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Relying on Others to Pay Your College Loans for You

There are so many things to love about college: great friends, inspiring professors, interesting classes, and fun extracurricular activities. Not everything about college is lovable, though. You also have to contend with bills for tuition, fees, books, and room and board, as well as entertainment expenses and travel costs. The National Center for Education Statistics (NCES) reports that the average total price of college attendance for full-time undergraduates is $17,200 per year. If you are lucky, you have family who can help you to pay for school or you have received grants that bring your financial contributions down to manageable levels. More likely, though, there are student loans.

Adding It Up
According to the NCES’s latest student financial aid study conducted in 2003-2004, 45 percent of undergraduates at public schools and 56 percent at private schools took out student loans to pay for their schooling. Loan amounts varied from $5,600 at public schools to $6,900 at private institutions. These figures might not seem so intimidating until you consider that they only represent one year of a four-year degree program. No one wants to graduate with over $20,000 in debt, but this is a reality for many new bachelor’s degree holders. What if you could erase that debt upon graduation, starting your new life and career with a clean financial slate? Here are some ways to get back into the black, all on someone else’s dime.

Your New Employer Repays Your Student Loan
Coming out of college, you might find that several different companies are actively recruiting you, especially if you have a unique skill set or are trained in an industry that is facing a shortage of qualified workers. Companies that really want you to join them might provide student loan repayment as part of their salary offers. Your college’s career center or your academic department can help you to discover whether your career path might lead to these benefits.

Another area where repayment programs are common is public service. If you have a degree in health care, for example, you might be eligible for student loan repayment if you agree to work in an underserved rural area for several years. Teachers willing to work in impoverished rural or inner city school systems also often qualify for partial or full loan repayment. In 2003, the American Bar Association (ABA) formed a commission to help lawyers who want to work in public service to find ways to do the work they are passionate about while still making their student loan payments. Since 2000, the ABA has offered partial student loan repayment to lawyers who work for legal aid. Well-known community service programs such as Teach for America and AmeriCorps also offer student loan repayment assistance.

You should keep in mind that the federal government has set aside money for student loan repayment to be used by its various branches as a recruiting tool for promising job applicants. Federal student loans are eligible for repayment at a maximum of $10,000 per year and for no more than $60,000 total per employee. Each agency sets its own criteria for student loan recruitment. For example, current concerns about international relations might make job candidates who can speak and write Arabic more desirable, thus qualifying them for the repayment program.

The Armed Forces Repays Your Student Loan
Want to avoid repaying your student loans yourself? Have you ever considered enlisting in the armed forces? If you answered “yes” to both of these questions, the armed forces student loan repayment program might be ideal for you. To earn the repayment bonus, you must enlist in a branch of the armed forces. Student loan repayment rates vary from branch to branch. The Army and Navy both offer up to $65,000 for student loan repayment, and the Air Force offers $10,000. For each year of active duty service, your loan will be paid off at a rate of 33.3 percent of your total loan or $1,500–whichever rate is higher. Also, you might be able to defer loan payments while you are serving.

You Get Creative with Loan Repayment
If you have hefty loan bills and strong HTML skills, you might consider making an online plea for student loan help. According to a recent Yahoo Finance article, desperate graduates are creating Web sites to generate money for their student loan payments. Some young entrepreneurs, such as Luke Livingston, offer sponsors ad space on their sites in exchange for donations. Others, like Derek Bender, offer blog entries about relevant topics in student finances and provide a button that allows readers to donate to student loan repayment efforts. The Internet is fertile ground for new business ventures. If you have got a great idea for a Web site, maybe you can convince Internet surfers to give you a few dollars each to ease the sting of your loan payments.

While there is no 100 percent foolproof way to sidestep your student loans, you definitely have options that can reduce or even eliminate your payments. If you cannot find a way to get someone else to fully repay your loans, all is not lost. You can set up a graduated loan payment plan so that your payments start off lower and rise every two years or so, as you advance in your career and your income increases. If you return to school, you can defer your loans until you graduate as long as you are enrolled at least half-time. Also, all federal loans have a six to twelve-month “grace period” after you leave school during which no payments are due. These student loan features provide you a little breathing room after graduation, so that you can start your new post-college life gracefully, finding a great job and getting settled in it before you have to start making those pesky loan payments.

Publish date: June 16, 2008