work in areas that need medical help, which are called Health Professional Shortage Areas. Some hospitals and health care facilities have loan forgiveness programs for occupational and physical therapists. Medical professionals can either apply to work at eligible medical sites or check the national database to see if their current employer is on the list. These people commit to working at the site for at least two years in order to qualify for loan reimbursement. Current or prospective medical students can apply for scholarships in exchange for service commitments. The National Health Service Corps Scholarship provides several scholarships for students in training to become primary care physicians, dentists, nurse practitioners, certified nurse-midwives, and physician assistants who agree to provide two to four years of service in an NHSC approved site in a Health Professional Shortage Area of greatest need. The scholarship covers tuition, fees, and a living stipend. Medical professionals who work for two or more years in areas with critical medical shortages can have as much as 60% of their student loan balances forgiven. Doctors, nurse practitioners, dentists, dental hygienists, mental health professionals, and physician assistants who agree to work in areas that lack adequate medical care as identified by the National Health Service Corps could have up to $50,000 in student loan repayments in exchange for two years of service. Check out the Nursing Education Loan Repayment Program ;the National Health Service Corps. The American Physical Therapy Association and the American Occupational Therapy Association have information on loan forgiveness programs, and the American Association of Medical Colleges has a database of state and other non-federal repayment programs for medical school students.

Stafford Loan Forgiveness for Law

Many states, law schools, and employers have loan repayment and forgiveness programs for law school graduates who work in public interest or nonprofit positions. People working as state or local prosecutors, public defenders, civil legal aid, or legal advocates in low income communities at nonprofit organizations may qualify for loan repayment assistance. Criteria vary by program. These programs assist law school graduates who are working in lower-paying public interest law positions. The Equal Justice Works Web site (see below) has a list of law schools that offer grants and scholarships to those studying public interest law. Loan repayment amounts vary from program to program. Proposed national repayment programs may pay an average of $2,000 to $10,000 per year for qualified service in public interest law. Contact the National Association for Public Interest Law (1666 Connecticut Ave., Suite 424, Washington, DC, 20009; 1-202-466-3686) or The American Bar Association.

Military Stafford Loan Forgiveness

Each of the five branches of the military (Army, Navy, Air Force, Marine Corps, and Coast Guard) offers tuition assistance, scholarships, and student loan forgiveness plans of various types. Serve your country for a specified number of years through a branch of the military, the reserves, or the National Guard either before or after college to receive tuition assistance and loan repayment benefits. If you want to go to college first and serve in the military later, the Reserve Officer Training Corps (ROTC) has merit-based scholarships in return for a three- or four-year military commitment upon graduation. If you want to serve in the military first, you can earn or save up to $50,000 toward college expenses. Students who serve part time in the Reserves can receive up to $24,000 toward college in exchange for a commitment of one weekend Reserve service each month, plus two training weeks a year. If you enroll in the military after graduation, the military will make payments directly to your student loan lender to help you pay for college. Each branch has its own criteria for loan repayment, so it’s important to ask a recruiter for information. For instance, soldiers can qualify to have one-third of their loan repaid for each year of full-time service, up to a maximum of $65,000. The Air Force’s College Loan Repayment Program has a maximum payment of $10,000. The education support page of the Web site Today’s Military explains many ways the military can help you pay for college or repay your loans. Taxability of Student Loan Repayment and Forgiveness The amount eliminated under loan forgiveness or repayment programs may be considered taxable income in the year received. In other words, if you have $5,000 in loans forgiven next year, that may increase your taxable income in the eyes of the IRS by an equivalent amount. While that’s never fun, it shouldn’t discourage you from using one of these programs since the benefit far outweighs the cost. To avoid having your student loan forgiveness or employer repayments be subject to taxation, your student loan must specifically include provisions allowing it to be forgiven. These provisions must require you to work within certain professions, for certain employers, for a specified minimum amount of time. Additionally, any loan repayments made under the National Health Services Corps (NHSC) Repayment Program or any state program eligible for funds from the Public Health Services Act are considered tax-free.


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