Graduate school students can leave their college or university tens of thousands of dollars in debt. This large debt burden can be financially stressful to young professionals just starting out in their careers, particularly in this uncertain economy.
Graduate school costs are estimated to run anywhere between $30,000 and $100,000, depending on the degree pursued and the institution attended. Scholarships and fellowships can help cover some of the cost, but very few students obtain enough financial aid to cover the full cost of graduate school. Graduate school loans are often used by students to cover tuition, fees, books and living expenses. For many students, these loans hang like anchors around their necks for many years after they earn their advanced degree, draining finances and creating financial hardship.
For students who fall on hard times, or who complete certain tasks, it is possible to have graduate school loans forgiven. The following is a list of circumstances and programs that may result in graduate school loan forgiveness.
Career specific graduate school loan forgiveness programs — A number of careers, particularly in government-sponsored fields, offer programs that will pay off or forgive your student loans in exchange for working in a specific job or area for a certain number of years. These programs can be very helpful for students who want to quickly discharge their debt and don’t mind working in less-than-optimal locations or jobs for a few years in exchange for this benefit.
There are many student loan forgiveness programs for teachers. For example, elementary teachers may have up to $5,000 in their federal loans forgiven. Math and science teachers and special education teachers in middle and high schools can get up to $5,000 in federal loans forgiven.
Various state governments also have student loan forgiveness programs for teachers. California has a program that will forgive up to $11,000 in federal student loans for teachers who agree to work in low-performing schools in the state. Math and science teachers can obtain additional amounts in loan forgiveness under this program.
Government work — Federal employees and members of the military may be eligible for student loan forgiveness. Certain federal workers can get up to $10,000 per year in their student loans repaid, up to $60,000. Members of the armed forces on active duty can obtain up to $65,000 in loan repayments. Reservists can earn $10,000 in loan repayments.
Americorps – Americorps is a Peace Corps-related organization that does work here in the States. Americorps volunteers can earn $4,725 in student loan forgiveness for one year of work.
Stimulus funding – The economic stimulus bill passed in 2009 sets aside funding for some graduate school loans in certain in-demand fields. For example, the act sets aside almost $200 million for loan repayment awards for graduates in the health field via the National Health Service Corps. Working for the NHSC can earn students up to $35,000 per year in loan forgivness.
Hardship forgiveness — Forgiveness programs exist for students who suffer severe health problems are experience other extreme financial hardships.
Students who die or are totally disabled by an accident or illness may obtain a full discharge of their student loans. Also, students of institutions that are forced to close while the student is still in school may also receive full discharge of their student loans.
In very, very rare cases student loans may be discharged through bankruptcy. The government makes it very hard for student loans to be forgiven this way, however, to deter students from defaulting on their loans and clearing them through bankruptcy court. Under the bankruptcy scenario, the court must find that continued repayment of the loan would constitute undue hardship on the student and his or her dependents.
Unpaid balance forgiveness — Congress recently enacted a law that forgives unpaid balances on student loans after 25 years of repayment. That means that if you enter into an extended repayment plan and still have an unpaid balance after 25 years, the remainder of your loan will be forgiven.
To find out more about graduate school loan forgiveness programs, contact your school’s financial aid office. You may also want to talk to department heads in your field, as they may be aware of some offers that the financial aid office is not.
Student loan forgiveness is another way the government is making obtaining a higher education more affordable for its citizens.