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How to Get Uncle Sam's Help With Student Loans
Instead of paying off your student loans, you can work them off with the government's help.


While most people know that the government offers various types of student loans, some may not be aware that Uncle Sam also offers graduates a number of ways to pay back loans. By volunteering, or working in community-service positions, graduates can have their debt paid for, diminished and sometimes eliminated by the government.


Volunteering for the Peace Corps, AmeriCorps or the Volunteers in Service to America (VISTA), for instance, can earn graduates money toward their loan repayment.


The organization may forgive 15% of a Perkins loan per year for the first two years of service and up to 20% per year for the third and fourth years of service, according to Molly Jennings Levine, a Peace Corps public affairs specialist. This means up to 70% of a Perkins loan can be paid for through service in the Peace Corps.


"This benefit is definitely attractive to many people that are interested in serving in the Peace Corps," Levine says.


Volunteers with other federal consolidation loans qualify for deferment of these loans for up to three years during service. The actual length of the deferment actually depends on the lender.


AmeriCorps and VISTA also offer money toward the payment for education. Volunteers can receive the Segal AmeriCorps Education Award. The award is good for $4,725 for a year of service. The money can be used toward educational expenses, educational training or to repay qualified loans.


AmeriCorps is allowed 70,000 members a year by Congress, according to Siobhan Dugan, public affairs specialist at the Corporation for National Community Service. After a year of service each volunteer receives the Segal AmeriCorps Education Award. Volunteers then have seven years to put their award to use.


Graduates looking to go into education may want to carefully consider where to teach. Under the National Defense Education Act, teachers may qualify to have their federal loans paid for. In addition to this Act which applies to teachers all over the nation, many individual states have programs set up to help teachers pay back student loans.


Teachers in schools serving low-income families across the nation can qualify for up to $5,000 toward their Stafford loans while qualified math, science and special education teachers can get up to $17,500 for their student loans. To be eligible for these loan repayment programs, teachers must complete five consecutive years of teaching and must meet specific state-regulated standards.


In addition to the national repayment programs, many states offer similar repayment programs, funds and scholarships. The different state programs all offer teachers repayment options for their federal Stafford and Perkins student loans.


The government program offering the most in student loan payment is the Army National Guard. Graduates in the Army National Guard may be eligible to have their loans paid for by the government. The program offers members up to $20,000 toward their loan payments. Guard members can receive 15% or $5,000 a year toward the outstanding principle balance on their student loans.


Like in the teaching field, many states offer different loan repayment and scholarship opportunities to members of the Army National Guard.


Government Loans


Students looking for loans to pay for their education can apply to receive a Perkins loan, a Direct loan, a Stafford loan or a combination of the three. Parents looking to take out a loan to support their children are eligible to apply for a PLUS loan.


With a Federal Perkins Loan, undergraduate students can receive up to $4,000 a year maxing out at $40,000 while graduate students are eligible for $6,000 a year maxing out at $60,000. This money is lent to students by their college or university and the actual amount is determined by financial need and the availability of funds at the school.


The Stafford loans are also available to graduate and undergraduate students. The amount dispersed depends, however, on grade level in school and the dependency status of the student. These loans generally are handed out through banks, credit unions or participating private lenders. Direct loans are given by the U.S. Department of Education.


The PLUS loan, available to parents, has no dollar-amount limit. The loan is determined by the cost of attendance at the student's school subtracted by any other aid received by the child. This resulting difference then becomes the maximum dollar amount of the PLUS loan. The PLUS loan is similar to the Stafford loan in that it is lent by banks while Direct loans are provided by the Department of Education.


Although these types of loans alleviate some of the stress of paying for college in the short term, they must be paid back after school and accrue interest after the education period ends.


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