Is the only way to pay off student loans by working through them over a number of years?
If you are an engineer, you might not have to wait so long. You have a few additional options that other students don’t have.
In an effort to keep more engineering students in the field, foundations, states, and companies are offering debt repayment as an incentive.
This means engineering graduates have access to different debt forgiveness options and programs that other students don’t have available to them. In this article, we’ll explore what those options are.
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Student Loan Forgiveness For Engineers
STEM (Science, Technology, Engineering, Mathematics) students have access to various types of debt forgiveness programs through foundations, states and companies.
Starting with foundations, there is the Harold Alfond Foundation, which targets STEM students in Maine. The program, called “Alfond Leaders,” was launched in February 2017. They have already paid off $685,000 in debt for 20 Maine students.
The goal of Alfond Leaders is to keep more STEM students in Maine. By working with companies that hire STEM employees, the foundation offers to pay up to $60,000 in student loans per recipient.
Another loan forgiveness program available to engineers is the Higher Education Opportunity Act of 2008. This program allows debt forgiveness of up to $2,000 per year with a maximum of $10,000.
From the acec.org website, “Under the law, an individual will be eligible for up to $2,000 in student loan forgiveness for each of five years of work in engineering or other designated fields.
The maximum amount of loan forgiveness available to an individual will be $10,000. Only years of work completed after August 14, 2008, will count toward the student loan forgiveness requirements.”
While not directly related to engineering, SEMA (Specialty Equipment Market Association) offers awards of up to $5,000. To be eligible for this loan forgiveness program, graduates must:
1. SEMA member company employee.
2. Possess a degree or certificate from a college, university, or career tech school in the United States.
3. Graduated with minimum 2.5 GPA.
4. Show your passion for automotive.
Given the broad nature of degree qualifications and the fact that some engineers will enter into the automative industry, this can be a great way to receive additional loan forgiveness.
Employer-Based Student Loan Repayment Assistance
While there are foundations and state-based debt forgiveness programs, don’t rule out employers who will pay all or a portion of your student loans.
These employers don’t work with foundation or state debt forgiveness programs. They are basically putting their own program together, which can make it easier to qualify for.
Employers will have certain restrictions that you must meet before debt forgiveness kicks in. The most common is that the employee must work a certain number of years before their loans are paid down.
Another approach is that certain amounts are paid each year and can start as soon as the first year. Both incentives are meant to keep employees at the company longer.
In some cases, a company may provide a lump sum immediately or after the first year, which can be used to pay off student loan debt. However, if the employee leaves before a certain number of years, they must pay back a percentage of the award.
Federal Student Loan Forgiveness Programs
If you don't qualify for any of the programs listed above, there are still options that may help.
First, there are "secret" student loan forgiveness programs that are attached to income-driven repayment plans. Not only do these programs lower your monthly payment, but they offer loan forgiveness on any remaining balance at the end of your loan term.
Second, if you are employed in public service (like a government job), you can potentially qualify for Public Service Loan Forgiveness. This program allows for student loan forgiveness at the end of 120 payments (or 10 years). While that may seem like a long time, if you get started at 22, you can be debt free by 32!
Plan Your Degree Ahead Of Time
Many debt forgiveness programs require specific degrees, possibly schools and employers to be eligible.
While you might not know where you’ll be after graduation, planning ahead can give you a higher chance of success in being awarded money for debt forgiveness. Here’s a few tips on how to do it.
Start by researching engineering and STEM debt forgiveness programs that are available in some of the states you might want to move to after graduation.
Don’t focus just on “engineering” programs. Many programs are STEM-oriented, which also includes engineering. It’s important to search for both types of programs.
Enlist your school in the search. Schools that you target can be great resources when it comes to helping you find debt forgiveness programs. Keep in mind that they are likely to be biased toward programs within their state.
Once you’ve identified a large number of programs, search which companies in your target states participate. Debt forgiveness programs are often linked with companies. It’s important that program and company are linked.
Otherwise, you might find a great debt forgiveness program that you are eligible for only to find out that your employer isn’t participating.
Engineers have a few great options when it comes to student loan debt forgiveness. While it’s unlikely any one program will pay off all of your student loan debt, the programs mentioned in this article can certainly help in paying down your debt burden.
Keep in mind that you’ll want to make sure your degree and employer all align for any program that you are choosing.
Although, it isn’t uncommon for employees to have their own student loan forgiveness program. Just be aware of their restrictions.
Are you considering student loan forgiveness if you qualify?
Robert Farrington is America’s Millennial Money Expert® and America’s Student Loan Debt Expert™, and the founder of The College Investor, a personal finance site dedicated to helping millennials escape student loan debt to start investing and building wealth for the future. You can learn more about him here.
He regularly writes about investing, student loan debt, and general personal finance topics geared towards anyone wanting to earn more, get out of debt, and start building wealth for the future.
He has been quoted in major publications including the New York Times, Washington Post, Fox, ABC, NBC, and more. He is also a regular contributor to Forbes.