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Can You Use Scholarships to Pay Off Student Loans?



Question: Are there scholarships/grants to pay off student loans? Can I apply for a college scholarship and apply it to my loan debt? – Elyse in Virginia

Howard Dvorkin, CPA and chairman of, responds…

As someone who’s bestowed a $500 scholarship every other month for nearly five years – you can apply for it here – I can tell you with certainty: Most scholarships don’t ask how you spend the money. They don’t demand receipts.

That said, you actually need to be in college to win a scholarship. That money won’t help you with your student loans – unless you squirrel it away until those payments kick in six months after graduation. And most college students I know need every dime. Otherwise, they wouldn’t have taken out student loans in the first place.

(The exception to this: if you have unsubsidized federal loans, you can make interest payments while you’re still in school. That keeps your debt from skyrocketing once you graduate, but it’s a juggling act now every student can pull off.)

The second part of Elyse’s question is more interesting and more lucrative. Unfortunately, it’s also more confusing. So, let’s simplify it.

There are indeed grants specifically to pay down student loan debt. But they come with some pretty big strings attached. That’s because they’re all based on influencing your career choices.

For example, there’s something called the Extramural Loan Repayment Program for Contraception and Infertility Research. Right away, you can see why I said these grants can be confusing. This program – which even abbreviated is called LRP-CIR – is run by the U.S. Department of Health and Human Services. It “repays up to $50,000 annually of a researcher’s qualified educational debt in return for a commitment” to conduct research into contraception and infertility.

“That’s great,” I can hear you saying. “I’d love $50,000 to pay off my student loans, but I’m not an infertility researcher. Now what?”

Crushed by student loan debt and worried you’ll never pay it off? There is help available.

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Let’s look at other what other professions offer…


Teach full-time for five years in a low-income school, and you can get up to $17,500 off your student loans, depending on the kind you have. It’s called the Teacher Loan Forgiveness Program, and like any federal program, it has lots of rules and regulations. Still, if you’re a teacher, it’s worth 20 minutes to review and 30 minutes to apply.


If you use your law degree to defend criminals or put them away, you can receive up to $10,000 a year – for six years – to pay off your law school loans. The John R. Justice Program makes you promise to be a state prosecutor or public defender for at least three years, up to a maximum of six years.

There’s a similar program for the federal government. The Justice Department’s Attorney Student Loan Repayment Program offers up to $6,000 to pay its attorneys’ student loans.

Finally, you can enter a lottery that will pay more than $5,000 toward your student loans. It’s called Herbert S. Garten Loan Repayment Assistance Program, and you not only have to work in a certain place, you’re not guaranteed you’ll get anything.

Doctors and nurses

Medical professionals have several opportunities to get other folks to help them pay off their student loans. The most popular is called the National Health Service Corps. Doctors, mental health pros, and even dentists can get $50,000 off their student loans if they commit to two years of serving in a “high-needs community.”

The IHS Loan Repayment Program works the same, offering up to $40,000 if you serve in American Indian or Alaska Native communities. Then there’s the Nurse Corps Loan Repayment Program, which will cover 85 percent of your loan balance if you work in a “critical shortage area.”

Other options

These are just some of the programs for teachers, lawyers, and medical professionals. New ones come online all the time, and some aren’t just particular to a career but also a state. Why? Because student loan debt is such a huge problem – topping $1.3 billion, which is more than all the credit card debt in this country – that everyone realizes something needs to be done about it.

That’s why the federal government created specific programs to help struggling graduates. Like the federal programs we just discussed, they can get complicated – what’s the difference between an “income based repayment program” and an “income contingent repayment program”? Even broader than that, what’s the difference between student loan relief and student loan forgiveness?

For those answers, check out’s Get Out of Student Loan Debt section. If that’s still too overwhelming, you can get a free debt analysis from a trained specialist by calling . Sometimes it really helps to have a real live person explaining these complex concepts to you in plain English – especially when the result is more cash in your pocket.

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