According to the National Center For Education Statistics, the average person with graduate school debt has racked up $78,390 in debt just for their graduate school loans.
Tack on the undergraduate loans, and the average indebtedness climbs to over $91,000 among graduate students.
But debt loads vary by degree type. For example, people pursuing a law degree took on an additional $142,790 in debt on average. Medical doctors took even higher debt loads of $246,330 on average.
While graduate degrees often translates to high salaries, many graduate students end up earning modest salaries. Regardless of your income, graduate school loan forgiveness would be a huge financial boon. Unfortunately, Biden’s Student Loan Forgiveness Program was struck-down, and loan payments are re-starting.
The addition of the new monthly payment may prompt some borrowers with graduate school debt to look at new ways to lower their monthly bill or have their loans forgiven.
Whether you have debt from law school, medical school, or a master's in engineering, here’s what you need to know about graduate school student loan forgiveness.
Public Service Loan Forgiveness
If you have graduate school debt and work in the Public Sector or for a non-profit, you may be eligible to receive loan forgiveness through for public service loan forgiveness (PSLF). This Federally-run program forgives eligible debts for eligible borrowers after they make 120 payments while working a qualifying job.
Qualifying jobs include social work, policing, working in a public school or for a university, or doing non-profit work for eligible 501(c)(3) organizations.
Historically, many borrowers have failed to take advantage of PSLF, but changes to PSLF administration is making it easier to ensure that your loans can be forgiven after 10 years of payments.
The following loan types are eligible for PSLF (assuming you meet the other criteria for loan forgiveness):
- Direct Subsidized Loans
- Direct Unsubsidized Loans
- Direct PLUS Loans
- Direct Consolidation Loans
But be careful with Direct Consolidation Loans. Consolidating your loans can “reset the clock” on the 120 payments, and that’s the last thing you want to do when you’re working towards loan forgiveness.
Repayment-Based Loan Forgiveness
Repayment-based loan forgiveness isn’t true loan forgiveness. Instead, it’s akin to running out the clock in a football game. Most graduate students on an income-driven repayment plan will have their loans discharged after 25 years. This discharge is a taxable event, but you’ll have two and a half decades to save up for the extra tax bill you’ll incur when the loans are discharged.
While most people want to get rid of their student loans as quickly as possible, the 25-year plan can make a lot of sense for people who have high debt-to-income ratios. This is a particularly important tool for veterinarians, medical professionals, lawyers and others who take on very high debt loads to obtain their degree.
Career Based Loan Forgiveness
We keep an up-to-date list of loan forgiveness programs for people pursuing particular careers. Most of these loan forgiveness programs can be combined with Public Service Loan Forgiveness. Right now, the list includes the following programs:
- Attorney Student Loan Forgiveness Program: Designed to forgive loans for attorneys working for the U.S. Department of Justice (DOJ). This program typically forgives $6,000 per year for every year an attorney works for the DOJ.
- Faculty Loan Repayment Program from the Health Resources and Services Administration: This repayment program offers up to $40,000 in loan forgiveness for qualifying health professionals going into faculty positions. You must have a two-year contract with a qualifying health professions school and come from a “disadvantaged” background (based on economic and environmental factors).
- Federal Employee Student Loan Repayment Program: Allows the Federal government to make loan payments of up to $10,000 annually on behalf of Federal employees. The lifetime forgiveness is $60,000.
- Indian Health Services Loan Repayment Program: Forgives up to $20,000 in loans per year for medical professionals who practice at an Indian health program site for a minimum of two years.
- John R. Justice Student Loan Repayment Program (JRJ): This offers a loan repayment benefit of up to $10,000 per year ($60,000 lifetime forgiveness) for people working as local and state prosecutors and local, state, or federal public defenders.
- National Health Service Corps Loan Repayment Program: This program offers up to $50,000 for qualified health professionals who practice for at least two years in high-need areas. The program is open to primary medical care practitioners, dentists, mental health professionals, and maternity care providers.
- National Institutes of Health (NIH) Loan Forgiveness: This is one of the few programs designed for scientists rather than practicing medical professionals. If you work for a non-profit or the U.S. government doing clinical research, pediatric research, Contraception & Infertility Research or Health Disparities Research, you could qualify to have a quarter of your loans forgiven each year (up to $50,000 annually). You typically have to sign up for at least a two-year research commitment and come from a disadvantaged background to qualify for this program.
- NURSE Corps Loan Program: Designed to address the nationwide nurse shortage, this program will repay up to 85% of the remaining loan balances for a registered nurses (RNs) or advanced practice registered nurses (APRNs) who work for at least two-years in a high-need area.
- Teacher Loan Forgiveness Program: Educators who serve in high-needs areas may qualify to have $17,500 of their loans forgiven after working for five years in a low-income school district.
- USDA Veterinary Medicine Loan Repayment Program: Vets working in a NIFA-designated veterinarian shortage situation for at least three years can receive loan forgiveness of $25,000 per year.
- U.S. Air Force JAG Loan Forgiveness Benefit: Lawyers working for the Air Force can receive up to $65,000 in loan forgiveness over a three-year period while working for the Air Force.
- Army Active Duty Health Professions Student Loan Repayment Program: Individuals who practice medicine or dentistry while in service can receive up to $120,000 in loan forgiveness paid in $40,000 over a three-year period.
- Navy Health Professions Student Loan Repayment Program: Similar to the Army Program, this program offers $40,000 in loan forgiveness per year if you work as a medical, dental, clinical psychology, nursing or optometry during active Navy service.
Employer-Based Loan Forgiveness
While most employers won’t pay off all your graduate student loans, a number of major employers are starting to offer loan repayment benefits to employees. Most of the companies we’ve found will pay between $100-$250 per month to help employees with their student loans. This won’t make a huge dent in a six-figure pile of debt, but it can be a nice incentive for anyone considering a job at one of those employers already.
Of course, if your employer is the U.S. Military, you could qualify for some aggressive loan forgiveness programs that could help you get out of debt quickly.
Graduate Loan Debt Doesn’t Have To Be A Life Sentence
Getting out of any type of debt is challenging. And if you’ve taken on six-figures of debt to get a graduate degree, it may feel like it will take a lifetime to pay it off. But these loan forgiveness programs can help you figure out the best options for getting out of debt. Even if it takes 25 years for your debt to be discharged, you can still save, invest, and grow wealth while you repay those loans.
Hannah is a wife, mom, and described personal finance geek. She excels with spreadsheets (and puns)! She regularly explores in-depth financial topics and enjoys looking at the latest tools and trends with money.