How Financial Aid for National and Community Service Works

Financial Aid Opportunities for College Students

If you're a college student, now might a great time to start thinking about devoting some time to giving back. Why? First, your financial obligations may be less daunting than the average two-kids-and-a-mortgage adult's. Second, you're probably used to working hard, long hours for not a lot of pay. And finally, the government has program that will help you out.

One of the most popular programs among college students and graduates is AmeriCorps. Full-time participants who complete their program earn an education award, which can go toward paying for college, graduate school or qualified student loans. If you serve part-time, you'll receive a partial education award. Depending on the program in which you enroll, you might also receive a modest stipend for living expenses while you serve. You can read more about this in How Financial Aid for AmeriCorps Works.

If you're about to graduate, you may consider going into a career in the public service -- you'll be doing beneficial work, and the government may help you out with your student loans. For example, the College Cost Reduction and Access Act of 2007 includes a provision for the Public Service Loan Forgiveness program. The definition of "public service" is fairly broad: You can work in government, law enforcement or the non-profit sector to be eligible. Participants can have the remaining balance on their school loans forgiven after 10 years of full-time employment -- at least 30 hours a week -- in the public service. What's more, the forgiveness includes both your principal and interest -- and it won't be taxed.

However, there are a few restrictions to keep in mind, First of all, only federal Direct Loans are applicable. Your loan will be forgiven after you've made 120 payments on it (10 years' worth), but these payments must have begun on or after Oct. 1, 2007. You have to be employed in the public service job while you make these 120 payments, and you must be employed in the public service job when the Secretary of Education forgives the loan -- no bailing out early. You can learn more about this program at the U.S. Department of Education's Web site [source: StudentAid].

College students aren't the only people who can make a positive impact on their communities and get a little back from the government in the process. Read on to find out how older people can also benefit from the American call to service.