How to Pay Off Student Loans with a Grant

Scholarships and financial aid aren’t the only way to get free money to pay for college. Even if you graduated several years ago, you might still be eligible for one of hundreds of incentive programs to help pay off your loans. This can include both private¹ and federal student loans.

Here’s what you need to know about paying off student loans with a grant.

Can you pay off student loans with a grant?

While some programs may offer one-time grants to reduce your remaining balance, many incentive programs pay off your loans directly while you’re working in a qualifying career.

Regardless of whether the program is classified as a “grant,” however, they achieve the same goal—helping you pay off your loans so it doesn’t come out of your pocket.

Programs and grants that help you pay off student loans

Just like college scholarships, most grants and loan forgiveness programs have narrow eligibility criteria. Some are for residents of certain states only, while others are for specific careers. Unlike student aid for higher education, you won’t need to fill out the FAFSA form for these opportunities—they’re generally based on your career rather than your finances. Here are some opportunities to get you started.

By career

Most student loan forgiveness programs focus on fields in need of new employees. If you work in health, education, the military, nonprofits, law, or in local, state, or federal government, there’s a good chance you can find a program to help reduce your student loan debt.

Healthcare professionals

Veterinary Medicine Loan Repayment Program — This grant from the US Department of Agriculture offers up to $25,000 per year in loan repayment for veterinarians working in critical shortage areas.

National Health Service Corps Loan Repayment Program — This NHSC program offers up to $50,000 for qualifying doctors, dentists, and others in certain health careers.

Nurse Corps Loan Repayment Program — Qualifying nurses can get up to 85% of their nursing school debt paid through this program from the Health Resources and Services Administration.

Teachers

Teacher Loan Forgiveness Program — Teachers who have worked five full, consecutive years in qualifying schools can get up to $17,500 of their federal debt canceled.

Perkins Loan Cancellation for Teachers — Full-time teachers in low-income schools and/or who teach qualifying subjects can get up to 100% of their Perkins loans canceled.

Teacher Development Grants — These grants of up to $20,000, from the McCarthy Dressman Education Foundation, offer teachers an opportunity to fund innovative projects for classroom development. You won’t be able to pay off your loans directly with the money, but you can pay yourself a stipend for the project from the grant — which you could potentially use as extra income to help pay your loans.

Nonprofit organization employees

Loan Repayment Assistance Program for Nonprofit Journalists — This program for recent graduates of Columbia Journalism School helps pay off debt for journalists working in nonprofit newsrooms.

Shared Harvest Fund — Regardless of where you work, this unconventional program allows people to volunteer in exchange for student loan payments made directly on their behalf.

Lawyers

John R. Justice Program — Prosecutors and public defenders can get up to $10,000 per year to cover student loan repayment.

Attorney Student Loan Repayment Program — Attorneys and other employees working in the Department of Justice can receive grants of up to $6,000.

State Loan Repayment Assistance Programs — Twenty-four states offer loan repayment programs for lawyers working in public interest law, which can help pay off debt from law school. Check out the American Bar Association for a list of these programs.

Military members

College Loan Repayment Program — Active members of the Army are eligible for a wide range of tuition and loan repayment programs, including this one, which will repay up to $65,000 in debt over three years of service.

Department of Defense Repayment of Your Loans — Active members of the Armed Forces may be eligible for student loan repayment assistance programs covering up to your full loan amount, depending on which branch of the military you’re in.

Veterans Total and Permanent Disability Discharge — If you were injured in military service, you may qualify for all of your federal loans, and even some or all of your private student loans, to be discharged.

Government employees

Federal Agency Student Loan Repayment — By law, federal agencies can offer employees up to $60,000 in loan repayment over six years. If you work in a federal agency, ask your manager how you can qualify.

Public Service Loan Forgiveness — Also called PSLF, forgiveness through the federal government is available for a wide range of public service employees, such as Americorps and the Peace Corps. After 10 years of qualifying payments, the remainder of your loan balance will be canceled.

National Institute of Health Loan Repayment Program — The NIH loan repayment program offers up to $50,000 annually for health professionals in biomedical and biobehavioral research careers. Separate LRPs exist for people who work for the NIH (a government agency) and people who work outside the agency.

By state

Many student loan grant programs are state-specific, so make sure you check for opportunities eligible to you as a resident. We’ve compiled a list of over 100 of these programs, so start your search here.

Where to find grants and programs that pay off student loans

If you’re looking for more grants programs to help you pay off student loans, scholarship search engines, federal websites like studentaid.gov, and lists of private companies with employee assistance are great places to start. However, there may be many opportunities that aren’t listed on these sites.

Try searching for your career plus “loan repayment” or “student loan grant.” Don’t stop there, either — you may be eligible for grants that offer cash payments that aren’t specific to student loan repayment, so you can use the money however you’d like.

Journalists, artists, and people in other creativity-focused careers can often find local, national, and international opportunities to get funding. These sources are designed to support their living expenses while they work on projects outside of standard employment — which you could potentially use to help pay down your debt, as long as it doesn’t violate the terms of the grant.

If you can’t find grants you’re eligible for, it might be worth calling your state’s department of education just to make sure there aren’t any hard-to-find grants you’re missing out on.

What if you’re not eligible for grants or loan forgiveness programs?

If you don’t meet eligibility requirements for student loan forgiveness or grant programs, you still have some options to reduce your monthly payments and save money over time. Here are a few ways you can reduce loan payments from the U.S. Department of Education, and/or restructure them alongside private student loans to make your bills easier.

Consolidation

Consolidating your federal loans won’t save you money on interest over time, but it can help you reduce your monthly loan payments into one bill that’s much more manageable. Your new interest rate will be a weighted average of the rates of all your previous loans.

Refinancing

You may be able to get a lower interest rate by refinancing² your loans through a private lender. This could save you thousands of dollars³ over the life of your loans so you can pay off your debt faster. Just keep in mind that you won’t have the same borrower protections as you would through a federal loan servicer, so it’s important to be certain you’ll be able to make your payments.

Income-driven repayment plans

Income-driven repayment plans (IDR) can help you reduce your monthly student loan payments—all the way to zero.

There are four ways you can take advantage of this:

SAVE Plan: Biden’s recent “Saving for a Valuable Education” Plan, or SAVE Plan, significantly reduces the amount of money federal loan borrowers have to pay. Based on this new IDR plan, you won’t have to pay more than 10% of your discretionary income per month.

Income-Contingent Repayment: This plan caps payments at 20% of your discretionary income and provides a 25-year repayment term.

Pay As You Earn Plan or Income-Based Repayment Plan: Both of these plans cap payments at 10% of discretionary income and provide a 20-year repayment plan.

IDR loan forgiveness

After making payments for 10-25 years, (depending on your plan and your loan balance), you may also be eligible to get the remainder of your balance forgiven. Always contact your loan servicer with questions about this to make sure your payments are being counted. The last thing you want is to discover 10 years from now, when you thought your loans would be discharged, is that you made a mistake and you still have several years to go.

The student loan on-ramp period

To accommodate the difficulty of restarting payments after such a long hiatus, the federal government has announced that it won’t penalize students for missed or late payments through September 2024. You won’t be reported to credit bureaus or sent to a collection agency during this time which also means that it won’t hurt your credit score if you make a mistake.

Deferment or forbearance

The worst thing you can do when facing hardship because of a student loan is to just stop paying it. To avoid late fees, credit score penalties, or going into default, contact your lender or federal loan servicer as soon as you think you might miss a payment. Deferment and forbearance can provide you with some extra time to get on your feet.

Deferment and forbearance are two types of temporary pauses in payment granted during periods of hardship. Interest will generally continue to accrue, but you may be able to get an interest-free deferment period for federal loans under some circumstances.

Learn more about Earnest student loan refinancing

If you can’t find repayment grants for debt relief, you might want to consider a student loan refinance. Refinancing could allow you to get a new interest rate, repayment term, and a different monthly payment, potentially saving you thousands of dollars over the life of your loan.

Want to find what you could be eligible for? Try our rate calculator. It’s fast, free, and it won’t affect your credit score.

The opinions expressed by the interview subjects are not necessarily those of Earnest. This blog post provides personal finance educational information, and it is not intended to provide legal, financial, or tax advice.

1 Before applying for private student loans, it’s best to maximize your other sources of financial aid first. It’s recommended to use a 3-step approach to assembling the funds you need: 1) Look for funds you don’t have to pay back, like scholarships, grant, and work-study opportunities. 2) Next, fill out a FAFSA(R) form to apply for federal student loans. Federal Direct subsidized and unsubsidized loans, excluding PLUS Loan for Parents and PLUS Loan for Graduate and Professional Students which require a credit check and a credit worthy endorser if the parent or graduate or professional student has adverse credit, do not require a credit check or cosigner, and offer various protections if your struggling with your payments. 3) Finally, consider a private student loan to cover any difference between your total cost of attendance and the amount not covered in steps 1 and 2. For more information, visit the Department of Education website at https://studentaid.ed.gov.

2 You may lose benefits associated with your underlying federal and/or private loans if you refinance such as federal Income-driven Repayment Plans, Economic Hardship Deferment, Public Service Loan Forgiveness, or other deferment and forbearance options. If you file for bankruptcy, you may still be required to pay back this loan.

3 Choosing to refinance to a longer term may lower your monthly payment, but increase the amount of interest you may pay. Choosing to refinance to a shorter term may increase your monthly payment, but lower the amount of interest you may pay. Review your loan documentation for the total cost of your refinanced loan.