4 States That Offer Generous Student Loan Forgiveness Programs

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.

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.

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-- 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.

[Check out careers that offer student loan forgiveness.]

-- 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.

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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 student loan debt, these programs are a great way to reduce that debt while gaining experience and giving back.

Betsy Mayotte, director of regulatory compliance for American Student Assistance, regularly advises consumers on planning and paying for college. Mayotte, who received a B.S. in business communications from Bentley College, is a frequent contributor to ASA's SALT Blog; responds to public inquiries via the advice resource "Just Ask;" and is frequently quoted in traditional and social media on the topics of student loans and financial aid.