Working in healthcare is a noble profession, but nursing school is expensive. Are you having trouble repaying an Installment loan or student loan you took out for an accredited nursing school? The good news is that nursing professionals have a variety of ways to help cover the high cost of education. There are multiple loan forgiveness and repayment programs available that may help you eliminate or reduce the amount of debt you have.
Keep reading to learn about the qualification requirements for various student loan forgiveness and repayment programs.
Student Loan Forgiveness Programs
A student loan works by giving you the funds necessary to afford tuition, books, supplies, etc. But repaying student loans can be a stressful financial burden. The good news is there are three types of student loan forgiveness programs you can apply for.
Individuals that qualify for a loan forgiveness program do not have to repay a portion or the entirety of their current loan balance.
Public Service Loan Forgiveness
The U.S. Department of Education offers a Public Service Loan Forgiveness (PSLF) Program for various individuals that provide public service. Nurses may have the remaining balance of their Direct Loans forgiven after making 120 qualifying monthly payments through a qualifying repayment plan. Typically, it takes about ten years for a student to make the necessary number of payments for loan forgiveness.
Take a look at the qualification requirements for PSLF:
- Work full-time for a U.S. federal, state, local, or tribal government or not-for-profit organization.
- Have Direct Loans or consolidate multiple federal loans into a Direct Loan.
- Repay federal student loans through an income-driven repayment plan.
- Make 120 qualifying monthly payments.
It is crucial that you work for a qualified employer in order to be eligible for loan forgiveness. Although you are a nurse and perform a public service, you must work for a government organization or not-for-profit organization that is tax-exempt under Section 501(c)(3) of the Internal Revenue Code. Keep in mind that time spent volunteering full-time for AmeriCorps or Peace Corps qualifies as employment. For verification purposes, you can use the employer search tool on the Federal Student Aid website to determine if your employer qualifies for PSLF.
You must consolidate your nursing student loans using a Direct Consolidation Loan if you do not have Direct Loans. It does not cost anything to consolidate multiple federal education loans. However, you will have to complete and submit a Federal Direct Consolidation Loan Application and Promissory Note. Eligible borrowers will receive a new fixed-interest rate based on the average of their current rates. After agreeing to pay a new Direct Consolidation Loan, you can have one monthly payment instead of several.
If you want to seek this loan forgiveness program, know that the Department of Education recommends borrowers complete a PSLF Form at least once a year. Although, you may complete it only when you change employers. The PSLF Form is short for Public Service Loan Forgiveness (PSLF) & Temporary Expanded PSLF (TEPSLF) Certification & Application. Submitting updates to a PSLF servicer ensures you’re on the right track for student loan forgiveness through the PSLF Program.
You can download the PSLF Form through the Federal Student Aid website. You will need to submit basic personal information, such as your name, Social Security number, date of birth, etc. Necessary work information includes the employer’s name, address, dates of employment, etc. Once you fill out the form, you can submit it for verification.
Perkins Loan Cancellation
Nurses and medical technicians who have federal Perkins loans and work full-time may qualify for a full or partial Perkins Loan cancellation. If you work full-time, you may be eligible for up to 100% loan forgiveness if you complete five years of qualified service.
As of Oct. 7, 1998, every borrower with a Perkins Loan is eligible for all cancellation benefits regardless of the loan date or the terms of the promissory note. However, the cancellation amount you qualify to get does depend on the type of loan you have as well as the date of the loan. Under particular circumstances, your Perkins Loan may be discharged. A discharge means you no longer have a further obligation to repay all or a portion of the loan.
The Department of Education may grant a discharge for the following conditions:
- Bankruptcy — You may get 100% discharged. However, cancelation is possible in rare cases when a bankruptcy court rules that repayment would cause undue hardship on the student loan borrower.
- Death — You can get 100% discharged in the event of death.
- Disability — You may get 100% discharged for total and permanent disability.
Suppose you want to apply for a Federal Perkins Loan cancellation. In that case, you must submit an application to the school that made the loan or to the school’s Perkins Loan servicer. The school or servicer can provide the necessary forms you need. You will receive specific instructions on what steps you need to take to get a cancellation or discharge.
State-Sponsored Student Loan Forgiveness Program
Almost every state offers at least one loan repayment program for qualified nurses. Getting student loan forgiveness from state-sponsored and federal programs may even be possible. Many state programs also cover private student loans, so you could further reduce your total student loan debt balance.
Suppose you live in Texas and work full-time at an institution as a licensed nurse practitioner. You could apply for the Nursing Faculty Loan Repayment Assistance Program, which grants up to $7,000 annually. To qualify for this state-sponsored loan forgiveness program, you must serve as faculty at an eligible institution of higher education, hold a master’s or doctoral degree in nursing, and be licensed to practice in Texas.
You can contact your state’s education agency to learn more about state-based loan forgiveness for nurses.
Student Loan Debt Repayment Programs
Suppose you do not qualify for student loan forgiveness for nurses. In that case, you may still get financial assistance through loan repayment programs. A loan repayment program could help you save on interest fees or get a reduced monthly payment amount. Keep reading to learn how to qualify for different student loan repayment options.
Income-Driven Repayment Plans for Federal Student Loans
Suppose you have a low income and have trouble paying your federal student loans. In that case, you can try applying for an income-driven repayment plan. The U.S. Department of Education offers four different types of repayment plans based on discretionary income, which is the amount you receive after taxes and other mandatory deductions. The qualification requirements vary per plan, and they all require a different monthly minimum payment.
To determine if you qualify for an income-driven repayment plan, you can talk to your loan servicer or submit an application through the Federal Student Aid website. The application takes about 10 minutes and must be completed in a single session. You will need to provide your FSA ID, financial information, and personal information. Married individuals will have to include their spouse’s information if it’s applicable.
These are the four income-driven repayment plans:
Revised Pay As You Earn Repayment Plan (REPAYE Plan)
The Revised Pay As You Earn Repayment Plan (REPAYE Plan) typically lets borrowers pay as little as 10% of their discretionary income. To be eligible, you must have Direct Subsidized Loans, Direct Unsubsidized Loans, Direct PLUS Loans, or Direct Consolidation Loans. Check the Federal Student Aid website for a complete list of eligible consolidated loans for this repayment plan.
The repayment length can last 20 or 25 years. You can expect a 20-year repayment period if all your student loans are for undergraduate study. But if your loans were for graduate or professional study, you will likely have a 25-year repayment length.
Pay As You Earn Repayment Plan (PAYE Plan)
Under the Pay As You Earn Repayment Plan (PAYE Plan), borrowers generally pay 10% of their discretionary income. If you have to pay more than 10% monthly, know that you will never pay more than the 10-year Standard Repayment Plan amount under this plan.
Eligible loans for this type of repayment plan include Direct Subsidized Loans, Direct Unsubsidized Loans, Direct PLUS Loans, and Direct Consolidation Loans. In addition, specific types of consolidated loans may qualify. The repayment period for the PAYE Plan is 20 years.
Income-Based Repayment Plan (IBR Plan)
Individuals that borrow federal student loans on or after Jul. 1, 2014, generally pay 10% of their discretionary income. But existing borrowers that took out loans before Jul. 1, 2014, typically pay 15%. However, both types of student loan borrowers never pay more than the 10-year Standard Repayment Plan amount.
New borrowers get a 20-year repayment length, while existing borrowers get a 25-year one. The IBR Plan is the most inclusive repayment plan because different types of loans can qualify.
You may be eligible for the IBR Plan if you have any of the following federal loans:
- Direct Subsidized Loans.
- Direct Unsubsidized Loans.
- Direct PLUS Loans.
- Direct Consolidation Loans.
- Subsidized Federal Stafford Loans.
- Unsubsidized Federal Stafford Loans.
- FFEL PLUS Loans.
- FFEL Consolidation Loans.
- Consolidated Federal Perkins Loans.
Income-Contingent Repayment Plan (ICR Plan)
The Income-Contingent Repayment (ICR) Plan generally allows borrowers to pay 20% of their monthly discretionary income. However, if you would end up paying less through a fixed payment over the course of 12 years, then that is the plan you will ultimately get. The ICR Plan lasts 25 years.
The following types of loans are eligible for the ICR Plan:
- Direct Subsidized Loans.
- Direct Unsubsidized Loans.
- Direct PLUS Loans.
- Direct Consolidation Loans.
- Direct Consolidation Loans.
Keep in mind that if you consolidate specific types of loans into a Direct Consolidation Loan, you may qualify. Check the Federal Student Aid website for a comprehensive list of eligible consolidated loans.
Nurse Corps Loan Repayment Program (NCLRP)
The Health Resources and Services Administration within the Department of Health and Human Services has a division known as the Bureau of Health Workforce. This bureau offers a Nurse Corps Loan Repayment Program that may cover up to 85% of your student loan balance.
Registered nurses (RNs), advanced practice registered nurses (APRNs), and nurse faculty (NF) may qualify for loan forgiveness of unpaid nursing education debt. These types of healthcare workers must work full-time at an eligible nursing school as nurse faculty (NF) or at a Critical Shortage Facility (CSF). A CSF is a facility that operates in, serves, or is a Health Professional Shortage Area.
Keep in mind this program has an initial two-year commitment. You can get a 60% loan repayment amount if you complete two years within the program. And if you qualify for and complete a third year, an additional 25% of your outstanding student loan debt will be repaid.
Do you think you qualify for the Nurse Corps Loan Repayment Program? In that case, you can fill out and submit an application through the Customer Service Portal on the Health Resources and Services Administration (HRSA) website.
National Health Service Corps Loan Repayment Program (NHSC LRP)
The Secretary of Health and Human Services offers a National Health Service Corps Loan Repayment Program. Through this repayment program, nurse practitioners and certified nurse-midwives can get financial assistance for loan repayment. Eligible healthcare workers can get up to $50,000 after two years of full-time service. Part-time service workers could get up to $25,000 after two years if that service is not done in private practice.
In order to be eligible for the NHSC Loan Repayment Program, nurses must meet the following qualification requirements:
- The applicant must be a United States citizen (U.S. born or naturalized) or a United States national.
- The applicant must be a Medicare, Medicaid, and State Children’s Health Insurance Program provider.
- The applicant must be fully trained and licensed in the NHSC-eligible primary care medical, dental, or mental/behavioral health discipline in the state they are applying.
- The applicant must be a health professional in an eligible discipline with qualifying student loan debt.
- The applicant must currently work at an NHSC-approved site.
The NHSC Loan Repayment Program has application deadlines, so submitting your completed application in time is critical. However, it typically takes applicants three weeks to complete an application form, so plan accordingly. Keep in mind that you will have to provide supporting documentation, as well as additional supplemental documentation if necessary. In addition, you must allow access to your credit reports. You can review the application requirements and access the application form through the HRSA website.
Indian Health Service Loan Repayment Program
If you make a two-year commitment to work as a licensed registered nurse with American Indian and Alaska Native communities, you may qualify for repayment assistance. The Indian Health Service Loan Repayment Program (IHS LRP) can cover up to $40,000 of outstanding student loans for eligible nurses.
You can apply to extend your contract annually if you require additional financial assistance. A contract extension can provide extra money for loan repayment until your debt is paid off. This repayment program is available for federal and private student loans. While this program is convenient, keep in mind that funds are taxable. However, the Indian Health Service usually provides extra money to offset the cost of federal taxes.
If you think you qualify for the Indian Health Service Loan Repayment Program, you must apply before the application deadline. Applications are accepted between Oct. 1 through Aug. 15. The online application requires basic information and can be found on the IHS website.
Military Loan Repayment Programs
Various military branches offer loan repayment programs for nurse practitioners. For example, the Active Duty Health Professions Loan Repayment Program (HPLRP) can provide up to $40,000 annually for the repayment of professional educational loans. However, 25% is deducted from the maximum yearly loan repayment amount to cover federal income taxes. HPLRP is available to new accessions and current active duty medical personnel of the Navy.
For additional information on the types of military loan repayment programs available, contact an officer from your branch of military service.
Alternative Ways to Repay Student Loans as a Nurse
If you do not qualify for student loan forgiveness or any of the repayment programs mentioned above, do not worry. Various repayment strategies are available to decrease the financial burden of student loan debt. You can try refinancing, seeking employer repayment assistance, or establishing a budget plan.
Refinance Your Student Loans
Refinancing student loans allows eligible borrowers to merge multiple loans and get a new financial contract. By signing a new loan contract, you can get different repayment terms that may work better with your monthly income and financial goals. The refinancing process is similar to applying for a new loan. Still, you will have to provide current loan information to the lender.
It’s possible for licensed practical or registered nurses to get lower interest rates by refinancing. A lower interest rate can save you money on interest charges. The eligibility requirements differ depending on the financial institution you apply with. Some lenders have minimum credit score requirements, so it may best to inquire with multiple lenders to find the best loan offer.
You may get the lowest rate possible if your credit score is high. Low-interest rates could save you hundreds or even thousands of dollars in interest fees! Low-credit borrowers may still be able to save by refinancing student loans. However, the total saving amount may not be as high. It’s essential to inquire with different lenders. Getting multiple loan offers allows you to make comparisons and potentially get your lowest rate possible.
Check for Employer Repayment Assistance
Certain employers provide student loan repayment assistance to employees. The amount you can get for loan repayment varies by employer, but nurses generally earn between $10,000 to $20,000.
Specific hospitals offer student loan repayment options as part of their employee benefits. For example, Craig Hospital in Colorado provides student loan forgiveness and tuition assistance. Craig’s Tuition Assistance program offers tax-free reimbursements for eligible employees seeking a degree in a hospital-related field. Employees can get up to $4,000 annually for bachelor’s or master’s programs and up to $5,000 for doctorate programs.
Use a Budget Plan for Fast Repayment
Setting up a budget plan can help you pay off your student loans more quickly. Repaying loans earlier than your repayment schedule dictates may enable you to save on interest fees, ultimately reducing the cost of borrowing funds for education.
There are different budget plans to consider, such as:
- The debt snowball or avalanche method.
- The 50/30/20 rule.
- The envelope system.
- The ‘No’ budget.
- The zero-based budget.
- The pay-yourself-first budget.
But before you pick a budget method, it’s essential to first calculate your monthly income and expenses. Knowing how much you earn and spend within a month can help you address issues and establish good financial habits.
Determine Your Monthly Income
You need to know your monthly after-tax income to start a budget accurately. After-tax income is the amount you receive after paying health insurance and other wage deductions. If you receive consistent paychecks from work, you only have to add up your monthly payments.
If you receive irregular income, you must calculate your average monthly income. You can get a monthly income estimate by gathering payment information for the last six months. Add up your monthly earnings for each past month and divide the total by six to get an honest estimate.
Calculate Your Living Expenses
Calculating your monthly expenses is critical to understand how much you spend within a month. Start with fixed expenses like rent, mortgage payments, subscriptions, etc. Some monthly bills change every month, such as the water and electricity bills. For these variable bills, you will need to calculate the average cost. You can do this by adding up six months’ worth of bills and dividing by six to get the average monthly cost. Once you have a clear understanding of your monthly expenses, you can start cutting costs to get more spending money.
For example, suppose you have monthly subscriptions to Hulu, Netflix, and HBO Max. In that case, you may be losing out on hundreds of dollars every year! You can keep more money in your pocket by switching to ad options or canceling.
References:
Public Service Loan Forgiveness (PSLF)│Federal Student Aid
How Does Student Loan Forgiveness for Nurses Work?│U.S. News & World Report
Texas Student Loan Forgiveness Programs The College Investor
Federal Perkins Loan Cancellation│Federal Student Aid
Income-Driven Repayment Plans│Federal Student Aid
