One of the Student Loan Ranger's all-time favorite
television series was the quirky '90s show "Northern Exposure." The
premise was that the main character, New Yorker Joel Fleishman, had his medical
school tuition paid for by Alaska in exchange for him living and working in
that state for a period after he graduated. Instead of the expected destination
of Anchorage, he's sent to the very small town of Cicely with its cast of
eccentric characters.
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The show came to mind when we were answering one of the most
frequent questions we receive here at Student Loan Ranger: "How can I get
my loans forgiven?" We've talked about the most common programs, the
income-driven repayment plans and Public Service Loan Forgiveness, many times
before. This week we're highlighting a few state programs that offer some very
generous student loan repayment benefits in exchange for living and working in
a particular state, in a particular field.
• Alaska: While there may not be a Cicely, the state does
offer a very generous loan repayment program for qualified health care workers
willing to live and work in areas with shortages of certain types of health
care providers. The program will pay up to $35,000 in qualified federal or
private student loans for up to three years.
Alaska's program allows an additional three years for some
employees and will increase the benefit to $47,000 per year for "very
hard-to-fill positions." The level of benefit will depend in part on
whether you are licensed in a tier I position – as a physician, dentist or
pharmacist – or in a tier II position, which includes physician assistants,
nurse practitioners, registered nurses, physical therapists, clinical
psychologists, clinical social workers and dental hygienists.
• California: If you're more into water skiing than dog
sledding, California also offers a very generous loan repayment program for
qualified health professionals. The California State Loan Repayment Program
offers up to $50,000 per year in federal or private student loan repayment for
a two-year, full-time, commitment in an underserved area.
Have more qualified debt? Extend your service and receive up
to $20,000 per year for years three and four, and $10,000 per year for years
five and six. You must be licensed to practice in California and not be part of
a private practice.
Eligible areas of health care include medical doctors in
primary care or family medicine, psychiatric nurse specialists, dentists,
mental health counselors, registered dental hygienists, health service
psychologists, primary care nurse practitioners, licensed clinical social
workers, primary care physician assistants, licensed professional counselors,
marriage and family therapists, certified nurse midwives and pharmacists.
• New York: State residents with undergraduate degrees from
approved New York colleges and universities may have up to $10,000 per year of
their loans repaid if they operate a farm full time within the state. Most
federal loans (except Perkins) and private student loans are eligible and you
must sign a five-year commitment to be eligible. The maximum award is $50,000.
• North Dakota: Got milk? Veterinarians licensed to practice
in the state may receive up to $80,000 in loan repayment benefits by agreeing
to a two-, three- or four-year commitment in a high-need area. Only three
veterinarians are approved per year and preference is given to those willing to
focus on "large food animals."
The award amounts are as follows: $15,000 for each of the
first and second years of a two-year contract; $15,000 for each of the first
and second years and $25,000 for the third year under a three-year contract;
and an additional $25,000 for the fourth year of a four-year contract.
Those are just a few of the dozens of state-based student
loan repayment programs out there. You can find a full list in our e-book.
Now, the bad news: The majority of student loan borrowers
are going to have to pay back their student loans as agreed. The programs that
most federal loan borrowers may qualify for are the income-driven repayment
plans and, if they work for a nonprofit or government employer, Public Service
Loan Forgiveness.
Keep in mind, however, that these programs require many
years of payments before any forgiveness kicks in – and under the income-driven
plans, the forgiven amount is taxed as income. As far as these state and other
programs go, the amounts and availability can change annually based on budgets
and priorities.
The bottom line is that one should never borrow in anticipation
of forgiveness. But if you have significant study loan debt, these programs
are a great way to reduce that debt while gaining experience and giving back.
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