Afam Onyema initially thought he would parlay his degree from Stanford Law School into a career as a corporate lawyer. But he couldn't shake the urge to help the less fortunate in his parents' home country of Nigeria. So in 2005 he established a nonprofit foundation with his father to help build schools, recreational facilities, and hospitals there. Onyema hoped to work for the foundation full time after graduation in 2007—though more than $100,000 in law school debt wouldn't make it easy.
Or so he feared. In fact, Stanford is paying back 85 percent of Onyema's loans. "I never really thought I'd work for a nonprofit full time. It didn't seem like it was feasible," Onyema says. Stanford's loan repayment assistance program "has been a lifesaver." The foundation hopes to break ground on its first hospital in Nigeria in 2013.
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With student debt levels rising, and openings for jobs that can support repayment relatively scarce, students whose hearts lie in public service or the nonprofit arena are more in need than ever of loan forgiveness and loan repayment assistance programs (LRAPs). The median debt load of those receiving professional degrees in 2008, the latest figure available, reached $79,836, according to Finaid.org; American Bar Association data show that the average student at a public law school borrows nearly $69,000, and students at private schools borrow more than $106,000.
While the median salary for 2010 law graduates who work in private practice is $104,000, the median for grads who took public interest jobs is only $42,900, according to NALP—the Association for Legal Career Professionals. The median debt burden is even higher for medical students who graduated in 2011: $162,000, according to the Association of American Medical Colleges.
Not surprisingly, LRAPs and loan forgiveness programs offered by schools, states, and the federal government are popping up at an unparalleled rate. “It’s critical when people are graduating with mortgage-sized $100,000-plus debts that they have some assistance if they’re going to go into public service,” says David Stern, executive director of Equal Justice Works, which provides public interest opportunities and funding for lawyers who want to represent vulnerable populations. (Staff at Equal Justice Works authors a blog, Student Loan Ranger, for usnews.com that covers education financing and debt relief.)
In all, Stern estimates that about 100 law schools offer some form of repayment assistance to grads who go into public service or work for a nonprofit; some with flush coffers, like Harvard University, offer assistance to any student who lands a job with a low income, even if it’s with a private firm. The programs typically award students an annual check covering a fixed percentage of their loan payments for that year.
Onyema, for example, will receive a check for 85 percent of the roughly $13,500 he owes every year for the 10-year duration of his repayment plan, assuming he sticks with public service. (Stanford offers 100 percent loan repayment help for people making less than $50,000 annually.) A 2010 Equal Justice Works study found that the average annual LRAP award is $3,900; about 5 percent of programs offer more than $10,000 annually.
[Learn the ins and outs of graduate PLUS loans.]
Given that medical students who go on to specialized practices make far more than general practitioners—according to the American Medical Group Association, the median salary for internists in 2010 was $219,500, compared to $386,068 for dermatologists and $422,921 for cardiologists—a shortage of general and family physicians is developing nationwide.
To help attract more professionals into primary care, some states and the federal government’s National Health Service Corps are offering generous loan forgiveness programs for physicians and nurse practitioners who are willing to practice internal or family medicine.
Teachers get a break from Uncle Sam, too. Federal Perkins and Stafford loans can be discharged over time if teachers choose to work in a school that serves low-income families, to teach special education, or to teach English as a second language. For Perkins loan recipients to attain full forgiveness, for instance, teachers must remain in a qualifying job for five years, though they can get partial forgiveness if they change their career track; Stafford loan assistance is capped at $17,500.
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The College Cost Reduction and Access Act, which went into full effect in 2009, established a national loan forgiveness program that applies to all college graduates, but stands to be most beneficial to graduate and professional students carrying heavy debt burdens who earn relatively meager salaries.
The program has two primary benefits. The first allows people whose loan payments would exceed 15 percent of their annual discretionary income (the difference between their gross income and 150 percent of the federal poverty line, which is currently $16,335 for an individual and $33,525 for a family of four) to make monthly payments based on their income rather than the size of the loan.
Second, and perhaps most beneficial, all remaining debt is forgiven after a borrower has worked for 10 years (not necessarily consecutive) in the public service sector. “You win the lottery,” says Stern.
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