By Debra Karplus
17 August 2009

Whether you are a freshman or a senior you probably worry about paying back your student loans. No one wants to start their life in debt. Luckily, there are government loan repayment programs (also called loan forgiveness programs) that can help you. These programs allow students to pursue financial aid via the traditional route: completing a Free Application for Federal Student Aid (FAFSA), obtaining a federal loan, and then having all or part of it excused based on choosing specific careers in high demand situations or locations, such as working in the public sector, serving low-income or underserved populations, or in other areas where finding competent employees in certain professions is difficult.  Most of these plans become effective once you have become employed after graduating.

College Cost Reduction and Access Act of 2007
The College Cost Reduction and Access Act of 2007 allows you to get your remaining loan debt discharged after 10 years of full-time employment in public service. The borrower must have made 120 payments (that’s 12 a year for 10 years) as part of the Direct Loan program. Only payments made on or after October 1, 2007 count toward the required 120 monthly payments. A public service job is defined as a full-time job in emergency management, government, military service, public safety, law enforcement, public health, public education, social work, public interest law services, child care, public library sciences, or any other job at an organization that is described in section 501(C)(3) of the Internal Revenue Code of 1986.

Volunteer experiences through AmeriCorps, VISTA, and the Peace Corps are also part of this program.  Ask your school counselor or search online to see how you can take advantage of these generous opportunities.  

Business school excuses
Business school graduates can be excused from some of their school loans if they work in specific government or non-profit domains. Stanford University, for example, will excuse up to 100% for qualifying MBA students who choose work in the public sector.  Check with your university to see if they offer similar loan forgiveness plans.

Healthy loan forgiveness
Everyone knows how expensive medical school is. Luckily, loan forgiveness programs are offered through the National Health Service Corps and the Nursing Education Loan Repayment Program (NELRP). These programs offer loan forgiveness to physicians and registered nurses who agree to practice for a set number of years in areas that lack adequate medical care (including remote and/or economically depressed regions). The NELRP will excuse 60% of college loans for qualified nurses who work for two years at a critical shortage facility. 

The National Institute of Health repays up to $35,000 per year of qualified school loans in exchange for two years of clinical research. They will also pay any taxes that result from these payments. 

Teaching for forgiveness
Teachers working in government designated poverty-stricken school districts, or in subjects such as math or science, or in special education may have some of their school debt waived.  Both the Perkins and Stafford loans vary in the amount they forgive, depending on what kind of teacher and length of time working.

There are other professions where new graduates may find employment helping others while having some or all of their government student loan forgiven.  Contact your specific university department, your school academic or financial aid adviser, or search online resources to learn how you can become eligible.

Debra Karplus, MS, OTR/L, an occupational therapist in private practice with an accounting degree, teaches entrepreneur and investing classes to children and adults.  She can be reached at dkarplus@yahoo.com.