Loan Forgiveness Programs

Provided courtesy of EDFUND. Copyright 2006.

With student loan debt increasing each year it is important for you to be aware of different programs available to assist you in repayment of your loans.  The following programs provide loan forgiveness or payment assistance in exchange for service commitments.

The programs are offered mostly by federal and state governments and the service commitments vary.  The programs are designed to encourage college students to consider careers in teaching or to help fulfill specific needs in rural or inner-city communities.

Following is a brief description of the major programs.  More information may found at the Web site www.federalstudentaid.ed.gov.

Teach for America

As a part of AmeriCorps, Teach for America provides loan forbearance and interest payments on qualified student loans during the two years of service that are required (participants must not have served previously as AmeriCorps members). Teach for America corps members are recent college graduates from all different fields of study who agree to teach for two years in urban or rural communities that are usually low income. In addition to the loan forbearance and interest payments, corps members receive salaries from the schools where they work and education awards at the end of each year of service (currently $4,725 each year), and are provided moral support throughout the program. Many participants report that this is a life-changing experience.

Federal Perkins Loan - Teacher Cancellation

Up to 100 percent of a student's Federal Perkins Loan may be cancelled if they serve full time in a public or nonprofit elementary or secondary school system. They must teach in a school serving students from low-income families; serve as a special-education teacher; or teach mathematics, science, foreign languages or bilingual education. There may be other subject areas that qualify, depending upon determinations made by individual states' educational agencies based on shortage areas.

Students who participate in this program also qualify for loan deferment while they are performing the qualifying teaching service. Also, certification or licensure is not required. Eligible borrowers will benefit from 15 percent of their loan being canceled each year for the first and second years of service; 20 percent canceled for each of the third and fourth years; and 30 percent canceled for the fifth year.

Perkins Loan Discharge/Cancellation

Certain professions qualify for discharge or cancellation of Federal Perkins Loans. Up to 100 percent of a Perkins loan will be canceled in exchange for full-time service as: a qualified professional provider of early intervention services to the disabled; a nurse or medical technician; a law enforcement or corrections officer; a staff member in the education component of a Head Start program; or an employee of a public or nonprofit child- or family-services agency providing services to high-risk children and their families from low-income communities.

Federal Teacher Loan Forgiveness Program

Up to $17,500 in loan forgiveness can be earned by working as a full-time teacher for five consecutive complete academic years in a designated low-income public or private nonprofit elementary or secondary school (as determined by the u.s. Department of Education). There are limitations, depending upon when a participant began their teaching service and when their student loans were taken out.

Students apply for cancellation once the service has been completed. Participants can obtain forbearance while completing the loan discharge application and for each year of qualifying service if the expected cancellation amount will satisfy the anticipated remaining loan balance.

Up to $17,500 can be canceled for those serving as a highly qualified full-time math, science or special-education teacher. Up to $5,000 can be canceled for serving as a full-time elementary school teacher demonstrating knowledge in elementary school curriculum, or a full-time secondary school teacher teaching in a subject area relevant to their academic major. Again, it is important to note the date limitations on any of these programs, which can be found on the Federal Student Aid Web site, www.federalstudentaid.ed.gov.

To find out about state-specific teacher loan forgiveness programs, visit, www.aft.org/teachers/jft/loanforgiveness.htm.

Nursing Education Loan Repayment Program

This program provides loan repayment assistance, not cancellation or discharge. It is designed for registered nurses and will pay 60 percent of a participant's total qualifying loan balance for two years of service or 85 percent for three years. In exchange, a participant must enter into a contract to provide full-time employment in an eligible health facility in areas of a nursing shortage.For more information, visit http://bhpr.hrsa.gov/nursing/loanrepay.htm

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Health Professions Education Foundation - California residents

Loan repayment programs are offered to graduates pursuing a health professional career and assists in the repayment of educational debt. You may apply for this award if you have graduated from one of these programs: Bachelor of Science Nursing, Dentists, Dental Hygienist, Licensed Vocational Nursing, Physician Assistant, Nurse Practitioner, Certified Nurse Midwifery, Licensed Vocational Nursing, Registered or Licensed Psychologists, Registered or Licensed Marriage and Family Therapists, Registered or Licensed Clinical Social Workers, and Physicians.

Those students and graduates who receive awards from the Foundation are dedicated to providing and practicing direct patient care in medically underserved areas of California. The Foundation is proud of its commitment in expanding health care professionals who continue to serve in their neighborhoods and communities.

For more information visit the website at http://oshpd.ca.gov/HPEF/index.html/