Publication 970
taxmap/pubs/p970-024.htm#en_us_publink1000178313Loan repayment assistance programs (LRAP) provide help in repaying
student loans for those who work in public service occupations or in areas with
unmet needs. Examples of such occupations are health care professionals in
underserved areas, attorneys in legal-aid offices and prosecutor's or public
defender's offices, and classroom teachers in subject areas with shortages.
An LRAP loan refinances your original student loan(s). After
you work for a certain minimum period of time in a qualifying position, all or
part of your student loan indebtedness is forgiven.
The amount of your loan that is forgiven is tax-free if the LRAP
meets certain criteria. Repayment assistance received under the following
programs has been determined to be tax free.
- National Health Service Corps (NHSC) Loan Repayment Program.
- State programs eligible for funds under the Public Health
Service Act.
- Law school LRAP.
If your repayment assistance is from a source other than those
listed, contact the program administrator to see if the LRAP qualifies for
tax-free assistance. The program must meet the qualifications listed earlier in
this chapter under
Qualifying Loans.
 | You cannot deduct the interest you paid on a student loan
to the extent payments were made through your participation in the above
programs.
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