For every second you spend reading this article, student loan debt in America rises by $2,700, according to MarketWatch. Graduates today are more burdened with student loans than at any other time in history.
But it’s not all bad news. If you have private student loans, you could get repayment help from state- and university-sponsored organizations.
Groups around the country offer federal and private student loan forgiveness programs to eligible borrowers. If you qualify, you could receive free money to help repay your student debt.
So, how do you know if you’re eligible for free money toward your private student loans? Here are the top five criteria.
5 ways to qualify for private student loan forgiveness programs
1. You work in a qualifying career
Many repayment assistance programs require that you work in a certain occupation, such as a teacher, doctor, lawyer, or veterinarian. For example:
- The Teach NYC program, for instance, awards up to $24,000 in loan assistance to teachers, school psychologists, and other school-based clinicians.
- Lawyers in New Mexico can receive up to $7,200 per year from the New Mexico Public Service Law Loan Repayment Assistance Program.
- Rhode Island doctors may earn $80,000 over four years from the Rhode Island Educational Loan Repayment Program for Primary Care Providers.
That being said, not all state-based loan assistance programs offer help repaying private student loans. Some, like the Illinois Teachers Loan Repayment Program, only offer money toward federal student loans.
Before applying, make sure to check which types of loans are eligible for repayment assistance.
2. You commit to a service contract
Before giving you any money, some programs require a commitment from you. Many stipulate that you agree to a contract of two years or longer. The Massachusetts Loan Repayment Program, for example, asks for two years of full-time work or four years of part-time work in a healthcare job.
These types of contracts are much more lenient than some federal loan forgiveness programs. The Public Service Loan Forgiveness federal program, for example, requires a full decade of qualified work before you receive any aid.
Many state-based programs only ask for a two-year commitment. After a couple of years, you could choose to continue on or seek employment elsewhere.
3. You serve in a high-needs or critical shortage area or organization
In addition to how long you work for, most repayment assistance programs also care where you work. To qualify, you may have to commit to a high-needs or critical shortage area.
Teachers, for instance, may work in rural or urban schools with limited resources. Doctors might take on hard-to-fill positions and serve low-income populations; lawyers could assume public service jobs with relatively low salaries.
Some programs offer student loan repayment assistance to offset a low salary or encourage graduates to pursue public service jobs. While student loan aid is a great perk, you may also find yourself in a challenging work environment. Before committing, make sure to consider where you want your career to go.
4. You’re a state resident
Some student loan repayment assistance programs require that you live and work in a certain state. State residency may be a secondary requirement that comes after your professional qualifications.
The Alfond Leaders program, for instance, awards up to $60,000 to STEM professionals who live and work in Maine. But the Kansas Rural Opportunity Zones program actually gives money simply for moving to Kansas.
This program offers up to $15,000 to people who establish residency in one of Kansas’s designated counties. With this benefit, the Kansas Rural Opportunity Zones program seeks to encourage people to live and work in Kansas.
Wherever you live, check out what your state offers in the way of loan repayment assistance. If you meet the other requirements, you could get major help repaying private student loans.
5. You graduated from the right university
Not all student loan repayment assistance programs are state-sponsored. Some universities offer student loan help to their graduates.
The University of Denver Sturm College of Law, for instance, offers loan repayment assistance to its alums. You must be a practicing lawyer with an annual income less than $75,000. If you qualify, the program could cover between 15 and 75 percent of your monthly student loan payments for up to five years.
University-sponsored loan repayment assistance programs are not nearly as common as state-sponsored ones, but it can’t hurt to check whether your university offers aid. If you haven’t started college yet, you may prioritize a school that offers loan assistance to its graduates.
Prepare to pay taxes on student loan repayment assistance
If free money toward your student loans sounds great, that’s because it is. But there may be one caveat.
Some rewards from private student loan forgiveness programs are treated as taxable income. Depending on the program, you may have to pay income taxes on assistance you receive. Loan assistance for healthcare professionals is often exempt, but other types may not be.
Of course, the repayment award could still be a lot greater than any tax bill. Just make sure you’re prepared to pay taxes on any awards you get.
Speak to your lender about repayment options
Private student loans tend to have less flexible repayment options than federal ones, but some lenders will help if you’re struggling to make your payments.
If you’ve run into financial hardship, speak with your loan servicer about your options. Some offer interest-only payments or forbearance to help you through a rough patch.
And if you qualify for loan repayment assistance, you could soon earn thousands of dollars to put toward your loans. To find out more and apply, check out our complete list of student loan repayment assistance programs around the country.
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