No one dreams of accruing massive amounts of student debt after graduating, but many new undergraduate and graduate degree-holders continue to grapple with this reality. According to NerdWallet, Americans hold a collective student loan debt of $1.6 trillion as of 2019.
This estimate, which includes private and public education loans, ranks higher than all other sources of debt in the country, including credit card debt. Since most top-paying employers in the country only consider people with at least two years of postsecondary schooling, this disparity presents a significant problem.
Student loan debt prevents students from investing in the retail market and helping the economy grow.
Student loan debt prevents students from investing in the retail market and helping the economy grow. Moreover, average student loan debt sits at approximately $29,200 per borrower, which limits some people from buying a home or a car.
It may seem that graduates of nurse practitioner (NP) programs have an advantage when it comes to paying back debt. The mean annual wages for NPs in the U.S. reached $111,840 in 2019, according to the U.S. Bureau of Labor Statistics.
Aspiring to earn a higher income encourages nurses to pursue master of science (MSN) or doctor of nursing practice (DNP) degrees. Students also pursue NP education to have more autonomy on the job and a more specialized working knowledge.
Make sure to research the details of these repayment programs, as some of them base approval on the type of federal loan and employment sector.
Many NP programs cost $15,000-$40,000 or more. While candidates can pursue affordable NP schools -- particularly, for those working as RNs enrolled in online degree programs -- many enrollees still take out loans in the process.
Luckily, NPs can pursue loan repayment programs to eliminate some of their loan debt or even have it canceled over time. Make sure to research the details of these repayment programs, as some of them base approval on the type of federal loan and employment sector.
Graduate credits typically cost more than undergraduate credits. Graduate students account for 40% of all student debt, with six types of graduate programs generating the most: law, medicine, master of arts, business administration, master's degrees in education, and master of science degrees. Keep reading for more details on federal loan forgiveness and repayment programs that can help NPs.
Loan Forgiveness Programs for Students
Nurse practitioner loan forgiveness and loan repayment programs can help nursing graduates burdened with sizable student debt obligations. NPs may apply for federal or state programs that reduce their loan repayments or cancel the amount owed. This overview describes the main types of programs available to NPs, along with eligibility requirements and other distinguishing features.
While these resources apply to nursing graduates, students from other educational backgrounds can also take advantage of some of these programs.
Nurse Corps Loan Repayment Program
Administered by the U.S. Health Resources and Services Administration, the Nurse Corps LRP pays up to 85% of nursing school debt in return for a commitment to work in eligible healthcare facilities or serve as faculty at eligible schools of nursing. Open to registered nurses (RNs), advanced practice nurses (APRNs), and nurse faculty, the number of qualified applicants to this highly competitive program far exceeds the number of awards. In 2019, the program approved 554 awards out of over 7,900 applications.
Successful candidates receive assignments working with high-need populations and in facilities experiencing critical nursing shortages. The award provides up to 60% loan forgiveness after two years of service. NPs accepted for a third year of service may apply for an additional 25% reduction of their student loan.
National Health Service Corps (NHSC) Loan Repayment Program
This federal loan repayment program benefits several healthcare professionals, including NPs, certified nurse midwives, and psychiatric nurse specialists, who receive assistance paying off their educational loans in exchange for a commitment to work in a designated health professional shortage area.
Repayment amounts depend on employment status and the level of community need. NPs working full time can reduce their nursing school loans by a maximum of $50,000, while those in part-time positions may qualify for an award up to $25,000.
Successful applicants must fulfill an initial two-year placement but may renew their contracts to extend their loan repayments beyond two years. In addition to loan repayment, NHSC program participants receive competitive salaries, tax benefits, and the opportunity to make a difference in high-need communities.
Income-Based Repayment Plan
NPs with a significant amount of outstanding federal student loan debt relative to their salary or who need to reduce their monthly loan payments benefit from income-based repayment plans. Sponsored by the U.S. Department of Education, these income-based programs appeal to nurses who need to reduce their debt load but do not want to work for a nonprofit or public facility in a designated nursing shortage area.
Applicants can choose from four income-driven repayment (IDR) plans. Recipients may reduce monthly payments by 10-15% of discretionary income over a repayment period up to 25 years, after which the loan balance is forgiven. The IDR plans cover federal family education loans and direct loans but exclude parent plus loans. Applicants who have defaulted on their student loans cannot receive IDR assistance.
Public Service Loan Forgiveness Program
NPs employed full time in a federal, state, local or tribal government facility, a tax-exempt nonprofit organization, or the Peace Corps or AmeriCorps may qualify for the Public Loan Forgiveness Program (PFLP). Unlike income-based plans, the PLFP plan offers tax-exempt loan forgiveness after making only 120 payments.
NPs who work in for-profit organizations but return to nonprofit employment at qualified organizations may apply their prior repayment credits to maintain their eligibility.
Compared to other loan forgiveness programs, the PLFP requires a more difficult application process and rigorous eligibility requirements, resulting in lower rates of loan forgiveness recipients relative to the number of applications. Currently, only William D. Ford direct loans qualify for PLFP plans. Perkins loans and federal family education loans only qualify if consolidated into a direct loan plan.
Several states across the U.S. have established nursing loan forgiveness programs for applicants willing to take positions in designated critical-need facilities and regions. Although some states do not offer these programs, or limit the participation of some nursing specialties, NPs should become familiar with the programs available in the state where they intend to work.
Eligibility and funding criteria for these state-based plans vary widely from state to state. For example, The California State Loan Repayment Program, available to primary care NPs, offers a maximum repayment amount of $50,000 for full-time employment with up to four years of extensions.