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6 Ways to Get Your Student Loans Forgiven

By Wendy Connick - May 7, 2017 at 6:05AM

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How would you like to have someone else pay for part or all of your student loan debt? Read on to find out how.

As the cost of a college education continues to rise, student loans become both more necessary and more burdensome. A study by One Wisconsin Institute revealed that on average, a graduate with a bachelor's degree will take 21 years to repay their student loans -- and the repayment period is even longer for those holding advanced degrees. If you'd like some help getting rid of your own student loan debt, consider taking part in one of these student loan forgiveness programs.

Teacher loan forgiveness

The Department of Education wants to encourage people to become teachers in schools serving low-income families, and it's willing to reimburse such teachers by forgiving some or all of their student loans. If you teach full-time for five consecutive years at an eligible school, you can get up to $17,500 worth of federal student loans forgiven. And unlike some student loan forgiveness programs, you won't be required to pay income tax on the canceled debt, which could save you four or five figures in taxes. The Federal Student Aid website has more details, including the eligibility requirements for this program.

Money raining down on woman

Image source: Getty images.

Public service loan forgiveness

If you work for a government organization or not-for-profit company, the Department of Education may reward you by canceling some or all of your student loans. You must work full-time for a qualifying organization and make at least 120 monthly payments on your federal student loans. After the 120th payment, assuming you meet all the requirements, the Department of Education will forgive any remaining balance on your federal loans. As with the teacher loan forgiveness program, the canceled debt is tax-free. See the Federal Student Aid website to find out how to qualify for this program.

Volunteer

AmeriCorps and the Peace Corps both have loan forgiveness programs to help out their volunteers. If you serve in AmeriCorps for at least 12 months, you can receive up to $7,400 in stipends and $4,725 to repay your student loans. Meanwhile, the Peace Corps will allow you to defer your federal student loans and cancel up to 70% of your Perkins Loans. Note that the debt these programs repay for you is considered taxable income, so although they may save you thousands, you'll still be responsible for the resulting tax bill. 

Become a legal aid attorney

If you thought college was expensive, try pricing law school. Newly graduated lawyers can carry crushing student loan debts of $150,000 or more. However, 24 different states have loan repayment programs to help lawyers doing public service work in various fields. If you are a lawyer and happen to live in one of those states, consider becoming a public defender or joining the district attorney's office for a few years to help get your student loan debt under control. You'll likely have to pay income tax on the canceled debt -- check with the program sponsor for your state to confirm.

Move to a rural area

Some parts of the country, particularly rural areas, are so desperate for new residents that they'll gladly reimburse people for moving there -- often through student loan repayment programs. For example, Kansas has 77 counties that qualify as Rural Opportunity Zones. If you have a college degree and move to one of those counties, you can get up to $15,000 worth of student loans repaid by the county. As a bonus, you also get your Kansas state income tax waived for up to five years. Other states with excellent student loan forgiveness programs include California (for qualified health professionals serving in rural parts of the state), Alaska (also for health professionals, including pharmacists, nurses, dentists, and more), and North Dakota (for veterinarians in high-need areas). Any state loan repayment programs designed to increase healthcare availability offer tax-free debt cancellation for the borrower, but non-medical programs, such as Kansas' program, will not spare you the income tax bill. 

Serve in the Army

Not only does military service typically count toward the public service loan forgiveness program, but the Army also has a few student loan forgiveness programs of its own. Serve for three years and you can get up to $65,000 worth of loans forgiven. Lawyers can get the same deal by serving for three years in the Judge Advocate General (JAG) Corps. Even certain civilian employees qualify for student loan forgiveness. Sadly, all of these loan repayments are considered taxable income for the borrower.

Other options

If you're struggling to pay your student loans but can't qualify for any of the student loan forgiveness options in time, you might request a forbearance. This allows you to temporarily suspend your student loan payments so that you have a chance to resolve your financial issues. You'll still be required to pay the interest, but that's typically a small amount. See the General Forbearance Request form (link opens PDF) for information on how to apply.  

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