When I graduated from college with a Bachelor of Business Administration degree and a minor in Business Education, I had $20,000 of student loan debt. I managed to get small scholarships and used my G.I. Bill from serving in the United States Air Force to pay for the rest of my college education expenses. I wanted to be a teacher and soon realized that on a beginning teacher’s skimpy salary, I would struggle to pay back the student loans I accumulated over four years. I was also a single parent which made the struggle even harder.
College graduates in today’s bad economy face an even bigger struggle as career jobs are scarce and college costs are higher. President Barack Obama started the Income-Based Repayment Plan in 2009 (IBR Plan) to allow college graduates to make lower student loan payments while seeking career jobs. Obama recently announced that an estimated 1.6 million Americans can cap their student loan payment at 10% of their income beginning in 2012 rather than 2014. In some cases, the IBR Plan allows for student loan forgiveness after making payments for a certain number of years. Applications and more information about the IBR Plan are available at the U.S. Department of Education Student Aid web portal for the Income-Based Repayment Plan.
How I Completely Eliminated My Student Loan Debt in Five Years Using Student Loan Forgiveness
I graduated from a college in Denver and during my student teaching semester, I applied for jobs in every school district in Colorado. I had no interviews by the end of summer and was desperate to find ways to make my student loan payments. I searched for financial aid help and discovered the Stafford Loan Forgiveness Program for Teachers. I changed my job search strategy to meet the qualifications of the loan forgiveness program and landed a teaching job in a Title I school district in Texas. Each year that I taught and made regular monthly student loan payments of $167.00, the government would forgive $2,000 of my student loan balance. I ended up paying only $10,000 of my $20,000 student loan over five years and the $10,000 balance was forgiven!
Changing Job Search Strategies to Get Student Loan Forgiveness May Pay Off
While doing my research, I found that student loan forgiveness programs are also available for college graduates who do certain types of volunteer work, are in certain military programs, are in certain medical professions and who take certain jobs in public service organizations. I found the University of Colorado Loan Forgiveness web site that helped me map my career goals and financial aid forgiveness options to employers and government programs that have student loan forgiveness programs.
The Public Service Loan Forgiveness Program provides student loan forgiveness to qualifying individuals who are employed with a federal, state, or local government agency, entity, or organization or a non-profit organization that has been designated as tax-exempt by the Internal Revenue Service. There are thousands of job titles that people with college degrees can seek for employment in public service organizations. Targeting public service organizations rather than private sector jobs as a job search strategy may pay off with the loan forgiveness program.
The U.S. Department of Health and Human Services offers a Nursing Education Loan Repayment Program to qualified nurses who take jobs in areas that have critical nurse shortages. Working in a Critical Shortage Facility or qualified nurse faculty program could pay off with loan forgiveness. Participants receive 60 percent of their total qualifying nursing education loan balance in exchange for a two-year commitment. There is also an optional third year of service commitment where participants could receive 25 percent of their original total qualifying nursing education loan balance.
Plan Ahead to Reduce Student Loan Debt Using Student Loan Forgiveness Programs
Most student loan forgiveness programs and repayment programs have strings attached, including income level, making a certain number of payments, making a time in service commitment, which types of student loans qualify for forgiveness, and what types of employers qualify. I was fortunate to find a program that offered a student loan forgiveness program to help me AFTER I incurred student loan debt and selected a career path. In today’s volatile economy, there are many more programs available from government and private sector employers for reducing college education debt.
Joining any branch of the military after receiving a college degree may qualify for student loan repayment under the Military College Loan Repayment Program or CLRP. Careful planning is required for this career strategy because there are strings attached to this program, too. It is crucial to speak to the military recruiter about the CLRP program prior to enlisting since it must be stated in the enlistment contract before getting the benefit. Another requirement of CLRP is to forego G.I. Bill benefits in order to get repayment benefits. G.I. Bill benefits can be requested upon re-enlistment.
I tell my younger friends and family members who are just beginning their college educations, to speak with a college counselor and do research BEFORE getting a student loan to plan for student loan forgiveness. Choosing a career field is fulfilling a dream. Planning the best way to achieve that dream can make the difference of having a sound financial future. Here are some questions to ask before getting a student loan:
What types of student loans qualify for loan forgiveness in my career field?
What degree and income qualifications must I meet to get student loan forgiveness?
What organizations should I target for employment to get student loan forgiveness?
How many years will it take to get a portion of my student loan forgiven?
How many years of service do I have to commit to in order to get student loan forgiveness?
How much of the student loan is forgiven if I meet all the qualifications?
Is an Income-Based Repayment Plan better for my personal finance goals than student loan forgiveness?