Graduating from college with thousands of dollars in loans is a
heavy burden. But take heart: A loan-forgiveness program can
lighten the load. Note, however, that most programs cover only
federal student loans. And if the program does not involve a work
requirement, the amount forgiven is generally considered taxable
1 Sign up for the income-based repayment plan.
For borrowers with high debt relative to income, monthly payments
are reduced, and any remaining debt is forgiven after 25 years. The
Obama administration has proposed shortening the time frame to 20
2 Work in a public-service job.
Any remaining debt will be forgiven after you have worked full-time
in public service for ten years and made 120 payments, beginning on
or after October 1, 2007. You benefit only if your payments have
been reduced through an income-linked repayment plan (see above).
Student loans must be made through the federal Direct Loan program
-- as opposed to private lenders, such as Sallie Mae -- but you can
get around this restriction by consolidating your loans into the
Direct Loan program. For details on both income-based repayment and
public-service loan forgiveness, go to www.ibrinfo.org
3 Work in an underserved area.
If you enter a profession such as teaching, health services, social
work or clinical research, you could qualify for loan forgiveness
through one of several programs. But before you make a years-long
commitment, be sure the program has the resources to make good on
4 Work at a national service organization.
A stint in AmeriCorps or its member organizations, including Vista,
makes you eligible to receive a Segal AmeriCorps Education Award,
worth up to $5,350 in 2010. You can use the award to pay for
further education or to repay your student loans. The Peace Corps
also rewards you for service by canceling up to 70% of federal
For more information, go to