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Student loan forgiveness programs

Admit it, you're hoping a long-lost rich uncle steps in to make your student loans disappear.

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Never hurts to dream, of course, but your time may be better spent exploring what many in the industry call the next best thing -- student loan forgiveness programs. A number of organizations, both private and public, offer college graduates a chance to reduce or eliminate their student debt in exchange for years of service.

"I imagine there are a large number of people who don't know these programs exist," said Kalman Chany, president of New York-based Campus Consultants and co-author of "Paying for College Without Going Broke." "I wouldn't let loan forgiveness dictate your career path, but if you qualify it may be something you want to look into."

The military, for one, offers loan payback programs for those who enlist in the Army, Navy or Air Force after college. For each year of active duty, the service branch makes a payment of 33½ percent or $1,500, whichever is greater, on your total remaining principal balance. The Army and Navy will repay up to $65,000 in student loans. The military's Web site offers information on student loan repayment programs.

Voluntary service in the Peace Corps and AmeriCorps can also help chip away at your debt burden, while providing countless social rewards.

For its part, the Peace Corps allows volunteers to reduce their outstanding balance on Perkins loans by up to 15 percent for each year of service. It also offers deferment of Stafford, Perkins, Direct and consolidation loans. AmeriCorps, the domestic arm of the Peace Corps, offers up to $4,725 in education awards for each term of service, along with modest living expenses.

Teaching in an underserved school system, meanwhile, could eliminate your loans altogether. Details are available at the Department of Education's Web site.

Lawyers can also get help. Law schools provide loan repayment programs to graduates who serve in the public interest or work for nonprofit groups. The Equal Justice Works has more information on its Web site.

Same goes for doctors who agree to practice in communities where health professionals are few and far between. The National Health Service Corps, under the Department of Education, will pay up to $50,000 for two years of service, based on the participant's outstanding loan balance.

A quick search on fedmoney.org, a free Web site of all government grants and loan programs, provides a laundry list of other employers offering similar loan forgiveness incentives -- just in case that rich uncle never shows up.

Back to: "Student loan paperwork a potential nightmare"

Bankrate.com's corrections policy
-- Posted: May 19, 2006
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