Additional Loan Forgiveness Programs

Public service loan forgiveness is only the tip of the loan forgiveness

iceberg. There are numerous other programs that may give you money

to pay off your student loans. Unfortunately, though, some of these

programs could melt before you get a chance to use them, such as

state programs that depend on the money being available in your

state’s budget. Other programs, though not necessarily loan forgiveness

programs, are better bets because you can get the money up

front, such as companies you work for that will pay for your tuition

ahead of time or offer semester-by-semester reimbursement when you

return to school, making it easy to take out a loan and be reimbursed

within a few months.

Demystifying Loan Forgiveness Programs

Thomas L. Harnisch of the American Association of State Colleges and

Universities lets you know what you should be aware of if you have or

wish to utilize a loan forgiveness or tuition reimbursement program.

Myth: Loan forgiveness programs apply to all types of student loans.

Fact: It depends on the program. For instance, some federal programs

may forgive Perkins Loans, but not Stafford Loans. Private

student loans are often excluded from these programs. Choose a

loan forgiveness program based on inclusion of the type of loans

that you have.

Myth: You have to work for the government to qualify for a loan forgiveness

program.

Fact: Some corporations and nonprofits may pay for coursework relevant

to an industry, such as an MBA program. Check with your

supervisor and human resources department for program requirements.

You may have a tuition reimbursement program for returning

to school or a loan forgiveness program where you work right now.

Myth: The new programs are the most lucrative for paying off loans.

Fact: The U.S. military’s loan forgiveness program has been around

for decades and will currently pay back up to $65,000 worth of federal

student loans.

Myth: You have to be right out of school to enroll in a loan forgiveness

program.

Fact: Not always. It depends on the program requirements. You can

often enroll in a loan forgiveness program if you have been out of

school for a number of years.

Myth: State-funded loan forgiveness programs are reliable and can

assist with your loans when you graduate.

Fact: State-funded loan forgiveness plans are at the mercy of overstressed

state budgets. Some states have reduced funding to these

programs, while other states have discontinued programs entirely.

Myth: Once you are enrolled in a program, the amount of your loan

forgiven will not change from year to year.

Fact: Especially on the state level, as budget demands change, the

amount you are given for loan forgiveness can change.

Myth: You can’t confirm you’ll receive the money on any state loan

forgiveness programs.

Fact: There are both in-school and out-of-school programs. In-school

programs will pay for your schooling “up front” in exchange for a work

commitment after you graduate. On-the-job loan forgiveness does not

pay for schooling, but allows you to “work off” the student loans.

Myth: If a federal or state agency offers loan forgiveness programs,

you will automatically qualify if you get the job.

Fact: Not always. Check with the human resources department in

each agency, as these programs have different requirements for

each agency and job position. Some federal or state agencies may

offer generous forgiveness programs, while others may not offer any

programs.

Bottom line: As long as you know the restrictions and play by the

rules, loan forgiveness programs can help your financial bottom

line. Just make sure you are entering a career you love. Otherwise,

the partial or total forgiveness of your loans may not be worth what

you could be making, in a job that you might enjoy more.