Being an engineer can often guarantee a pretty good salary. Although there are various types of engineers, the Bureau of Labor Statistics estimates that the median salary in 2016 was $91,010. But depending on your degrees and the school you went to, you might have a lot of student loans to contend with.
If you’re an engineer, check out these options for repayment assistance and student loan forgiveness for engineers.
Federal student loan forgiveness programs
If you have federal student loans, you may qualify for some student loan forgiveness programs. Unfortunately, these programs aren’t available for borrowers with private student loans.
Public Service Loan Forgiveness
If you end up getting an engineering job with certain government agencies, you may qualify for Public Service Loan Forgiveness (PSLF). Under PSLF, qualified borrowers who work at a nonprofit or government agency are eligible for student loan forgiveness after working for 10 years and making a total of 120 payments. The forgiven amount under PSLF is also tax-free.
Federal loan borrowers are also eligible for student loan forgiveness through an income-driven repayment (IDR) plan. There are four different income-driven repayment plans:
- Income-Based Repayment (IBR)
- Income-Contingent Repayment (ICR)
- Pay As You Earn (PAYE)
- Revised Pay As You Earn (REPAYE)
Under these four income-driven repayment plans, borrowers pay a percentage of their income. In general, between 10% and 20% for 20 to 25 years. The exact numbers vary depending on the plan. If there’s a remaining balance at the end of the repayment term, that amount is forgiven.
This is a good option for student loan forgiveness for engineers. But the forgiven amount under IDR is considered taxable income. We suggest saving for these tax consequences with Betterment.
Higher Education Opportunity Act of 2008
The Higher Education Opportunity Act of 2008 was approved by Congress in July 2008. The goal of the act is to provide student loan repayment forgiveness for engineers. The program would offer $2,000 per year for up to five years while working as an engineer. Though it was approved by Congress, the program is not currently funded.
State programs for student loan forgiveness for engineers
To our knowledge, there is only one remaining state specific loan forgiveness program for engineers. North Dakota used to have one, but their state assembly discontinued it.
Maine has the Alfond Leaders program by the Harold Alfond Foundation. This is a student loan repayment assistance program to help reduce the debt burden for STEM employees in Maine. The program launched in February 2017 and is managed by the Finance Authority of Maine. The program offers up to $60,000 in student loan forgiveness for engineers.
To qualify, you must be a Maine resident and work for a Maine-based employer in a qualified occupation. This program offers a hefty amount of student loan forgiveness for engineers. But as part of the application, you’re expected to make a declaration that you’ll live and work in Maine for a decade.
Employer-based student loan forgiveness for engineers
Some employers are getting on the student loan repayment assistance bandwagon, knowing that their employees are dealing with the burden of debt. Here are some employers that offer student loan forgiveness for engineers.
Abbott is a health-care technology company and has a unique approach to offering student loan repayment for engineers. The company understands that student loan borrowers deal with a common dilemma: Should they pay off their loans or save for retirement?
To solve this problem, Abbott unveiled the Freedom 2 Save Plan. This plan offers a 5% “match” to full-time and part-time employees. Employees who are eligible for a 401(k) and contribute 2% of their pay to their student loans are eligible for the plan. The match is deposited into your 401(k) without any contribution needed from you. This way, you’re still paying down your student loans while also saving for retirement.
Natixis Investment Managers
Natixis Investment Managers, an asset management company, offers $1,000 in student loan repayment assistance to employees each year. The company employs various types of engineers, such as network security engineers. The funding can go to either federal or private student loans. You can earn up to $10,000 over a period of 10 years, and each month, $83.33 will be sent to your student loan provider.
PriceWaterhouseCoopers (PwC) offers student loan repayment assistance of up to $1,200 per year. The company has various career opportunities for engineering majors and minors. PwC will pay $100 per month directly to your loan servicer for up to six years.
Your next employer
These companies have clear student loan repayment assistance policies and programs for engineers. Your next job may as well. It doesn’t hurt to ask your prospective employer about any student loan benefits. See if the company offers student loan repayment assistance or reimbursement in some way.
Student loan refinancing
So what can you do if you want to save money on your student loans but student loan forgiveness or repayment assistance isn’t available? One option to consider is student loan refinancing.
Student loan refinancing is the process of obtaining a refinanced loan at a lower rate than your current loans. The reduction in interest rate could potentially save you thousands of dollars.
There are many student loan refinancing companies to consider, each with different eligibility requirements. If you do get student loan repayment assistance from your employer, you want to make sure refinancing your loans won’t make you ineligible for the program.
Student loan refinancing can be a good, cost-effective option. But be aware that refinancing federal loans will mean giving up federal benefits. The student loan forgiveness under PSLF or income-driven repayment is no longer available when you refinance. If you’re sure you don’t want to go that route and think your employment is stable and credit is in good shape, this is an option to consider.