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Borrowers in Alabama owe an average of $33,873 in federal and private loans, which is 8% lower than the U.S. average of $36,689. There are 600,000 student loan borrowers in Alabama, owing $22 billion and making an average payment of $244 a month.

Alabama offers student grants and other financial aid to certain students, which can help reduce the amount of debt experienced by these students. However, Alabama student loans are still a major part of life for hundreds of thousands of people. Here’s what you need to know if you have student loan debt in Alabama.

Alabama student loans: Borrowers owe average of $33,873 in federal, private debt — and more facts

Alabama features 14 four-year public universities and 24 public community colleges. Students can get help paying for school with the help of different assistance programs, including ones for dependents of blind parents and survivors of those killed in the line of duty. Alabama also offers the Student Grant Program and the Student Assistance Program, which provide aid to students continuing their education at eligible schools in the state.

In addition, Alabama students can access American Legion scholarships, as well as athletic and performing arts scholarships awarded to community college students.

For students interested in reducing their reliance on Alabama student loans, there are different options, based on various situations. However, many students will still need some student debt to cover their costs.

Student loan debt in Alabama’s largest counties, from Jefferson to Mobile

Student loan debt by ZIP code in Alabama’s largest city: Birmingham

Loan repayment programs for Alabama residents

If you have Alabama student loans, you might be able to take advantage of student loan forgiveness. Here are some of the student loan forgiveness programs available to Alabama residents.

Alabama Math and Science Teacher Education Program (AMSTEP)

For teachers willing to complete certification in math and science and teach public school in areas with a shortage in those subjects, AMSTEP offers up to $7,500 a year in loan repayment help. Teachers eligible for the program can receive the award for up to four years.

National Health Service Corps

The federal government offers different loan repayment programs through the National Health Service Corps, which focuses on encouraging health care professionals to work in areas that are designated as shortage areas. When working with the National Health Service Corps in Alabama, it’s possible to receive up to $120,000 in loan repayment help, depending on the specialty and the years of service provided.

Public Service Loan Forgiveness (PSLF)

PSLF is a federal program that aims to forgive student loans after borrowers have made 120 qualifying payments while working with an eligible employer (in general, an eligible employer is a nonprofit or government organization). With PSLF, you’ll need to pay direct loans (or other federal loans that have been consolidated into a direct loan) using an income-driven repayment plan. Once qualifying payments have been made, the remaining federal student loan balance is forgiven.

Teacher Loan Forgiveness

The federal government also offers a Teacher Loan Forgiveness program that provides educators with up to $17,500 in loan forgiveness after they teach for five consecutive years in a low-income area or with an education service agency.

Alabama federal student loan borrowers younger than 25 owe more than national average — and more comparisons

How to refinance Alabama student loans

In Alabama, 7.9% of borrowers owe $100,000 or more in student loans. For these borrowers, refinancing can be an attractive way to potentially reduce interest charges and pay off debt faster.

When you refinance your loans, you take out one big loan and use it to pay off all your smaller loans. In many cases, refinancing can reduce your interest rate and potentially help you pay off your loans faster. It can also be a way to reduce your monthly payments and make them more manageable.

However, when you refinance any federal loans, you lose access to federal benefits, including:

  • PSLF
  • Income-driven repayment
  • Automatic deferment in certain circumstances

Carefully consider whether refinancing makes sense for your federal loans. It’s possible to refinance private student loans and separately consolidate federal loans. Decide what’s best for your situation before going forward.


  • U.S. Department of Education data as of June 30, 2020
  • Anonymized My LendingTree June 2020 credit reports
  • Federal Reserve Bank of New York Consumer Credit Panel/Equifax as of June 2020

Because the latter data is from 2015, researchers estimated the increase in student loan debt per borrower in the state using statewide data from anonymized credit reports.

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