Critical Analysis of Scholarships and Programs to Pay off Student Loans

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What is a Student Loan?

Student Loans are seen as monetary funds that helps a student pay his/her college tuition fee and other study-related expenses such as books and other stationery items. Loans may seem like a very good option at the beginning but in the end, repaying those loans will be seen as the biggest difficulty in life. You have to pay back your loans at any cost. For many borrowers as in students, repayment is considered to be a complex task.

There are various smart ways to repay your debts which will be discussed further. Before going to that, it is important to know the different types of student loans available.

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What are the different types of student loans?

Student loans come in different rules and regulations. It is mainly classified into two types and sub-classification is discussed below.

Stafford or Federal student loans: These are the loans available for graduate and undergraduate students. Funds for these loans are directly permitted by the federal government.

  • Direct Subsidized loans
  • Direct Unsubsidized loans
  • Parent PLUS loans
  • Graduate PLUS loans
  • Direct consolidation loans

Private student loans: These loans differ based on the lender and certain conditions on each one. The rates can be fixed or variable, it again differs based upon the lender.

  • Private parent loans
  • Private student loans

When to start paying back student loans?

Most of the student loans are given six months as a grace period which means you don’t have to start repaying until six months after graduating or dropping out. A grace period is usually meant to find a job so that you can start repaying.

Scholarships to pay off student loans

Scholarships are monetary aids that are offered to students for their academic excellence in various fields during their studies. They are not meant to be issued only for achievements studies. Students can get scholarships for excellence in sports, research, and other extra-curricular activities.

They are not like student loans, you don’t need to repay them. And you should remember that you can apply and get a scholarship only when you are in college. If you already have student loans then Scholarships may help you pay them off completely or at least can be useful to pay an effective sum towards your student loans. If you do not require a large sum of money, you can just settle with scholarships. They may be enough to satisfy your financial needs.

A scholarship is the first financial aid that you can get when you are in college. Before thinking of any loan you should try to get as many scholarships as possible. Student loans should be your last option for fetching monetary support when your financial need is high that cannot be satisfied by scholarships and grants.

Anyways, if you are already in student loan there are best scholarships available that you can use to pay off your student loans as early as possible.

Programs to pay off student loans:

As student loan repayment is mandatory, there is no way to escape from it. Student loan repayment can be made easier by student loan repayment programs or a forgiveness program. There are various such programs available from which borrowers can choose the right one that suits them. Most of such repayment programs and forgiveness programs are specific to their states and professions. These programs expect your service in return for their benefits. A few such programs and their respective details are given below.

AmeriCorps Program

What is AmeriCorps? When you become a member of this program and utilize your valuable time to national service, you will be able to attain realistic job experience and real-time education simultaneously.

What is the duration of the program? There are few part-time job opportunities but mostly full time. Also, this program’s duration is around 10 months to one year.

Is it paid? Depending on the program, you may receive health insurance and housing. You may not be able to make much money but you can earn enough to earn for your daily needs.

Peace Corps Program

What is Peace Corps Program? Volunteers in this program work at the grassroots level toward sustainable change that lives on long after their service, at the same time becoming global citizens and serving their country. Volunteers will have to travel to a foreign country and focus on one specific volunteer area, determined by the needs of the host country and by the qualifying skills of the volunteer. During the period of service, you will be relieved from repayment towards your student debts. And if you hold any Perkins loans then you will be eligible for getting them forgiven.

What is the duration of this program? The minimum period of service required to get the benefits of this program is 2 years.

Is it paid? As a volunteer in this program, you will be receiving house and travel allowances, medical coverage, and 48 paid leaves a year.

Career-specific Loan Forgiveness Programs: These are the programs that are meant for the students who are willing to enter into a specific profession. Most of these programs allow doctors, teachers, medical-related and other recent college graduates in certain specific professional fields to have an opportunity to work in exchange for student loan forgiveness, and some of those are listed below.

Nurse Corps Loan Repayment Program:

What is this program? It is a program that enables registered, advanced practice registered nurses and nurse faculty to pay off a portion of their student debt.

What is the duration? You will be working as a registered nurse for at least 32 hours weekly for 2 years.

Is it paid? Up to 60% of student loans will be paid. If the nurse accepts to work for 3 years or more, you will be able to pay off 25% more.

National Health Service Corps Program

What is it? It is a program that will benefit the people who belong to the profession related to health and medicine related. Doctors and dentists can take advantage of this program in a good manner.

Is it paid and what is the duration? Health professionals can get their student loans forgiven by accepting to work at specific areas where there is a shortage of service for a minimum of 2 years.

Loan forgiveness for teachers

What is it? Teachers with student loans can opt for this program to get their student loans forgiven. They have to agree to work in a school that is in need of a faculty in a certain department.

What is the duration and details of payment? On an agreement to work for 5 years in such a school, a teacher may get eligibility for $5,000-$17,500 in the forgiveness of your student loans.

Public Service Loan Forgiveness Program

What is it? It is applicable only for direct loans. You must make a required 120 qualifying payments on your Direct Loans on time, monthly payment made under one of the Direct Loan Program repayment plans, while employed full-time by a public service organization. Jobs include public health and safety, social work, library, and varied law professions. After you make your 120th qualifying payment, you will need to submit the Public Service Loan Forgiveness (PSLF) application to receive loan forgiveness.

Teacher Cancellation

What is the teacher cancellation program? It is a program for those who have taken Federal Perkins Loans. You will have to teach full-time for an academic year or its equivalent as a teacher in one of the following situations: as a teacher for babies, children, or youth with disabilities; in a school teaching students from low-income underprivileged families; teacher in the fields of mathematics, science, foreign languages, or bilingual education, or in any other field of expertise where there is a shortage of qualified teachers in that state which is determined by the state education council. If you are eligible, 100% of the loan can be paid off in exchange for teaching.

Grants to Pay Off Loans

John R Justice Student Loan Repayment Program

The JRJ is a federal program that provides for the repayment of eligible educational loans on behalf of certain state and federal prosecutors and public defenders. You can receive up to $10000 a year through this program which can be used to cover up your student loan.

Iraq and Afghanistan Service Grant

It is a grant given to a student if his/her parents served in the military for Iraq or Afghanistan and died during the period of their service. The grant permitted will be up to $6095 which can be used towards your student loans. If you are planning to join the military, communicate with your armed force branched to know about the military loan repayment assistance program.

Federal Pell Grant Program

It is a program that provides need-based grants to students who have low income and are underprivileged. It is granted to undergraduate and students can not receive these grants from multiple schools at a time. Also, these are the grants which you don’t have to pay back. The amount you receive for this will depend on your financial need, status as full time or part-time, and attendance. The money received can be used to pay off your student loan.

New York State Young Farmers Loan Forgiveness Incentive Program

Graduates who want to pursue a career in farming in New York will be granted $10000 a year for up to 5 years which can be utilized to repay student loans. The criteria here is that the student should have received a degree in a university that is situated in New York itself and those students should agree to work with operating a farm in New York for a minimum of 5 years. This is a grant which is exclusively given only to the students in New York.

The Veterinary Medicine Loan Repayment Program

This is a program which is mainly organized to help veterinarians to pay back their student loans. “National Institute of Food and Agriculture (NIFA)” is an organization you will have to look into at first place as it a loan repayment assistance which helps you to pay up to $25000 a year in exchange for 3 years of service in an underserved region ie it helps you repay $75000.

Is it necessary to pay back grants?

Technically, it is not required to return or pay back grants as it does not work like student loans. But there are few grants which have certain conditions or agreement for maintaining an award. If you don’t meet their requirements, you might be in a situation where you will no be granted money or will even have to repay the small amount you have received.

Alternative plans to repay loans

Consider income-driven repayment plan

If you are struggling with balancing your payments on your present salary and have loans to repay, this is a plan which might help you solve your problem. There are basically 4 types which are:

  • Income-based payment
  • Income-contingent payment
  • Pay as you earn
  • Revised pay as you earn

These plans are different from each other but all that it does is reduce your problem and helps you repay your loans with much ease.

Public Service Loan Forgiveness

It is a federal government’s program that forgives all your loans but you will have to meet certain requirements. You can get started by finishing an Employer Certification Form from the US Department of Education.

Refinance your student loans

Using a private lender, you can lower your interest rates which means you can lower your monthly payment save hundreds of dollars in interest. There is no fee to apply for this, so you can pay off your student loan with ease and also faster.

Part-time jobs and paid internships

As you can start repaying the loans while you are studying itself, there are many opportunities during college summer to earn money by doing internships. Search for paid internships online as there are many internships that do not pay. So be conscious while applying for one. Part-time work is a good option as you can see many of the students do such jobs to earn basic requirements but you can use it to repay loans.

Conclusion

Paying off student loans is quite a challenging task which most of them realize only in the later stages. But you don’t have to worry much about it. Choosing the best plans and programs can help you pay off a part of the loan even while you are pursuing your education. It is advised to be well aware of all the student loan repayment options in order to take advantage of what they offer and tackle the burden of debt with ease.

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