Debt Reduction Grants
Most debt reduction grants from the federal government offer student loan forgiveness in exchange for a specified work commitment. The first student loan forgiveness program was the National Defense Student Loan Program, authorized by the National Defense Education Act in 1958 to provide financial assistance to public school teachers.
People pursuing careers in education related fields are eligible for several types of federal assistance. Child care providers can receive debt reduction grants through the federal government if they have a degree in early childhood education, work in a low income community, and provide child care to children under the age of five in a licensed facility. Elementary and secondary teachers with five years of service in a low income community are also eligible for a loan forgiveness program.
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The medical field is another popular area for student loan forgiveness programs. Nurses are eligible for debt reduction grants of up to $50,000 from the National Health Service Corps if they complete two years of service in a specific geographic area. The National Institutes of Health provides up to $70,000 in debt reduction grants to people pursing careers in medical research.
Veterans can receive debt reduction grants in recognition of their military service. The Navy’s Loan Repayment Program provides up to $65,000 for full time soldiers with qualified loans. The Air Force College Loan Repayment Program offers a maximum grant of $10,000 to eligible new recruits. The Army’s College Loan Repayment Program offers grants of up to $65,000 for full time soldiers.
Service payback programs can be thought of as an alternative type of debt reduction grant. These programs will pay a portion of the student’s educational costs in exchange for a promise to work in a specific job in the future. Since the recipient of this type of debt reduction grant is awarded money years before the service is performed, there is a substantial financial penalty for failing to fulfill the terms of the agreement.
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