Student Loan Repayment Assistance Programs


Student Loan Repayment Assistance Programs

If you enjoy community interest projects and need some help paying your student loans, a loan repayment assistance plan (LRAP) can provide you with work experience while helping pay off your loans. Although each program is different, in general, you agree to serve with an organization in exchange for financial aid.

There are several things you need to consider before signing a contract, such as:

  • What kind of loans you have: Some programs will only repay certain types of student loans. Federal assistance programs, for example, can only be used for federal student loans.
  • How long you want to serve: Most programs require at least a year or two of commitment, and many are subject to longer terms. Ask if there are any limits on participation.
  • What your skills and qualifications are: Find out if the program requires you to hold a certain degree, certification, or level of training in a particular field.
  • How payment and “income” are handled: Some programs will give you a check or a grant, while others will give money directly to your lender. Find out what qualifies as “income” and which taxes you might be subject to, and then figure out if the commitment is worth the payoff.

For federal student loans, the two main LRAPs are the Teacher Loan Forgiveness program and the Public Service Loan Forgiveness program. Teachers who teach fulltime for at least five consecutive years at schools that serve low-income families can have all or part of their loans forgiven, up to $17,500. Only Direct Loans and Federal Stafford Loans can be forgiven through this program.

The Public Service Loan Forgiveness program is offered to public service workers and is only eligible toward Federal Direct Loans. By making 120 full loan payments on time, the remaining amount of your loan might be eligible for forgiveness. If you do not work for a government agency, your organization must serve the public in some capacity and cannot be a labor union or partisan political organization.

Some Federal Perkins Loans might be eligible for forgiveness, but there are no standard programs for this. Talk to your school’s financial aid office about options for discharge.

There are hundreds of LRAPs available. Ask your advisor or financial aid officer about local opportunities, or check out one of these organizations:

  • AmeriCorps and Peace Corps are volunteer organizations that help people in low-income neighborhoods or those suffering extreme hardships. Depending on which you serve with, you could work outside the United States.
  • Medical professionals can join the National Health Service Corp and earn forgiveness by agreeing to serve an area with poor medical care. If you’re more of a research-oriented person, the National Institutes of Health LRP will forgive your loan while you perform medical research.
  • Teach for America can help you repay student loans when you agree to teach in a low-income area.
  • Your state might have special LRPs available to residents or students.

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