Repaying Federal Student Loans
It is important to remember that federal student loans must be repaid, even if your financial circumstances become difficult. They cannot be cancelled because you do not complete your education, or because you do not secure the job you expect.
A benefit to federal student loans is that, under certain conditions, students may be able to temporarily postpone loan payments through grace, deferment, or forbearance. Students enrolled in school, serving in the military, experiencing financial hardship, or completing a mandatory medical residency may qualify for one of these options.
Another benefit to federal loans is that students have a choice of several repayment plans designed to meet their individual needs. There are even plans designed to reduce a qualifying student's monthly payment during periods of financial hardship. For eligible borrowers, the repayment period can range from ten to twenty-five years.
Borrowers who have multiple federal student loans may wish to consolidate them into a single Direct Consolidation Loan. This may simplify repayment for those who are currently making separate loan payments to different loan holders or servicers, as they will only have one monthly payment to make. However, there may be tradeoffs to consider. The Dept. of Education provides an excellent resouce for students who want to learn more about the advantages and possible disadvantages of consolidation.
Public Service Loan Forgiveness
In 2007, Congress created the Public Service Loan Forgiveness Program to encourage individuals to enter and continue to work full-time in public service jobs. Under this program, borrowers may qualify for forgiveness of the remaining balance due on their eligible federal student loans after they have made 120 payments on those loans under certain repayment plans while employed full time by certain public service employers. For more information, please review the PSLF Fact Sheet.
National Health Service Corps Loan Repayment Programs
The NHSC offers three loan repayment options for primary care providers who work at approved community sites.
Indian Health Service Loan Repayment Program
The Indian Health Service (IHS) Loan Repayment Program (LRP) offers health professionals the opportunity to pay off qualified student loans while assisting the IHS in meeting the staffing needs of Indian health programs. The LRP awards loan repayment to health professionals practicing in specific health profession disciplines who are willing to commit to an initial two-year service obligation while working in health facilities serving American Indian and Alaska Native communities.
National Institutes of Health Loan Repayment Programs
NIH offers loan repayment programs to outstanding health professionals who choose to pursue careers in biomedical, behavioral, social, and clinical research. If you commit at least two years to conducting qualified research funded by a domestic nonprofit organization or U.S. federal, state, or local government entity, NIH may repay up to $35,000 of your qualified student loan debt per year, including most undergraduate, graduate, and medical school loans.
State Loan Forgiveness/Repayment Programs
State governments often provide loan repayment programs as an incentive for service. The Association of American Medical Colleges (AAMC) provides an excellent resource for obtaining information on these programs. In addition, the NHSC provides a chart which shows all states that participate in their State Loan Repayment Program.
Military Health Professions Loan Repayment Program
The HPLRP is available from some branches of the US military. For terms and conditions, please contact a service branch representative.
The American Association of Colleges of Osteopathic Medicine (AACOM) and its Council of Student Financial Aid Administrators (CSFAA) have announced the launch of two new educational debt management modules designed specifically for upcoming osteopathic medical school graduates in the Class of 2013: Repayment Strategies for Osteopathic Medical School Graduates - Class of 2013 and Income-Related Repayment Plans, Consolidation, and Public Service Loan Forgiveness as Components of Your Repayment Strategy.
Repayment Strategies for Osteopathic Medical School Graduates – Class of 2013, describes a common sense approach to helping upcoming graduates select a repayment strategy to meet their repayment and career goals and objectives during residency, fellowship, and practice.
Income-Related Repayment Plans, Consolidation, and Public Service Loan Forgiveness (PSLF) as Components of Your Repayment Strategy, delivers an easily understandable description of income-related plans, consolidation, and PSLF – what they are and how they can be used in tandem as part of an effective repayment strategy.