Reduce Student Loan Debt With Public Service

As the economy slides and the job market continues to tank, many students have resigned themselves to a lifetime of debt. But there is hope for students who are facing decades of student loan payments.

Thanks to the College Cost Reduction and Access Act of 2007, the federal government will cancel the balance of any interest and principal due on any federal direct loan—including Direct Stafford, PLUS and Consolidation loans—as long as it’s not in default. Moreover, federal agencies such as the Department of Education also have partial loan forgiveness programs.

The only catch is that graduates will have to work in public service jobs such as law enforcement, social work and child care in order to qualify.

If you’re looking to make your payments more manageable in the long run, here are some options for you.

Option 1: Volunteer
The Peace Corps will cancel 15% of your Federal Perkins Loan for every year that you serve and AmeriCorps volunteers are eligible to receive a $4,725 award at the end of a 10 to 12 month stint in the service.

Eligibility: You must be a United States citizen, U.S. national or lawful permanent resident of the U.S. and at least 17 years old in order to Join AmeriCorps. Peace Corps volunteers have to be 18.

Savings: If you have $16,000 in Federal Perkins Loans, you can expect to pay $800 interest at the end of one year. The Peace Corps will cover 75% of your interest payment. However, if you join AmeriCorps, you can wipe out almost 30% of your entire loan at the end of one year.