Struggling to pay back your student loans? You’re not alone. Nearly 25% of the more than 41 million people with student loans are having trouble paying back their college debt, according to the Consumer Financial Protection Bureau (CFPB). For some, student loan forgiveness might be the answer.
Currently, student loans are the largest form of consumer debt in the United States after mortgages. The total amount of outstanding educational loans has exploded in the past decade, going from under $600 billion in 2006 to $1.2 trillion today. In 2016, the average graduate left school with $37,172 in student loan debt, according to Student Loan Hero. Although those loans might not be the drag on the economy and the housing market that some thought, at least some borrowers say they’re putting off major financial milestones in order to pay down their debt. About 30% of people under 30 with student loan debt said they’d put off buying a house or car, 19% had delayed getting married, and 14% had chosen to wait to have kids, a 2015 Bankrate survey found.
People have proposed various solutions to the student debt crisis, such as making it easier to take advantage of income-based repayment programs, lowering interest rates on existing federal student loans, and making it easier to discharge college debt in bankruptcy. But for some borrowers, a solution to the problem already exists. It’s called student loan forgiveness – free money to pay off your student loans. (Well, almost free; depending on the type of student loan forgiveness you receive, you may have to pay income tax on the balance paid on your behalf, though some people in Congress are working to change that.)
Student loan forgiveness may sound too good to be true, but these programs are very real. If you work in a certain profession, move to a particular area, or serve our country in the military, you might be eligible to have a portion of your loans repaid. And there are more of these programs than you might realize. While you may have heard of Public Service Loan Forgiveness (which will forgive the remaining balance of your loan after working for a non-profit or the government for 10 years), that’s not the only forgiveness option out there. Here are six more ways to reduce or eliminate your student loan debt.
1. Work in an eligible profession
Working for the government or a non-profit is one path toward student loan forgiveness, but those aren’t the only careers where you can get help with your debt. Doctors, nurses, veterinarians, dentists, and others who work in healthcare professions may qualify for forgiveness if they work in under-served areas. Forgiveness may also be available for teachers who work in low-income schools. You can receive up to $17,500 if you are a math, science, or special education teacher at an eligible school, while teachers of other subjects may be eligible for $5,000 in loan forgiveness.
Twenty-six states have loan repayment programs for lawyers who pursue public interest law, and some law schools offer repayment programs to students who work in the public interest. In New York, young farmers can have up to $50,000 in student loans wiped out. Firefighters, police officers, social workers and even some librarians may have their Perkins Loans forgiven. To find out what student loan forgiveness programs might be available in your area, check out this ebook from American Student Assistance.
While it’s not strictly a student loan forgiveness program, AmeriCorps volunteers are eligible for an education award after they complete their term of service. If you serve full-time for one year, you’ll receive $5,775, which can be used to pay down student loans or cover future educational expenses. Plus, any time you spend serving full-time in AmeriCorps counts toward public service loan forgiveness.
You can serve multiple terms of service in AmeriCorps and receive up to two full-time education awards. One catch: The award is subject to federal income tax, which decreases its value somewhat. If you are an AmeriCorps VISTA volunteer and decline the education award in favor of a cash stipend, you may be eligible to have a portion of your Perkins Loans cancelled.
3. Pull up stakes
Cities and states want to attract young, educated residents, and some are willing to pay off a portion of your student loans to get you to relocate. Niagara Falls, New York, will give you nearly $7,000 to pay off your student loans if you agree to live in certain neighborhoods in the city for up to two years. If you move to one of dozens of Kansas counties designated as Rural Opportunity Zones, you may be receive up $15,000 for your student loans.
To be eligible for the Niagara Falls award, you must submit transcripts and write two briefs essays. So far, 14 people have taken advantage of the program since it launched in 2013, The Guardian reported. To get the money from Kansas, you must move to one of 77 eligible counties, have an associate, bachelor’s, or post-graduate degree, and have an outstanding balance on your student loans.
4. Serve in the military
Joining the armed forces isn’t for everyone, but if you do elect to serve, you may be eligible to have some of your student loans forgiven. The Army’s College Loan Repayment Program may repay up to $65,000 in loans if you serve for at least three years and meet certain other requirements. (The Army also has a repayment program for civilian employees.) The Air Force’s Judge Advocate General (JAG) Corps has a student loan repayment program, with payments totaling up to $65,000 made directly to your lender if you serve three years as a JAG officer.
Unfortunately, other branches of the armed services either don’t appear to have or have discontinued their student loan forgiveness programs. However, members of the armed forces who serve in a hostile fire or imminent danger area may have all of their Perkins Loans discharged. Time spent in the military also counts toward public service loan forgiveness.
5. Work for a generous employer
It’s not yet a common benefit, but a handful of companies now offer to help employees pay off their student loans. PricewaterhouseCoopers rolled out such a benefit in 2015 and financial firm Fidelity recently announced a similar initiative. Employees who’ve worked at Fidelity for at least six months will receive $2,000 a year toward their loans, up to $10,000.
Only 3% of companies currently offer student loan repayment as an employee benefit, according to a 2015 report from the Society for Human Resource Management, but the number seems to be growing. “Companies are starting to see how they can turn this national issue into an opportunity; not only does this benefit help a company attract and retain talent, it also helps differentiate them from competitors,” Tim DeMello, founder and CEO of Gradifi, which administers student loan repayment programs for companies, told The Cheat Sheet in 2015.
Roughly half of people surveyed by iontution in July 2015 said they’d rather have their employer repay their student loans than contribute to their health insurance premiums or 401(k). In addition to PricewaterhouseCoopers and Fidelity, companies offering a student loan repayment perk include Natixis Global Asset Management, ChowNow, CommonBond, Chegg, LendEDU, and Powertex.
6. Other discharge options
Loan discharge or forgiveness is also available to borrowers in a handful of other extreme situations. If you’re totally and permanently disabled, you may be excused from paying your federal student loans. Until recently, discharging student loans because of a disability was a complex, drawn-out process, and many disabled individuals didn’t know they were eligible. But beginning earlier this year, the U.S. Department of Education began notifying people who qualified for assistance and guiding them through the steps to get their loans discharged.
Discharge may also be an option if the school you attended closes while you’re still enrolled or shortly after you leave. Students who attended the now-defunct Corinthian Colleges or its associated schools may be eligible for this form of debt relief. If you believe you were defrauded by school, you may also be able to have your debt forgiven through something known as “borrower defense to repayment.” People who attended Everest College, Everest Institute, Everest University, Heald College, or WyoTech may be eligible to receive a discharge under this program.
In rare cases, student loans can be discharged in bankruptcy. The process is difficult and often unsuccessful, so most borrowers don’t pursue it. However, the White House has indicated its interest in loosening the rule around student loans and bankruptcy, so more borrowers may eventually be able to pursue this path.