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New job, old loan

Gayle Goddard-Taylor -- You're about to leave the hallowed halls of academia and start using your freshly minted skills.

But there's a catch. While you were studying the doctrines of law, following economic trends, or memorizing disease names, your student loans were sleeping. Now that you've graduated, the repayment clock is starting to tick. Today's college grad typically incurs loans of $16,000 or more to augment any grants or scholarships landed along the way. And those exiting graduate school or pursuing certain professions will have racked up significantly more debt.

The Monetary Monkey

The Access Group, of Wilmington, DE, is a primary lender for law students. If you've just secured a law degree, according to their statistics, you probably owe anywhere from $40,000 to $80,000. If your degree is in the medical field, you might be $70,000 to $150,000 in debt, depending on your field and the schools you attended. So says Bruce Baggett, director of the Health Resources and Services Administration Division of Student Assistance.

But whatever career path you choose, student loans will typically come due at the end of a six-month grace period following graduation. Wouldn't it be nice to just wave a magic wand and see those loans disappear?

The Magic Wand

For graduates who don't mind temporarily taking a lower-than-average paying job, there are "magic wand" programs that forgive a significant portion of an education-related debt. In exchange, the graduate promises to work for a designated period of time in a disadvantaged area.

The debt-laden law school grad, according to Sheila Siegel of the National Association of Public Interest Law, might have his or her loan diminished or dismissed if they are willing to serve in public interest positions. Additionally, legal organizations in more than a dozen states and the District of Columbia offer loan repayment options, according to NAPIL figures. And four states--Arizona, North Carolina, Minnesota, and Maryland--have instituted loan repayment programs to attract attorneys to underserved areas.

"Minnesota's program is very broad," Siegel says. "You can go to school in Minnesota and work [in underserved areas] anywhere or you can go to school anywhere in the country and work [in underserved areas] in Minnesota."

But if you think that prestigious private law firms will be courting you with huge salaries and promises of loan forgiveness, forget it, says Access Group director of debt services Jeffrey Hanson. "It used to be something large law firms would do, but in the early 90s they stopped doing it because the market was so saturated. They didn't need to offer that kind of benefit anymore."

A Healthy Approach

Public interest work in exchange for debt forgiveness isn't confined to the legal field, either. Health professionals can find similar programs to shrink their loan burden. The National Health Service Corporation, which is part of the federal Health Resources and Services Administration, offers about $30 million annually to attract qualified medical professionals to disadvantaged areas. In exchange for a two-year commitment, the NHSC awards up to $25,000 per year for loan repayment. The local hiring institutions pay competitive salaries and provide benefits. If service is extended by a year, an additional $35,000 is paid.

But this particular program is generally oversubscribed. "In 1999, we got about 1,000 applications and could only accept about 30 percent of them," says Laura Griffin, deputy chief of communications for the Bureau of Primary Health Care of the HRSA.

There are other options available. The American Physical Therapy Association and the American Occupational Therapy Association, for example, both offer to pair debt-strapped healthcare grads with the institutions that need them most.

The HRSA Bureau of Health Professions has targeted degree-trained health professionals who meet specific criteria for an annual loan repayment of $10,000-$18,000. In exchange, recipients agree to serve a minimum of two years as salaried members of the faculty of health professions schools. "The goal is to get people into faculty positions where they can be mentors for students," says Bruce Baggett, director of the Division of Student Assistance. Competition is stiff: This year, only 26 of 90 applicants were funded from the $800,000 available.

Adventurous Options

But you don't have to be a medical or legal professional to find ways to erase school debt. If you've got an itch to travel, consider a stint in the Peace Corps. "We've got 7,000 volunteers in 76 countries right now," says Dana Topousis, deputy press director. "They're working on basic programs in education, agriculture, business, health and nutrition, and community development."

For those with Perkins loans (directed toward students with "exceptional financial needs" and administered by individual colleges and universities), the agency assumes 15 percent of a student's debt per year of service for a two-year period. Additionally, volunteers receive a monthly stipend and a $6,000 exit bonus. For people with loans other than federal Perkins loans, the Corps offers loan deferment.

AmeriCorps and Volunteers in Service to America offer similar programs, as do various branches of the military. And, if you can picture yourself cleaning up a river or protecting a forest, the Green Corps, a nonprofit field school for environmental organizing, offers student loan repayment options, a salary, and other benefits.

Owning up to your debt isn't just a matter of honor--it's a necessity in today's world. Defaulting on loans can result in garnished wages, ineligibility for future borrowing, and even a federal lawsuit. You should also know that student loans cannot be discharged by declaring bankruptcy. "The most serious consequence is that it shows up on your credit report," Hanson emphasizes. "It's a huge black mark."

Gayle Goddard-Taylor writes about business, recruiting, women's issues, and nature for www.YourWriters.com.

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