With more states pushing for registered nurses to obtain bachelor’s degrees, the amount of student loan debt held by nurses has increased accordingly. According to a report issued by the American Association of Colleges of Nursing in 2020, 69% of postgraduate nurses surveyed took out student loans to finance their education. Of 2,235 survey respondents, 76% had undergraduate loans, while 68% took out loans to pay for their master’s degrees. If you took out loans for your nursing education, you may qualify for one of the programs offering student loan forgiveness for nurses.
When you borrow money for your education, you typically have to repay the loan according to the terms of your repayment plan. Federal loan servicers offer several types of student loan repayment assistance, but loan forgiveness goes a step further by wiping out some or all of your student loan debt after you’ve made a certain number of payments. Each loan forgiveness program has its own terms and conditions, but you may be eligible for forgiveness if you have a Perkins loan, a Stafford loan, or another type of federal student debt.
The Federal Perkins Loan Program offered low-interest loans to undergraduate and graduate students who demonstrate exceptional financial need. Although the program ended in 2018, you may have a Perkins loan if you graduated before the last disbursement was made. If you consolidated your student loans and aren’t sure if this type of loan was included in the consolidation, contact your student loan servicer for more information. Your loan servicer is the company that sends you billing statements, administers your repayment plan, and performs other services related to the management of your federal loans.
Stafford Loans are awarded to help cover the costs of attending a participating school. These loans are classified as Direct Subsidized Loans or Direct Unsubsidized Loans. The main difference between the two is that the U.S. Department of Education pays the interest on a Direct Subsidized Loan while you’re in school and during a six-month grace period right after you leave school. If you have a Direct Unsubsidized Loan, you’re responsible for paying the interest at all times.
You may also have a Direct Plus Loan or a Direct Consolidation Loan. Direct Plus Loans are available to graduate and professional students, so you may have one of these loans if you’re an advanced practice nurse or doctor of nursing practice. Direct Consolidation Loans make it possible to combine multiple loans into a single loan with one student loan servicer. You may have this type of loan if you took out multiple federal loans while attending nursing school or completing a graduate program.
A loan forgiveness program is different from loan cancellation or loan discharge. Loan cancellation is available only in limited circumstances; for example, you may qualify for loan cancellation if you were defrauded by an educational institution. Loan discharge is similar to loan forgiveness, but the difference is that you no longer have to make payments because of a major change in life circumstances. Discharge is usually available when someone dies or develops a permanent disability; in rare cases, student loans can also be discharged in bankruptcy.
As a nurse, you may qualify for several student loan forgiveness programs. Although the terms of each program vary, the concept of forgiveness is simple. If you meet the eligibility requirements and fill out the required documentation exactly as instructed, your loans should be forgiven. Some programs forgive the remaining balance of your student loan debt, while others forgive up to a certain amount of your loan balance.
You should consider a student loan repayment program if you have federal loans, if you have explored other repayment options and determined they’re not a good match for your circumstances, and if you’re willing to meet the terms of your selected student loan forgiveness program. Depending on the program, you may have to work for a certain employer or in a certain type of job, such as public service at a nonprofit organization, to qualify for loan assistance. If you’re okay with that, then loan forgiveness can be a good option for reducing the amount of student loan debt you owe.
To qualify for loan assistance, you may have to commit to working for two or more years for one of the following types of employers:
It’s also important to know that each student loan repayment program has specific terms related to how and when funds are disbursed and how long you must commit to service. Some programs pay off your loans directly, while others give you the funds to make a loan payment toward your overall balance. While some programs give you a lump sum after you’ve completed your minimum term of public service, others pay out in equal installments over a period of several years. The right type of loan assistance depends on your individual circumstances.
Another important consideration is your level of experience as a nurse. If you’re an advanced practice registered nurse, a nurse educator at a university, or a registered nurse working in a health care facility, you may qualify for forgiveness of your undergraduate and/or graduate loans. Some loan forgiveness programs even award funds to nursing students in their last year of clinical training, making your loan repayment plan more manageable.
Before you apply for student loan forgiveness, you should know that forgiveness is only available for federal loans, not private loans. Therefore, if you consolidate your federal loans into a private loan, you’ll no longer be eligible for a loan forgiveness program. You also need to know that some types of forgiveness are taxable. The $1.9 trillion economic stimulus package signed in March 2021 excludes forgiven loans from taxes, but the exclusion was intended to be temporary.
The eligibility requirements for loan forgiveness depend on the terms of each program. If you need student loan repayment assistance, look into the following programs to see if any of them are right for you.
The Nurse Corp Loan Repayment Program, sometimes referred to as a nursing education loan repayment program, is a loan forgiveness program that pays up to 85% of your unpaid nursing student loans if you work for at least two years in a critical shortage facility (CSF) or spend two years as a nurse faculty member at an eligible school.
You become eligible for the Nurse Corp Repayment Program once you’ve met the following requirements:
The NHSC Loan Repayment Program is a form of student loan forgiveness that rewards health care professionals for working with underserved populations. You may qualify for this loan forgiveness program if you meet one of the following criteria:
The main NHSC program requires two years of service at any NHSC-approved site, while the NHSC Rural Community Loan Repayment Program and the NHSC Students to Service Loan Repayment Program both require at least three years of service.
If you’re a registered nurse or an advanced practice nurse, you may qualify for the Faculty Loan Repayment Program, which is administered by the Health Resources & Services Administration. The program requires at least two years of service as a faculty member at an eligible school of health professions.
If selected for this student loan repayment program, you’ll receive up to $40,000 to pay back your nursing education loans. Because loan forgiveness is usually taxable, you may also receive an additional amount to cover the taxes on the amount forgiven. You may qualify for the Faculty Loan Repayment Program if you meet the following criteria:
The Indian Health Services Loan Repayment Program offers up to $40,000 in loan repayment assistance to health care professionals who commit to at least two years of service in facilities serving the Alaska Native and American Indian communities. Nursing student loan forgiveness is available to ADN and BSN nurses, certified nurse midwives, certified registered nurse anesthetists, nurse practitioners, and doctors of nursing practice. You must also meet the following requirements to be considered for this type of loan forgiveness:
If you don’t qualify for one of the loan forgiveness programs specific to the health professions, you may be eligible for the Public Service Loan Forgiveness Program. To qualify, you must enter into a qualifying repayment program and make 120 qualifying payments. You must also meet the following criteria:
If you have a Perkins loan, it wouldn’t qualify for PSLF on its own, but you might qualify for this type of loan forgiveness if you include your Perkins loan in a Direct Consolidation Loan with other types of student debt. Remember that private loans don’t qualify for loan forgiveness, so you can’t use the PSLF program to cover a loan from your personal bank or credit union. As the borrower, you’re responsible for making every loan payment on time.
Now that you’ve decided loan forgiveness is right for you, it’s time to apply. The application requirements depend on the program you select, but most programs require similar steps. First, you need to determine if you meet the eligibility criteria. Review the loan repayment program guidelines to determine if you need to possess a specific license or have a certain type of financial background.
You may not qualify for federal loan forgiveness programs if any of the following apply:
These aren’t the only restrictions on federal loan repayment assistance, but they’re some of the most common. Review the application packet for your selected program to determine if you’re barred from receiving repayment assistance for any reason.
Remember that eligibility for some loan forgiveness programs is restricted to certain professions. If you’re a nurse educator, psychiatric nurse specialist, advanced practice nurse, or doctor of nursing practice, you may qualify for more loan repayment assistance programs than a nursing student or someone with an ADN or a BSN.
If you think you qualify for public service loan forgiveness, contact your loan servicer for more information. When you receive the application, you’ll need to provide your contact information, Social Security number, and employment data. You’ll also be required to fill in a borrower request that acknowledges the terms of the loan forgiveness program.
The Health Resources & Services Administration program administers the State Loan Repayment Program, which makes funds available to the individual states to award to health professionals as they see fit. If you’d rather apply to this loan repayment program than one of the federally managed programs, you’ll need to meet the following application requirements:
The other major loan repayment assistance programs require applicants to sign up for an online account and submit an electronic application via each portal. If you’re applying for this type of repayment assistance, follow the on-screen prompts to fill out the application and submit it to the appropriate agency. Be sure to keep your login information in a safe place so that you can check the status of your application or submit additional documents if needed.
Once you decide to apply for loan forgiveness, you’ll need to gather some information to make it easier to fill out the application. Because nursing student loan forgiveness is only available for federal loans, you’ll need to gather your loan documents and verify that your loans are eligible.
If you’re already doing some type of public service or working at a facility in a high-need area, have your employment contract or other employment documents on hand in case the application asks for your employer’s federal tax ID or any other employer information to determine if you’re eligible for loan repayment assistance.
If you’re applying for the Public Service Loan Forgiveness Program, you’ll need to have several pieces of information on hand:
The major advantage of applying for student loan repayment assistance is that you can have some or all of your educational debt wiped away if you qualify for a repayment program. Another benefit of applying for loan forgiveness is that you may have the opportunity to work with some of the most dedicated professionals in the health care field.
A major disadvantage of applying for one of these loan repayment programs is that you’ll have to commit to at least two years of service at an approved site, which may prevent you from moving to a new area or seeking opportunities elsewhere. If your site is in an HSPA, you may have to work long hours to ensure that community members receive the care they need. You may also encounter some challenges related to working with underserved populations, such as the fact that low-income patients often can’t afford to seek care when they have mild symptoms, so you may not encounter them until their health has worsened.
If you have private student loans, you’re not willing to commit to a minimum term of service, or you don’t meet the eligibility requirements for a state or federal forgiveness program, there are some alternatives that can help you ease your student loan burden.
Income-driven repayment plans set your monthly payment according to how much money you earn and how many people are in your household. The U.S. Department of Education has four options for income-driven repayment:
Under the ICR plan, your monthly payment is set at 20% of your discretionary income or what you’d pay on a fixed repayment plan over a period of 12 years, adjusted according to your income–whichever is less. The PAYE plan usually sets your loan payment at no more than 10% of your discretionary income.
For all borrowers, REPAYE sets the loan payment at no more than 10% of discretionary income. The difference between PAYE and REPAYE is that the payment may be more than 10% of your discretionary income, but it’s never higher than what you’d pay under the Standard Repayment Plan with a 10-year term.
Your payment amount for the IBR plan depends on when you took out your first Direct Loan. If you became a borrower before July 1, 2014, your payment should be about 15% of your discretionary income. For a borrower who took out a federal loan after July 1, 2014, the payment would be about 10% of discretionary income.
If you’re having trouble affording your loan payment each month, contact your loan servicer to discuss your options. You may qualify for one of these income-driven repayment plans, which would reduce the amount of money you’re required to pay on a monthly basis.
Federal loans are rarely discharged in bankruptcy, but if you have private loans and can’t afford the monthly payments, bankruptcy is an option. In a Chapter 7 bankruptcy, also known as a liquidation bankruptcy, the court sells a borrower’s nonexempt property and distributes the funds to banks, credit card companies, and other creditors. Chapter 13 bankruptcy allows you to develop a repayment plan that typically lasts for three to five years, making your monthly payments more manageable. Many factors should be considered before deciding to declare bankruptcy, so speak with a licensed attorney before filing any paperwork with the court.
For borrowers who don’t qualify for loan forgiveness, loan repayment assistance, or any other type of relief, loan consolidation could be an option. Loan consolidation is especially helpful if you have multiple loans with varying interest rates and terms, as your consolidation loan will be assigned to a single loan servicer and have one payment due each month. If you have more than one federal student loan, contact your servicer to find out if you’re eligible to consolidate. Reducing your interest rate and/or your monthly payment is a good way to pay off your nursing school loans as fast as possible.
If you have private loans, you may be able to refinance them into a new loan with more attractive terms. For example, you may be able to lock in a lower interest rate or qualify for a longer loan repayment term, which would lower your monthly payment. To refinance a private loan, contact a trusted financial institution for more details. A finance officer can explain your options and let you know if you qualify based on your credit score and other factors.
If you’re having trouble making payments on your federal loans, talk to your servicer right away. You may qualify for a deferment or forbearance. Deferment is a temporary suspension of your payments that can give you time to improve your financial situation. To qualify for a deferment, you must be in school, have an approved economic hardship, or be receiving cancer treatment. If you have any Direct Unsubsidized Loans, interest will continue to accrue during the deferment period.
Forbearance is a temporary reduction in or suspension of your monthly loan payments. You may qualify if you’re willing to make payments but can’t do so due to some type of financial hardship. Interest on your loans continues to accrue and is added to the principal balance of the loan once the forbearance period ends.
Some employers offer student loan repayment programs to help employees pay off their debt. If your employer offers this type of program, you may receive a monthly payment to put toward your loan balance, or you may receive a lump sum at the end of the year or after a certain number of years of employment. If you receive a monthly benefit, you’ll be able to reduce the principal on your loan even faster, saving money on interest and eliminating your nursing school debt as quickly as possible.