Looking for cash in all the right places

Community-service options: Loan-forgiveness programs are available to everyone from teachers to nurses to young doctors and lawyers to Peace Corps volunteers.

Teachers who work in low-income elementary or secondary schools, for example, may be able to cancel as much as $5,000 of their federal Stafford loan debt.

The National Health Service Corps offers loan-forgiveness programs to physicians, nurse practitioners, physicians' assistants, midwives, dentists, dental hygienists, psychologists and therapists who work for two years in communities in great need of health professionals.

Similar programs are available to attorneys who pursue public interest careers. About 50 law schools offer loan-forgiveness or loan-repayment assistance programs.

Several volunteer organizations also provide assistance with student loan debt: Peace Corps volunteers who complete a two-year term can wipe out 30 percent of the balance of a Perkins loan. Student loan payments may also be deferred while serving in AmeriCorps. Volunteers who commit to 10 months of volunteer service are eligible for a $4,725 credit that participants can use to pay off loans or to pay for graduate school. Volunteers also receive a stipend to cover living expenses.

Hope Credit and Lifetime Learning Credit: These two tax credits offset higher-education costs by reducing the amount of your income tax. Unlike deductions, which reduce the amount of your income that can be taxed, a credit reduces the tax directly. Check with the IRS for more details.

Hope credits are up to $1,500 per year per student, and Lifetime Learning Credits are up to $2,000 per tax return. These credits begin to phase out once your modified adjusted gross income reaches $42,000 (single) or $83,000 (joint). The credit is eliminated at $52,000 (single) and $103,000 (joint). There are other subtle differences between the two, including how many years each is available and how many courses you need to be taking. If education expenses total less than $7,500, the Hope credit is probably your best bet.


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