College is expensive. There’s no denying it. According to The Institute for College Access & Success, 69% of students graduating from public and non-profit colleges in 2014 had some form of student loan debt.
The average amount? $28,950.
That’s a sobering thought.
Paying off that kind of debt isn’t easy, but it is possible. And what you might not know is there is help available to pay off that debt. Legally.
How can you legally get help paying off your student loans?
Choose A College That Will Help You
Cost is often a determining factor when students decide where to go to school. In an effort to be more competitive, some colleges have begun to offer loan repayment assistance programs.
Rules vary from college to college, but the idea is that if a student who is working full time makes under a certain salary after graduation, the school will help repay the student loans.
Right now several Christian colleges offer loan repayment assistance programs for undergraduates. These programs are more common in law schools, but with the cost of college rising, we may see more programs for undergraduates in the future.
Work For An Employer That Will Help You
Just like colleges are competing for students by offering loan repayment assistance programs, employers are jumping on the bandwagon by offering repayment assistance programs of their own.
The number of employers offering help with student loan payments is small, just 3%, but growing. The startup Gradifi, which aims to help companies offer student loan repayment benefits to employees, has already signed nearly 100 interested companies. Some employers offer to make payments toward student loans while others offer refinancing options with attractive terms.
Work In An Underserved Community
If you’re a teacher, a healthcare worker, or even a veterinarian, you may be able to qualify for student loan forgiveness if you work in an underserved community.
Teachers who teach in certain low-income communities for five consecutive years may have up to $17,500 of their loans forgiven.
Similar programs exist for nurses, veterinarians, doctors, and more. If you’re working in an underserved community, it’s worth a Google search to see if there are programs out there to help you repay your student loans.
Work In Public Service
Do you work for a non-profit? Or the government? If so, you may qualify for student loan forgiveness through the Public Service Loan Forgiveness Program.
It works by paying the remainder of your Direct Loans after you have made 120 qualifying payments on your own while working full time for a program approved employer.
Even if you don’t work full time for a qualifying organization, you may be able to take advantage of this program by serving full time in AmeriCorps or the Peace Corps.
Join The Military
When you join the Army, Navy, Air Force, or National Guard you may become eligible for student loan forgiveness.
It’s a big commitment, but the payoff is also big. For instance, the U.S. Navy offers to pay up to $65,000 over the course of your service.
Similar programs exist for other branches of the military, each having their own requirements and terms.
Choose An Income-Driven Repayment Plan
You may be able to get part of your student loans forgiven if you choose an income-driven repayment plan.
The government offers four such plans for federal student loans:
- Revised Pay as You Earn Repayment Plan (REPAYE)
- Pay as You Earn Repayment Plan (PAYE)
- Income-Based Repayment Plan (IBR)
- Income-Contingent Repayment Plan (ICR)
Each plan has its own requirements for which loans qualify and how they calculate payments. With all of these plans, the remainder of your loans will be forgiven after you make 20-25 years of payments.
Things To Keep In Mind
Before you apply for any of these programs, be sure you understand the terms and conditions.
Many programs have restrictions on:
- The types of loans they will forgive.
- What constitutes an eligible employer.
- How many payments you must make on your own before you are eligible for forgiveness.
- When you took out your loans.
The other big thing to remember is that the amount of your loan that is forgiven will be considered taxable income by the IRS. Having a large student loan forgiven can mean you will owe a lot more in taxes than usual. Be prepared and set some money aside.
Don’t Count On Bankruptcy
One way that you will not be able to get rid of your student loan is by declaring bankruptcy. Unlike other debts, student loans are not automatically discharged when you declare bankruptcy.
In order to discharge your loan in bankruptcy, you must first prove that repaying it would cause undue hardship, that the hardship would continue for much of the repayment period, and that you have made significant efforts to repay the loan.
If you can’t prove all three, your loan will not be discharged.
Think Before You Borrow
The best way to avoid large amounts of student loan debt, of course, is to not borrow in the first place.
Even though options exist to help you repay student loans, these options are saddled with rules and regulations that may make it difficult to qualify.
If you are applying to college or have an upcoming college student in your family, consider options like a community college or working your way through college, even though it may take longer to graduate.
Whatever you do, make sure to think about how you will repay your student loans before signing on the dotted line.