There are numerous methods for securing a loan reimbursement. Generally, reimbursements are common for a wide array of student loans, whether they are general undergraduate loans, graduate and post-graduate loans, loans for medical school or law school, or loans for those who earn a degree in education or public service.
Typically, the first step to obtaining a loan reimbursement depends upon what type of loan one hopes to have reimbursed or forgiven. In 2011, federally backed student loans offer numerous options for both reimbursement and forgiveness, if certain criteria are met. These criteria often require work in the public sector, such as teaching in low-income school districts or working for non-profit — classified as 501(c) — organizations following the completion of an educational program.
Federally backed Stafford and Perkins loans are the easiest to have forgiven or reimbursed, simply due to the large number of different programs that the United States government offers. One of the most popular student loan reimbursement programs is available to those who have borrowed through Perkins and who then go on to teach in primary or secondary schools in underprivileged school districts. Full loan reimbursement is available to teachers who serve up to five years, with all interest accrued also forgiven.
With the Perkins Loan Reimbursement Program, the first and second years of teaching in an underprivileged school earns the debtor 15% each year in loan forgiveness. The third and fourth years earn 20% each year, while the fifth year of service will vacate the remaining 30% of Perkins loan debt.
For debtors with Stafford student loans, there are numerous ways to have the balance forgiven or reimbursed. Often, paid and unpaid volunteer service for charitable groups or with federally backed organizations such as AmeriCorps will earn credit toward partial student loan reimbursement.
The U.S. military offers loan reimbursement programs to recruits who qualify for needed military occupation specialties such as infantry, military police, combat engineering, medicine and others. Service with municipal police and fire departments also earns credit toward loan forgiveness for Stafford loans, though approval for this credit often rests with the municipal agency itself, rather than with the guarantor of the loan.
Those who study medicine or earn a degree in law, who then apply that education to public service, may have Stafford and Perkins student loan debt forgiven or earn reimbursement credit.
There are numerous methods for having student loan debt forgiven or vacated that are not related to occupational service. For example, debtors who are experiencing chronic financial hardship may earn partial deferral or forgiveness if the debtor shows an ongoing incapacity to meet the repayment requirements of the loan.
Although it is very difficult to achieve, it is still possible to have some student loan debt vacated through bankruptcy proceedings in extreme circumstances. Most forms of student loan reimbursement and forgiveness are subject to federal and state taxes, and are often considered income when forgiven or reimbursed, so debtors who are considering forgiveness programs should factor in the tax liability consequences prior to undertaking any program.