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Paying Off Your Student Loans with Forgiveness Programs

by Lucy Lazarony

Paying Off Your Student Loans with Forgiveness Programs

Looking for some help with your massive student loan debt? Why not roll up your sleeves and do some good? By volunteering or choosing to work in service-oriented professional jobs in lower income communities, you could cancel a huge chunk of your federal student loans. You could knock off thousands and thousands of dollars of student loan debt after just a couple of years of service. Who knew doing some good could be so incredibly good for your bottom line? Want to see exactly how much student loan debt you are carrying and find out how it is impacting your credit score? Use Credit.com’s Free Credit Report Card tool and find out now.

Loan forgiveness programs are available to everyone from Peace Corps and AmeriCorps volunteers to teachers, nurses, doctors, and other young professionals serving communities in need. Professionals choosing to work jobs in communities in need may take home lower-paying salaries, but they’ll also get some serious help paying their student loans.

Here’s a roundup of the loan forgiveness programs and volunteer programs available to recent grads and young professionals:

Nursing Education Loan Repayment Program

This program repays up to 60 percent of student loans for registered nurses who agree to work full-time (32 hours or more each week) for two years in a non-profit facility in need of nurses. Nurses that choose to work a third year have the opportunity to repay an additional 25 percent of their student loans.

Repaying as much as 85 percent of student loan debt after 3 years is some deal. For more information, visit the website of the Health Resources and Services Administration.

National Health Service Corps

Doctors, nurse practitioners, physician assistants, dentists, dental hygienists and mental health professionals including psychologists, social workers, and marriage and family therapists can wipe out a big chunk of their education debt by choosing to work for two years in an under-served community.

In exchange for two years of full-time employment, up to $25,000 in student loans will be repaid each year. Further loan repayment is available if you choose to serve beyond the two-year contract. One-year amendments are available with up to $35,000 available in loan repayments.

Healthcare professionals with extra-heavy student debt burdens could pay down as much as $50,000 in loan debt in just two years and as much as $85,000 of loan debt in three years. Talk about a great opportunity.

Loan Forgiveness Program for Teachers

Teachers who are willing to make a five-year commitment to a school in need can get some much-needed help with their student loans. The richest rewards are reserved for science, math, and special education teachers.

Science and math teachers who work in low-income high schools may be able to cancel as much as $17,500 of their federal Stafford loans. This money gets eliminated from a teacher’s loan balance after he or she completes five years of teaching at a designated low-income school.

Special education teachers who work in designated low-income schools for five years may be eligible for as much as $17,500 in loan forgiveness for their federal Stafford loans.

Other full-time teachers working in a designated low-income elementary or high school for five years may be able to cancel as much as $5,000 of their federal Stafford loans.

For more information on teacher loan forgiveness programs, visit the U.S. Department of Education’s website.

The College Cost Reduction and Access Act of 2007 created a new loan forgiveness program for public service employees. This program requires quite a commitment – 10 years working as a public service professional. But the payoff – the cancellation of all remaining federal direct loans after 10 years of service — may be just the incentive a heavily-indebted college grad needs to choose a lower-paying, service-oriented career path.

Eligible public service jobs include everything from emergency management, public health and safety and law enforcement to social work, child care, library sciences, public interest law services, and jobs serving people with disabilities and the elderly.

To be eligible for this program, you must make 10 years of consecutive, on-time repayments of your federal direct loans. This program also includes federal direct consolidation loans, so it would be possible to consolidate federal Stafford loans into the direct loan program and therefore be eligible for the cancellation of your remaining loan debt after 10 years of service. Keep in mind that the standard repayment period for federal student loans is 10 years. If you choose standard repayment for your student loans and keep up with your payments, your student loans will be paid in full in 10 years. You won’t qualify for loan forgiveness because you’ll have no remaining debt left to forgive! Only grads that are eligible for reduced student loan payments, because of very high debt levels or consistently low salaries, would be eligible for this loan forgiveness program. To qualify, they would still need to make 10 years of on-time payments through an income-based or income-contingent repayment plan and work full-time for 10 years in a public-service job.

Loan Forgiveness for Volunteer Programs

Peace Corps volunteers with Perkins loans can cancel as much as 70 percent of their debt after four years of service. Peace Corps volunteers who complete a two-year term can wipe out 30 percent of their Perkins loans’ balance. Another 20 percent can be cancelled upon completion of a third and fourth years of service. Federal student loan payments may also be deferred while serving in the Peace Corps.

Members of AmeriCorps receive education awards of $4,725 for each year of service. These awards can be applied to student loans or future education expenses. And 78 colleges and universities across the country match AmeriCorps education awards for their students. So if you continue your education after your AmeriCorps service you could have as much as $9,450 available for your tuition!

To find out how much student loan debt you are carrying and to see the impact on your credit score, use Credit.com’s Credit Report Card tool. It’s completely free and updated every month, so you can track your progress as you pay down your student loans.


  • mike howard

    How can a nurse work fulltime sufficiently take care of their family and do 32 additional 32 hours a week?

    • http://www.Credit.com/ Gerri Detweiler

      It’s not 32 hours on top of a regular work week. It’s simply that you don’t qualify if you only work in nursing part-time.

    • OhMy

      Gerri Detweiler is correct. 32 hours is the minimum hours you can work and still apply. If you work less than 32 hours…you are part time.

  • Julissa

    I have a question, I am enrolled at school to obtain a BA in Social Work, I then want to go for my Master’s. Problem is school is becoming way too expensive. I heard about this program and wanted to know if I would be eligible.

  • http://www.Credit.com/ Gerri Detweiler

    Do you have federal student loans? If so I suggest you check out this student loan forgiveness chart which summarizes options. If you can’t get loan forgiveness working specifically as a nurse it sounds like you could be eligible for income-based repayment (if you qualify).

    • Mark

      The sad part of this is the income based doesn’t always work. I have more loans than I should, House, truck, car, etc… My loan holder wants more than 180 a month and I don’t have that to give with having insurance (medical/dental/vison). What else can be done. They just keep taxing and adding on penalties. I was jobless for 2 yrs and they just put more debt on me. I didn’t have money to give yet they charged late fee’s. Now I finally have a job and am so far in the hole there is no way out. They just keep burying me in penalties that I cant afford.

      • http://www.Credit.com/ Gerri Detweiler

        I would recommend you get a second opinion from someone other than your servicer. You can get a free consult with Joshua Cohen, the Student Loan Lawyer, or you can visit IBRInfo.com for more information. It has been well documented that servicers don’t always give borrowers complete and accurate advice about their options. That’s not to say there is a program that will definitely work for you, but you do want to make sure you explore all possibilities.

  • Teresa Mc Daniel

    I am 59 and cannot find any full time work that pays more than $11.00 an hour. I am in debt for 70 grand for an MBA from University of Phoenix that doesn’t hold water.

    • MAC1950

      I’m 64 and owe $130K plus. Am on disability and can’t even find a job for more than $8 per hour.
      Hey Obama forgave illegals for committing the crime of sneaking into this country the least he could do is forgive the student debt when is less than these blood suckers who are undocumented. Perhaps we can find employment with their criminal selves headed back where they belong.
      He doesn’t want to break up families what a crock! He’ll ruin us though.

      • http://www.Credit.com/ Gerri Detweiler

        Are you in Income Based Repayment? If so please check it out. If you are not eligible for it because your student loans are older, you may become eligible within the year because President Obama signed an executive order expanding that program. Under IBR your payments may be as low as $0 and balances will eventually be forgiven.

      • Tish Mata

        Gerri Detweiler is right. Income Based Repayment is the way to go. My $12,000 loans were in some sort of forbearance or deferment for 13 years and grew to almost $20K before I found out about it. But now, based on my income, I owe a payment of $0 per month. You MUST reapply every year however and usually about 3 months before your current time period is up because of the length of time it takes to process the paperwork.

        • http://www.Credit.com/ Gerri Detweiler

          Thanks so much for sharing your story and I am glad it helped.

          • Wendy

            I’ve been in the IBR for a while now, I guess with me my thought is, eventually it’ll need to be paid, but what if I never make enough money and my required payment stays at $0??

          • http://www.Credit.com/ Gerri Detweiler

            If you continue in the program then eventually the remaining balance will be forgiven.

      • T.C.

        I know why don’t you take a job in the fields like the migrant workers your so worried about, and maybe you can work off your debt that way. Oh by the way I’m sure you wouldn’t last not one day doing such hard labor. You ought to do one thing before you dole out your racism. Look at the face
        of all the pan handlers in your community and I bet you won’t see not one brown skinned person in the lot. Why because the would rather work the fields before stooping to beg for money.

        • http://www.Credit.com/ Gerri Detweiler

          Mac – I am editing your comment as we are trying to help people by answering their questions on this blog and not to get into political discussions. The problem of student loan debt dates back a while, and is not at this point a partisan issue.

    • Anita

      same here. I’ve only had just above minimum wage jobs and now I’m unemployed at 57 and my credit is ruined.

  • http://www.credit.com/ Credit.com Credit Experts

    Dear stilldeepindebt,

    Here’s one resource, Pssst…Want to Know The Best Kept Secret In Student Loans? and you can find others by using the search bar at the upper right of any Credit.com page. The loans that are eligible for these programs are federal loans (Stafford, PLUS and others). More information is here: The Ultimate Guide to Student Loans

  • http://www.credit.com/ Credit.com Credit Experts

    We’ve emailed you, totherightofleft, and are gathering information about your options.

    • totherightofleft

      Thanks!​

  • http://www.Credit.com/ Gerri Detweiler

    You may have gotten wrong advice from your servicer about having to make payments while you’re being garnished. It is not uncommon for them to incorrectly advise borrowers. Joshua Cohen, “The Student Loan Lawyer” who we frequently quote in our articles offers a free 15 minute consultation. You may want to take advantage of that to see how you can get back on track. Let us know what happens.

  • Tish Mata

    The bigger problem I’m seeing is not so much the Student Loans, but the inability to get a job after college, ESPECIALLY if you are an older adult, that pays enough money to cover the cost of normal living expenses, insurance, servicing the loans, AND having margin for savings. My husband completed his Bachelor’s Degree three years ago and it seems to have only qualified him for the most basic of entry level positions paying about $12 per hour and it is SEASONAL at that. By the time the employer takes out taxes, insurance, and TSP, over 60% of his check is gone. His take home is similar to the kids working for minimum wage with no benefits!

    It used to be that a Bachelor’s Degree was your key out of poverty and into the Middle Class. In my opinion, a Bachelor’s Degree is not worth anything more than a high school diploma was worth 30 years ago when I graduated high school. And yet, the cost of that degree has skyrocketed. It just no longer seems like it provides a good return on the investment unless you are going into a specialized field like engineering, medicine, etc.

    This has caused us to completely change our approach to our children’s higher education – to the point that we are seeking alternative avenues. We know HVAC guys, plumbers, and welders with just six months of technical education that make over twice what we make, and my husband and I have three jobs each just to cover everything.

    • http://www.Credit.com/ Gerri Detweiler

      Yes, these are exactly the kinds of issues Credit.com contributor Bob Sullivan has been writing about in his series The Restless Project. Here’s one of his articles: U.S. Ranks Only 12th in Well-Being Survey

  • Janice M Likens

    I, too, am nearly 60 years of age and cannot seem to get above the $27K per year. my debt for student loans is over $50K. I stupidly thought if I got my master’s degree I could get a good paying job. ain’t gonna happen, captain. I cannot afford to make any payments towards student loans, make a car note (that I have to have for the $27K job) and pay insurance for the car. now the government wants to tax me more because I cannot afford health insurance with a $6K deductible per year. after paying bills just to survive, I barely have enough for groceries. where does it all end?

    • http://www.Credit.com/ Gerri Detweiler

      So sorry to hear what you are struggling with. Have you looked into income-based repayment for your student loans?

  • http://www.Credit.com/ Gerri Detweiler

    Janice – if your income dropped you should be able to apply to have your payments readjusted. I know it’s a lot of work to keep up with this but it’s really important you try to use the programs available to you, or you may find yourself in an even more stressful situation. You’ll find more information here. IBRinfo,org.

  • karebear

    I am 47 years old. I attended the Art Institute of Fort Lauderdale 2 year program when it was still a trade school. My original loans were less than 18K. I was a young, single mother and had problems making payments. I ask for forbearance often. By 1995 the loans were 26K. I consulted a bankruptcy attorney who told me to consolidate the loans. I did with Sallie Mae. By 2001 the loans were up to 42K. I got married and we made regular payments for nearly 6 years. The loan amount never went down. We were both out of work in 2007 and moved out of state for a job for my husband. We have small children so I got a part time job on the weekends. Even so, we could not make the payments. I made income based repayments for a few years and watched the loan get bigger and bigger. It was up in the 50s when I read about an income based payment where your interest was paid for you for 3 years. I read this on Sallie Mae’s website. I guess I read wrong, because after signing up for the program and paying for a year, the loan was up to 62K.
    It broke my heart. I cannot tell you the huge burden I feel with these loans. I have paid over 30K on loans that were originally less than 18K and that were consolidated at 26K. I have worked in my field, but not using the very expensive education I received at AIFL. The year after I left, everything shifted to computers. I had one computer class the whole time I was at AIFL. Everything that I learned there was done by hand. I learned everything on a computer at the first job I got in my field, 4 years after I left AIFL. I had taken a job on the midnight shift to get my foot in the door. I waited and when a job opened up in the Graphics department there, I applied and I got it “because of my personality”. They trained me on how to do computer design.
    Anyway, you can get released from every kind of debt that I am aware of, but student loan debt. I would be very, very happy if a judge would simply stop this monster of a loan in it’s tracks – stop the interest – and just let me pay it off. Paying on a loan for years and years and never once making a dent in it, but watching it grow and grow, is horrible. When I saw that the loan had gone up to 62K, I just shut down. I stopped paying. The loan is in collections now and is over 90K. They want me to sign up for the rehab program, but doesn’t that ERASE all my payment history and start me at day one/payment one? When my loan is sold, I am at the mercy of whomever buys it – as far as my payment goes. Is there any hope of loan forgiveness? There is new legislation out or coming out that protects people against schools such as the one that I attended (Art Institutes programs have changed) where they charge you high prices for an education that is not adequate for you to work in the field earning enough to pay back the loans. It does not help me. I need a miracle.

    • http://www.credit.com/ Credit.com Credit Experts

      So sorry to hear you’re going through this. We have emailed you.

    • fer

      i’d like to see the answer to this specific situation. i am in just the same one.

      • http://www.credit.com/ Credit.com Credit Experts

        In a nutshell, it was that stopping payments was a huge mistake. It was possible “karebear” did not understand or had not been told that the remainder of the loan would be forgiven after 25 years of payments on the income-based repayment plan. However, because she gave up and stopped paying, the clock will now re-set when she begins again.

    • Patti Crockett Branch

      I am in a similar situation, I had a child that was born with a birth defect. Then my husband was diagnosed with a terminal illness and later died. My $40,000 loan is now over $200,000 after deferment and forbearances. I have worked for 2 state governments for 12 years total but have never been able to pay consistently for 10 years straight. I see no hope in sight!

  • http://www.credit.com/ Credit.com Credit Experts

    Tom —
    It varies by the loan. Factors that affect it include whether it’s a federal loan or a private one, and if there was a co-signer. We wrote about it here: What Happens to Student Loans When You Die?

  • http://www.Credit.com/ Gerri Detweiler

    There certainly are downsides but the jury is out yet on the tax issue. I suspect Congress is going to do something about that but you’re right, it’s not guaranteed. And I agree it’s not perfect – there can be downsides for some borrowers, but right now there aren’t many other options for those who truly can’t afford their payments.

  • http://www.credit.com/ Credit.com Credit Experts

    You can find application information here: http://nhsc.hrsa.gov/loanrepayment/index.html

  • http://www.Credit.com/ Gerri Detweiler

    You may currently be eligible for the Income Based Repayment program which offers public service loan forgiveness. Visit IBRinfo.org for more information.

    Currently this forgiven debt is likely taxable but Congress has not yet indicated whether it will change that.

  • http://www.Credit.com/ Gerri Detweiler

    Have you disputed it with the credit reporting agencies? I’d suggest you do that and supply a copy of the letter with your dispute. A Step-By-Step Guide to Disputing Credit Report Mistakes

  • http://www.Credit.com/ Gerri Detweiler

    Cathy – I am not aware of a director that lists student loan forgiveness opportunities in every community. I believe you’ll have to do some digging for that. And I don’t understand the second part of your question. Can you try restating it?

    • cathy

      The original loan was from a technical school and due to interest has gone way up taking his entire IRS refund at the end of each year. He has no information on this loan. How does one get information on something that was 15 years ago and is there a forgiveness program for technical schools.

      • http://www.Credit.com/ Gerri Detweiler

        OK one more question. Is it a federal or private student loan. Tell him to get into the National Student Loan Data System to see what he can find out about the loan.

  • http://www.Credit.com/ Gerri Detweiler

    Have you looked into Income Contingent Payments? We wrote about that here: Help! I Owe $45K for My Kids’ College & I Only Make $28K a Year

  • http://www.Credit.com/ Gerri Detweiler

    Start at the National Student Loan Data System. You should find information there about your options for your loans. Let us know what happens!

    • Lindag

      Thank you so much for the information.

  • http://www.Credit.com/ Gerri Detweiler

    Please contact an attorney with experience in student loan issues asap. You can find one via The Student Loan Lawyer website.

  • Tanisha Bradford

    Where do I apply?

    • http://www.Credit.com/ Gerri Detweiler

      There are links in the stories to the various programs. You’ll have to go directly to the program you believe you qualify for. Otherwise you can go to IBRinfo.org to learn how to apply for income-based repayment.

  • p

    The income based payment program is a finger in the leaking dike stop gap measure because when your loan IS forgiven After 25 yrs of payments, you Must pay Income Tax on the forgiven amount, which will be 3 times your balance of today. Say you have 100k in debt. Your balance Increases each yr because you are not even paying the interest due. In 25 yrs, the debt will increase to over 300k, and you will owe TAX on 300k , all in one yr. ! That will be at least 100k itself.

  • Annie

    I have been paying on my student loan going on 9 yrs. because the interest rate is so high. I feel like I haven’t touched it. I have asked them to reduce the interest but they won’t! Its ridiculous that there are people out there that care more about money than helping their fellow human being.


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  • Meet Our Expert

    lucy_lazarony GravatarLucy Lazarony is a freelance personal finance writer. Her articles have been featured on Bankrate, MoneyRates, MSN Money, and The National Endowment for Financial Education. Prior to freelancing, she worked as a staff writer for Bankrate for seven years. She earned a bachelor's degree in journalism from the University of Florida and spent a summer as an international intern at Richmond, The American International University in London. She lives in South Florida.
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