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Tuesday, April 20, 2010

Student Loan Repayment Using OPM (Other People's Money)

This article is an overview of ways to have other people make student loan repayments for you, or at least of portion of them. These programs aren't for everyone, but the shoe probably fits quite a few people.

Join The Military

The SLRP (Student Loan Repayment Program) is used by the military as a recruiting incentive. The Army and Navy can repay up to $65,000 of student debt, and the Air Force will pay up to $10,000. 15% of the loan balance or $500 is paid each year, whichever is greater. Reservists can also take advantage of this program, but in lesser amounts (up to $20,000). There are also a number of loan deferments possible for people in the military. So if you are thinking about joining the military make sure you ask about the SLRP and make sure this benefit is specified in your enlistment agreement. Only federal student loans can be repaid in these programs.


There are several programs available for teachers to get help paying off their federal (not private) student debt. The Stafford Loan Forgiveness Program gives eligible teachers grants to repay student loan debt of up to $5,000 after they have taught for 5 consecutive years in a low income school. Teachers can also qualify for the Public Service Loan Forgiveness Program. After 10 years in public service a person's student loan balance can be forgiven. A teacher can enroll in an IBR (Income Based Repayment) Plan during those 10 years, and this will provide the lowest monthly payments possible until the loan is forgiven after 10 years. There are also some state programs available to help teachers pay off their student loan debt. Check the state government web site or call the education department of your state government to inquire if any programs are available that might help you.

Health Care Workers

There are a number of federal programs for student loan repayment that apply to health care workers. Under the Higher Education Opportunity Act of 2008, "full-time professionals engaged in health care practitioner occupations and health care support occupations" and "medical specialists" can qualify for up to $10,000 in student loan repayments over a period of five years. Also, Nursing Education Loan Repayment Programs (NELRP) will pay up to 60% of student debt for nurses who work in a critical shortage facility. There are also student loan repayment programs with the National Health Service Corps (NHSC) and the National Institute of Health.

Federal Government Workers

If you are employed by the federal government it is possible to obtain loan relief from the Federal Student Loan Repayment Program. This program is designed to retain or attract talent, and the borrower must agree to stay with the agency making the debt payments for 3 years. $10,000 of debt relief can be paid each year up to a total of $60,000.

Legal Workers

In order to attract attorneys to become public defenders, the government has instituted the Loan Repayment for Civil Legal Assistance Attorneys Program. There is a minimum service period of 3 years and up to $6,000 of student debt can be paid off each year with a maximum of $40,000 of debt relief.

Other Options

Of course friends and family can be asked at graduation time to make a financial contribution that will go toward paying off student debt. A couple of interesting web sites exist as well which give credit for many common purchases, and payments are made against student loans to help offset outstanding balances. Among these are Small amounts can build up over the 10 years or longer life of the loan and make a real impact. Every little bit counts and helps.

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