Reducing Student Loan Debt

College is expensive and many students take on a great deal of debt in the process. Kiplinger
reports “that two-thirds of students who earn a bachelor’s degree leave campus with debt in
tow—$26,600, on average.” Those who go to graduate school typically owe even more. But
there are ways to receive partial or total loan forgiveness, depending partly on your major and
where you are willing to live and work.

Choose Your College Wisely

Maybe you know that you could be better off going to a public, in-state college or university, as
tuition will cost much less than at a private or out-of-state institution. But you will also do well
to find a school that offers substantial financial aid. In Kentucky, Berea College serves lower-
income students from Appalachia and from all over the world. The student body is very diverse.
Berea offers working opportunities for students that leave them owing much less than at other
institutions. Not only that, it is an excellent small college.

Public Service

If you commit to work ten years in a qualifying government or nonprofit job, you can have what
remains of your loans forgiven after you make 120 monthly payments. You must work full-time
for federal, state or local government; a 501(c)(3) nonprofit organization; a private public-service
agency, such as law enforcement; AmeriCorps; or the Peace Corps.

AmeriCorps

AmeriCorps allows graduates to engage in public service while receiving “what AmeriCorps
dubs a ‘modest living allowance’—a monthly payment that adds up to no more than $24,200 a
year.” There might also be the possibility of limited housing assistance. Your federal loans can
be deferred while you serve, and a year’s service gets you as much as you could receive from a
Pell Grant; this award must go toward your student loans. Or, if you volunteer with AmeriCorps
Vista, you could choose to receive 15 percent of the original amount of your Perkins loan. In all,
you may volunteer for up to two financial years.

The Peace Corps

The Peace Corps allows young people the opportunity to volunteer overseas, providing hands-on
assistance to local populations in a variety of fields, such as teaching or farming. You must be 18
or older, and a college degree is not necessary, but is preferred. Volunteers receive three months
of training, and then must work at least two years abroad. Federal student loans do not need to be
paid while you serve in the Peace Corps. However, only Perkins loans can be repaid with Peace
Corps service. You receive 15 percent of the original amount of your loan for each year of
service in the first two years. You may also receive 20 percent more per year during your third
and fourth year if you choose to stay that long. Other benefits include a cost-of-living stipend
and a $7,425 “readjustment allowance” when you have completed your service.

Teach for America

Teach for America is like AmeriCorps, but for teachers. To qualify, you must be a U.S. citizen
with at least a 2.5 undergraduate GPA and a bachelor’s degree in any subject. If selected, you
will teach in a low-income community and help students improve their test scores. Math, science
and special-education teachers are especially needed; you will also be in demand if you plan to
go into early childhood education or if you speak more than one language, especially Spanish.
You receive a salary based on cost of living where you teach. While serving, your loans will be
deferred. Annual financial awards that equal the largest Pell Grant must be applied toward your
student loans.

Health Care

Licensed health care providers may commit to two years of service with the National Health
Service Corps, which pays up to $60,000 of your student loans if you work two years at a
qualifying facility with a critical shortage of workers. Working at a qualifying location with a
slightly less critical shortage of workers will get you $40,000 toward your loan payments over
your two years of service. These payments are exempt from federal taxes. Nursing students may
qualify for the Nurse Corps Scholarship Program, which provides free tuition and books if you
promise to serve at least two years at a Critical Shortage Facility after graduation from nursing
school. There is also a monthly stipend. This program is highly competitive, however. Another
program for registered nurses, the Nurse Corps Loan Repayment Program, pays 60 percent of
loans for nursing school over two years of service, and an additional 25 percent if you serve for a
third year. You must fulfill all program requirements, however, or pay it all back with interest; so
you must be committed.

Other Options

Those with doctoral degrees in a health field also have the possibility of receiving up to $70,000
in loan payoffs for two years of research service with a nonprofit or government agency. You
may also receive loan payback for military service. And you might also want to consider an offer
made by various rural and town governments around the country: If you have a bachelor’s
degree and student-loan debt, you may receive student-loan repayments just for moving there!
Struggling communities need taxpaying residents. Awards vary depending on community.
“Rural Opportunity Zones” in Kansas, for instance, pay up to $15,000 toward student loans over
five years. Truly, there are more ways of paying for college than you might think.


READERS, what do you think?

1. Do any of these options for paying off student loans sound good to you?

2. Considering how much college costs, do you think these programs pay enough?

3. How do you plan to pay for your education and career training?


Reference:
Fischer, M. C. (2013, August). 9 Ways to Reduce Your Student Loan Debt. Kiplinger. Retrieved

November 3, 2015, from http://www.kiplinger.com/slideshow/saving/T053-S001-ways-to-

reduce-your-student-loan-debt/index.html.