New fed programs aim to help college grads

Jessica Smith

With the recent economic downturn, students can expect to see the cost of tuition go up across the country. Budget cuts are forcing colleges to make up the deficit in funding by increasing the cost of higher education.

Meanwhile, families are already suffering financially due to a rise in unemployment, recent home foreclosures and general economic instability.

As a result, more and more students will be forced to borrow money to pay for college; others may put off attending college in the face of overwhelming debt.

According to U.S. Public Interest Research Group, in 2007, the average college student graduated with $20,000 in student loan debt and almost half of full-time students worked 25 hours or more a week.

There is good news, however. New federal programs will help college grads manage their debt and also reward those electing to enter certain fields by forgiving some of their loans in exchange for a few years of service.

Some of the major ways that graduates can get some or all of their college loans forgiven is through volunteer work, military service, practicing medicine, teaching in under-served areas of the country or qualifying for several federal loan forgiveness programs.

Students wishing to relieve their student loan burden through volunteer work can do so through programs like AmeriCorps, Peace Corps or Volunteers in Service to America (VISTA).

AmeriCorps volunteers and VISTA volunteers who complete a full year of service receive the Segal AmeriCorps Educational Award in the amount of $4,725.

This can be used to repay qualified student loans, or applied towards educational training or tuition, with nearly 70 higher education facilities matching the award.

Peace Corp volunteers are eligible for loan deferment during their term of service.

For the first two years of service volunteers qualify for a 15 percent cancellation of federal Perkins loans, with 20 percent cancellation for three and four years of service.

This means Peace Corp volunteers could cancel 70 percent of Perkins loans in exchange for four years of service.

If volunteering isn’t appealing to students, then military service is another option.

Through the College Loan Repayment Program, those who commit to three years of active duty with the Army or four years with the Navy or Air Force are eligible for debt forgiveness.

Those who enlist in the Army or Navy Reserves or the Army or Air National Guard for a minimum of six years are also eligible for the program.

To qualify, the enlistee must be wiling to take a job that is in specific shortage.

For Guard and Reserve positions, the maximum repayment amount is $20,000. For active duty members the program caps at $65,000.

As an incentive for teachers to take jobs in under-served areas, the National Defense Education Act was created.

Under this act, teachers who take positions at primary and secondary schools with children from low-income families are eligible to have their Perkins loans forgiven.

Under this Act, 15 percent of the loan is forgiven for each of the first two years of service, followed by 20 percent for the third and fourth years and 30 percent of the loan is forgiven for the fifth year.

Similar programs are in place for those with degrees in law, medicine or nursing who are willing to work in public interest or non-profit positions or with low-income populations.

The American Bar Association lists an overview of loan repayment programs for those willing to practice public interest law on their website at http://www.abanet.org/legalservices/sclaid/lrap/home.html.

The U.S. Department of Health and Human Services also has programs established for those in the medical field to qualify for debt forgiveness through the National Health Services Corp and the Nursing Education Loan Repayment Program.

Both programs offer debt forgiveness to doctors and nurses willing to practice medicine for a specific time period in areas of the country that have medically under-served populations.

More information on these programs is available at http://nhsc.bhpr.hrsa.gov/ and http://bhpr.hrsa.gov/nursing/loanrepay.htm.

Another option for recent graduates is to take a federal job after graduation.

Under the Federal Student Loan Repayment Program federal agencies will repay up to $10,000 a year for employees who agree to a three-year commitment, with a maximum of $60,000 per employee.

Additionally, the College Cost Reduction and Access Act of 2007 created two other federal loan forgiveness programs, the Income-Based Repayment (IBR) and the Public Service Loan Forgiveness (PSLF).

The IBR program takes effect on July 1 and applies to borrowers with federal student loans.

The program offers a repayment plan that is based on a percentage of the borrower’s income, and allows for a 25-year repayment period.

At the end of 25 years, the remaining balance of the loan is forgiven, provided the borrower has made consecutive payments.

Under the PSLF program, those working full time in public service for 10 years, and making 120 consecutive payments on federal student loans, will have their debt discharged at the end of that term.

This program provides an incentive and a means for graduates to enter the public service field.

Additional information regarding loan forgiveness can be found at http://www.finaid.org/loans/forgiveness.phtml.

  • Mesa Legend Staff

    These are archived stories from Mesa Legend editions before Fall 2018. See article for corresponding author.

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