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Student loan debt can represent a significant obstacle to public service. In an effort to enable borrowers to engage in public service, both the federal government and the Kennedy School have programs to assist loan borrowers with repaying their student loans. The Kennedy School offers the Loan Repayment Assistance Program (LRAP) and the federal government offers the Federal Public Service Loan Forgiveness Program.
In addition to these programs, there are other opportunities for loan repayment assistance for certain types of employment.
The purpose of Loan Repayment Assistance Program (LRAP) is to assist graduates engaged in public service in paying their monthly student loan payments. Graduates working at public sector and non profit organizations with missions consistent with the mission of the Harvard Kennedy School, and earning up to $70,000 for single applicants or $90,000 for married applicants, may apply to the program. Applicants may receive coverage for a total of five years.
In 2007, the CCRAA was passed into law. As part of this act, Congress created a new public service loan forgiveness program.
The Public Service Loan Forgiveness Program has several restrictions:
The forgiveness occurs after 120 monthly payments made on or after October 1, 2007 on an eligible Federal Direct Loan. Periods of deferment and forbearance are not counted toward the 120 payments. Payments made before October 1, 2007 do not count. Likewise, only payments on a Federal Direct Loan are counted.
What is forgiven? The remaining interest and principal are forgiven.
The borrower must be employed full-time in a public service job for each of the 120 monthly payments. Public service jobs include, among other positions, government, military service, public safety and law enforcement (police and fire), public health, public education, public early childhood education, public child care, social work in a public child or family service agency, public services for individuals with disabilities or the elderly, public interest legal services (including prosecutors, public defenders and legal advocacy in low-income communities), public librarians, school librarians and other school-based services, and employees of tax exempt 501(c)(3) organizations. Full-time faculty at tribal colleges and universities, as well as faculty teaching in high-need areas, also qualify.
Eligible loans include Federal Direct Stafford Loans (Subsidized and Unsubsidized), Federal Direct PLUS Loans, and Federal Direct Consolidation Loans. Borrowers in the Direct Loan program do not need to consolidate in order to qualify for loan forgiveness. Borrowers in the FFEL program will need to consolidate into Direct Loans. (Beginning on July 1, 2008, FFEL borrowers may obtain a Federal Direct Consolidation Loan in order to qualify for public service loan forgiveness even if they had previously consolidated in the FFEL program. Such borrowers will be restricted to the income-based repayment, income-contingent repayment and standard repayment plans.
(The above excerpted from FinAid.org)
The Federal Student Loan Repayment Program permits agencies to repay federally insured student loans as a recruitment or retention incentive for candidates or current employees of the agency. The program implements 5 U.S.C. 5379, which authorizes agencies to set up their own student loan repayment programs to attract or retain highly qualified employees.
Perkins Loans may be cancelled or forgiven for a number of reasons. The federal government uses loan forgiveness as a way to recruit people into professions that are understaffed or into geographic areas of need.
Schools may cancel up to 100% of a Perkins Loan if the borrower has served full time in a public or nonprofit elementary or secondary school system as a
• teacher in a school serving students from low-income families;
• special-education teacher, including teachers of infants, toddlers, children, or youth with disabilities; or
• teacher in the fields of mathematics, science, foreign languages, or bilingual education, or in any other field of expertise that is determined by a state education agency to have a shortage of qualified teachers in that state.
Other Service Cancellations
Schools may cancel up to 100% of a Perkins Loan if the borrower has served full time as a/an:
• nurse or medical technician providing health care services;
• employee of an eligible public or private nonprofit child or family service agency who is providing or supervising the provision of services to both high-risk children who are from low-income communities, and the families of such children;
• qualified professional provider of early intervention services in a public or other nonprofit program under public supervision;
• staff member in the educational part of a preschool program carried out under the Head Start Act; or
• qualifying law enforcement or corrections officer.