How to do what you love and pay back student loans
You don鈥檛 have to make a deal with the devil and take a high-paying job you hate to pay off your student loans. There are federal and state programs specifically designed to help you afford your loan payments as a do-gooder, traveler, volunteer or starving artist. Some will even get you off the hook for part of your loan balance.
Depending on the option you qualify for, you could get your loans forgiven after a period of time, get money to pay your bill or lower the amount you owe every month. All of these programs are free to sign up for, but they take some work to find. We鈥檒l help you with the second part. Check out the basics below.
Student loan forgiveness: Pay back just a portion of your loans
Working in the public interest can pay off in the form of loan forgiveness through these three programs. Your eligibility depends on your job and the type of loans you took out.
Public Service Loan Forgiveness
If you work at a nonprofit or for the government, Public Service Loan Forgiveness should be on your radar. It鈥檚 the granddaddy of student loan forgiveness programs because it鈥檚 one of the most generous and most widely available. The program went into effect in 2007, which means the first eligible borrowers will receive forgiveness in October 2017.
鈥淚t was created to encourage people to do what they want to do, to get into these public service industries and still not be completely burdened with debt,鈥� says Kristin Bastian, financial education manager at Origin SC, a financial counseling nonprofit in Charleston, South Carolina.
You must make 120 on-time loan payments while you work at least 30 hours a week for a聽, and you can work one full-time job or a few part-time jobs at once. At the end of that period, the government will forgive your remaining federal student loan balance. A big plus is that you won鈥檛 pay taxes on the amount you鈥檙e forgiven.
Perkins loan cancellation
If you work in certain public service jobs and have Perkins loans, which are for undergrad or graduate students with particularly high financial need, you can get up to 100% of those loans forgiven under a separate program.聽聽generally happens in increments over five years, but you can postpone payments while you鈥檙e working if you expect forgiveness. That means no payments, then full forgiveness once you meet the requirements. Score.
Teacher loan forgiveness
聽have a few additional forgiveness options. Teacher loan forgiveness is available for federal direct and Stafford loan borrowers who teach in certain schools for five years. If you expect to teach for 15 years or more, you can take advantage of the one-two punch of teacher loan forgiveness and the Public Service Loan Forgiveness program. Several states have their own programs, too. Search for them in the American Federation of Teachers鈥櫬犅燽y choosing 鈥淟oan Forgiveness鈥� in the 鈥淔unding Type鈥� drop-down menu. This resource also lists state teacher loan-repayment assistance programs, which we鈥檒l tackle next.
Learn more about each of these programs and how to apply for聽.
Loan repayment assistance: Get money to put toward your loan bill
厂辞尘别听, states and universities run loan-repayment assistance programs, which give borrowers money to offset their student loan payments. State and federal programs may require you to work in an area or specialize in a subject in which there鈥檚 a critical shortage of workers. Loan repayment assistance can often be applied to private student loans, which can鈥檛 be forgiven under the federal programs listed above.
聽has a comprehensive list of loan repayment assistance programs for lawyers. Doctors, dentists and mental health providers can receive up to $50,000 in assistance from the聽聽if they work for two years in an underserved area. Some states offer similar programs for health professionals.聽聽for more information.
Income-driven repayment: Pay less each month
You can ease your student loan burden no matter where you work thanks to聽聽plans for federal student loans. These plans cap your bill at 10% to 20% of your income, and the newest plan, Revised Pay As You Earn, is available to all federal loan borrowers regardless of income. If your loan balance is large enough and there鈥檚 still some left to repay after 20 or 25 years, it鈥檒l be forgiven.
Current tax law states you鈥檒l pay income taxes on that amount. If you qualify, the big money-saving move is to repay your loans on an income-driven plan while you鈥檙e working toward Public Service Loan Forgiveness. You鈥檒l have a lower payment now, forgiveness later and no tax bill to worry about.
Because private student loans don鈥檛 offer forgiveness, you can take your savings from income-driven repayment and put the money toward your private loan bill, if you have one. You can also聽聽to cut down on the amount of interest you pay if you meet the requirements.
It鈥檚 possible to take that world-saving but low-paying job of your dreams when you have student loans. The key is to take advantage of the opportunities that are available, even if that means spending a few hours filling out tedious paperwork. Your happiness 鈥� at work and in life 鈥� is worth it.
Brianna McGurran is a staff writer at聽, a personal finance website. Follow her on Twitter:聽.
This article was written by and was originally published by聽Forbes.
