Student Loan Employer Repayment

What is Student Loan Employer Repayment?

There are two things that people are searching for when referring to student loan repayment.  The first is the specific programs offered by employers that will pay off or pay down your student loan and the second is those that want to know the repayment options available for a borrower when they are paying off their own loans.  This page covers both of these topics.

Private Sector Employer Repayment

When it comes to employers many have incentives that they can give prospective employees in their compensation plan that includes the repayment of their student loans.  These compensation packages are common for highly competitive industries where there is a shortage of workers or where there is high competition to attract the best and the brightest.  There is no limitation on the amounts that a private sector employer can offer to a job candidate as part of their overall compensation plan.

Public Sector Employer Repayment

These programs are not limited to the private sector, in fact the federal government offers more student loan repayment programs than any other employer.  The federal program allows different federal agencies and departments to payoff or pay down the federal student loans of the individuals that they are trying to recruit.  Oftentimes this repayment is tied to a particular employment contract or commitment of service.  The maximum amount of student loan repayment that can be offered by a federal agency or department is $10,000 per year of employment up to a maximum of $60,000 for a single person.

Borrower Repayment

If you are paying the loan back yourself, as the borrower, then you should know that your first payment normally starts six months after you leave school (for graduation or other reason) or reduce your class load to less that half that of a full time student if you have a federal direct or Federal Family Educational Loan.  If you have a federal Perkins loan then your first payment will start nine months after the conditions above are met.  For private loans the time between graduation or leaving school and your first payment varies, you need to consult your lender and your loan documentation.

For graduate and professional studies students under the Federal PLUS student loan program the first payment is due 60 days after the final reimbursement for the loan is made.  Even though payment is due, the PLUS student can apply for a payment deferment as long as they are still attending school.  The loan will still continue to accrue interest, but no payment will be due until the student leaves school, graduates, or reduces class load to less than half the load that is considered full time for their particular field of study.

Repayment Strategy

There are many different strategies to payoff student loan debt.  These strategies include loan forgiveness programs such as those offered by the Peace Corps and certain occupations such as teaching as well as loan credits that are offered for working through numerous non profit agencies such as AmeriCorps.  If your strategy is to pay the loan yourself be certain to take advantage of loan consolidations and refinances that offer lower interest rates.  The key to refinancing to lower rates is that you want to make certain that you make a payment that does not extend the term of the loan.  Even if the loan refinances to a full term, you need to make a payment that will amortize that loan in a shorter period of time.

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