3 Career Choices That Can Help You Erase Student Loan Debt
A college degree will give you a leg up on fellow job seekers armed with only a high school diploma, but those four years come at a cost. Student loan debt can be crippling, and a recent study by Fidelity Investments found that 70% of those who graduated college earlier this year hold an average student loan debt of more than $35,000.
Fortunately, there is hope. The Consumer Finance Protection Bureau has published a report that outlines how college graduates with federal student loan debt can shave thousands off of their debt loads. The catch? Grads must commit to public service employment for a certain length of time.
If this sounds onerous, it really isn't. The report notes that many -- as much as 25% of the working population -- already work in eligible positions and are simply unaware of it.
Here are three great careers that carry the added bonus of falling comfortably within the parameters for federal loan forgiveness programs, some of which are very generous, indeed.
1. Elementary or secondary school teacher: In exchange for working full time in a school federally recognized as serving low-income students for five consecutive years, teachers can have up to $17,500 of their college loan balances forgiven. While many teachers will only qualify for the $5,000 forgiveness program, the higher amount is reserved for those who specialize in math, science, or special education. This program applies to Direct Loans and Stafford Loans, whether subsidized or unsubsidized.
A second program is reserved for need-based Perkins Loans, and entails cancellation of the teacher's debt balance after five years of service. With the Teacher Cancellation program, a certain percentage of your loan is cancelled after each year of service, with the highest being the fifth year of teaching. For borrowers that fulfill five years of service, 85% of their loan balance will be discharged.
2. Nursing: Nursing school graduates can pay off a whopping 60% of their student loans in two years under the Nurse Corps Loan Repayment Program, with the option to pay off 25% more in the optional third year. To qualify, applicants to the program must agree to work a minimum of 32 hours per week at a location identified as a Health Professional Shortage Area -- of which there are thousands across the U.S.
3. Librarian at a public library: This career choice is one of many available to employees who work in the public sector. The Public Service Loan Forgiveness Program, of which the CFPB is currently trying to raise awareness, encompasses all kinds of jobs, provided they are under the auspices of a public service organization, such as a local, state, or federal entity. Employers may also be, under certain circumstances, a non-profit organization.
The rules for this one differ somewhat from the first two programs. Graduates must work full-time for 10 years -- though, not consecutively -- in order to be eligible. Only those who borrowed through the Dept. of Education's Direct Loans program can participate; Perkins Loans, for instance, would need to be refinanced into a Direct Loan in order to come within the parameters of the program.
An important factor is that the borrower must be enrolled in a Direct Loan repayment program during the 10-year timeframe, and all payments must be made timely. At the end of the 10 years, your balance will be forgiven, even if you enrolled in an Income-Based Repayment Plan, which reduces the monthly loan payments according to a borrower's income.
Take the time to learn the facts
Spending decades under a cloud of onerous student debt may seem to be the new normal, but it doesn't have to be. Both students and their parents should thoroughly research all financial aid programs in order to fit career options with the reality of loan repayment obligations. It's very possible that your own, or your child's, particular career track segues nicely with one of these loan forgiveness programs -- you just didn't know it.
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