What Is the Name of Student Loans That Don't Have to Be Repaid?

Once you take out a student loan in the U.S. you almost always have to pay it back, even if you declare bankruptcy. Some students even flee the country to avoid debt. You can get the government to forgive some student loans, but you cannot expect all of your debt to be forgiven, especially if you have a loan from a private lender.

Identification

The U.S. Bankruptcy Code makes it nearly impossible to discharge student loan debt -- federal and private -- in bankruptcy court, because the government does not want people getting a free college education by declaring bankruptcy. You can eliminate student loan debt through bankruptcy if you become incapacitated. Otherwise, you will eventually have to pay it back -- the lender might sue for a levy or lien on your property if you stop payment on your loan. The only type of aid that does not have to be repaid is a grant or scholarship. (ref 2)

Forgiveness Programs

The federal government offers rebates toward student debt for people serving in programs that benefit the public good. One of the most common programs is AmeriCorps, which sends volunteers to communities around the U.S. and offers up to $4,725 toward federal student debt after 12 months of service in 2011, according to FinAid.org. The Peace Corps, which has volunteer opportunities outside of the U.S., will cancel up 70 percent of student loan debt. The Army National Guard offers up to $10,000 in tuition rebates and military associations might offer additional assistance.

Career

Some careers are in such need in disparaged areas that the government offers to cancel all of your student loan debt. Teachers willing to serve in underprivileged areas, for instance, might qualify for this if they teach certain subjects or special needs children in a public or nonprofit school. Hospitals and private health care practices might offer student loan repayment as a perk for signing an employment contract.

Tip

Talk to your college's financial aid office about grants and scholarships they might offer. Also, depending on the cost of college and your family's income, you might automatically qualify for government education grants. The Pell Grant is the largest government college grant program; a student can receive up to $5,500 for the 2010-2011 school year. States might also offer their grants similar to federal programs. Good grades in high school gives you a better chance at a merit-based scholarship. Apply to as many outside scholarships as possible, because it does not hurt to try.