No one dreams of having massive amounts of student debt after they finish a degree program, but that's the hard truth for many new undergraduate and graduate degree-holders. According to NerdWallet (2017), Americans hold a collective student debt of $1.4 trillion; this estimate includes both private and public education loans, and is higher than all other sources of debt in the country, including credit cards. Since a majority of top-paying jobs in the country are only open to people with at least two years of postsecondary schooling, this is a significant problem.
Some economists even suggest that student loan debt is preventing students from investing in the retail market and helping the economy grow. Moreover, student loan debt sits at an average of approximately $27,000 per borrower, stopping some people from buying a home or a car—simply because borrowers have to focus on paying back school loans.
It may seem that graduates of nurse practitioner programs have an advantage when it comes to paying back debt. After all, the mean annual salary for nurse practitioners in the U.S. was $104,610, according to the US Bureau of Labor Statistics (BLS May 2016). Yet, many nurse practitioners are included among the 44 million people in the US who hold student loan debt.
Of course, aspiring to earn a higher income is one factor encouraging many nurses to pursue a master of science (MSN) or a doctor of nursing practice (DNP) degree. Just consider that the mean annual salary for registered nurses was $72,180 (BLS May 2016)—approximately $32,000 less than NPs’ average annual wages. That said, students pursue an NP education for other reasons, too, including the ability to have more autonomy on the job and to have a more specialized working knowledge.
The truth is that graduate school is never cheap and many nurse practitioner programs cost anywhere between $15,000 and $40,000 or higher. While various affordable NP schools exist—particularly for working RNs enrolled in online degree programs—many students take out loans in the process. Luckily, loan repayment programs are available to help new NPs eliminate some of their program debt or even have it cancelled after a period of time. The details of these repayment programs are important, however, as approval can be based on the type of federal loan a student received and the type of employer or sector in which they are employed (e.g., public sector).
It’s important to note that a credit-hour of a graduate program typically costs more than a credit-hour of an undergraduate program. In fact, graduate students account for 40 percent of all existing student debt and six graduate programs generate most of it: law, medicine, master of arts (MA), business administration, masters degrees in education, and master of science (MS) degrees (e.g., NP programs) So what can be done about all this student debt? Keep reading for more details on the federal loan forgiveness and repayment programs that can help NPs.
Nurse practitioners in the US looking to pay off their loans or who want loan forgiveness can find many different options. Below are details on five programs that provide pathways to federal loan forgiveness or cancellation. But sure to peruse the fine print about the type of loan that is required, as the federal government makes different loans available to students, including Direct Loans and Perkins Loans, both of which have forgiveness programs mentioned below. Of note, the government's Direct Loan program accounts for more than 70 percent of all student debt, so forgiveness for this loan can be a good place to start.
Sponsored by the US Health Resources & Services Administration, this loan repayment program provides opportunities for registered nurses, advanced practice registered nurses (including NPs), and nursing faculty to have up to 85 percent of their nursing school debt forgiven.
Interested nurses must first apply to become part of the NURSE Corps to be eligible for funds and loan repayment. As part of the NURSE Corps program, they will be assigned to work in a designated high-need critical shortage area, which could include rural health clinics or centers for Medicaid and Medicare Services.
Accepted applicants not only receive pay and benefits once they start working, but also receive 60 percent of loan forgiveness for two years of service. Applicants who commit to a third year of service in a high-need critical shortage area can receive an additional 25 percent of forgiveness, for 85 percent loan forgiveness in all.
The NURSE Corps was established in 2002. The application cycle is open once a year, and applicants are expected to provide their transcripts, resume, loan documentation, and more. Nurses accepted into the program are expected to work a minimum of 32 hours per week for 45 weeks. No more than 35 days per year can be spent away from the hospital. Up to 50 percent of the funding for the program is set aside for NPs, which is good news for recent program graduates.
The Income-Based Repayment (IBR) plan is sponsored by the US Department of Education and gives nurses with high student debt an opportunity to set up a repayment plan based on their income. This plan could be ideal for nurses who want a lower monthly payment on their student loans. Just keep in mind that anyone who has defaulted on his or her federal student loans is ineligible.
Under the parameters of this plan, students who borrowed money after July 1, 2014 can have their monthly loan repayment amount set at ten percent of their monthly income. Nurses with loans prior to July 2014 are only eligible to have their monthly loan payment amount set as low as 15 percent of their monthly income. A repayment estimator is available to help interested students figure out what their monthly estimated payment might be under the program.
The IBR plan lasts for 20 years for applicants who have loans with an origination date starting after July 2014. Students with federal loans dating before July 1, 2014 follow a plan based on 25 years. Any loan debt that exists following the 20- or 25-year term can be forgiven, according to the US Department of Education. Keep in mind that a loan could already be paid off in entirety before the loan repayment period is up, often as a result of increases in income as a person advances in his or her career.
It is the loan service provider that keeps track of the monthly loan repayments and lets a payee know when he or she is reaching the end of the repayment term and whether any amount is eligible for forgiveness. To apply for the income-based repayment plan, visit the US Department of Education site. The application typically takes about 10 minutes to complete.
Similar to the program detailed above, this loan forgiveness program is sponsored through the US Department of Education, but it offers loan forgiveness after only ten years to qualified applicants. The Public Service Loan Forgiveness (PSLF) program requires payments for 120 months while payees work full-time for a qualified employer.
This loan forgiveness program requires a person to be employed in public service, meaning applicants must work for a federal, state, or local government agency, a not-for-profit, or a similar organization as defined by the IRS, meaning that some nurses and nurse practitioners could be eligible. Students who are working for AmeriCorps or the Peace Corps also may qualify. However, employment for a for-profit government contractor does not qualify.
The 120 months of repayment do not need to be consecutive, meaning that an applicant can work for a for-profit agency at some point, but can still retain credit for prior payments if they switch back to a public service position.
Interested applicants can apply for the PSLF program through the US Department of Education website. The application seeks proof that the employer qualifies as a public service entity. The applicant must provide information about the organization for which they work. Of note, only Direct Loans through the William D. Ford Federal Direct Loan program are eligible for forgiveness in the PSLF program.
People familiar with the Perkins Loan Cancellation Program may think that it's just for teachers, but the truth is that full-time nurses and licensed medical technicians can benefit, too. Under the guidelines of this program, nurses may be able to have their Perkins Loans cancelled after five years of service. The catch is that their federal loan must be a Perkins Loan; notably, less than one percent of all federal education loans granted are Perkins loans.
As part of this program, loan cancellation is incremental year over year. For example, in the first two years, 15 percent of the loan amount can be cancelled, but in years three and four, this amount jumps up to 20 percent. Finally, in the fifth year of service, the remaining 30 percent of the Perkins Loan can be cancelled.
To apply for this loan, students need to speak to their program coordinators or a loan servicer designated by the school. These contacts should be instrumental in answering questions about having a Perkins Loan cancelled after five years. The US Department of Education provides a list of loan servicers and phone numbers on its website.
Finally, nurse practitioners can look to loan forgiveness programs within the state where they live or work to see what opportunities are offered. Availability of programs will vary from state to state, and some states may not offer loan forgiveness programs.
Florida is an example of a state that does. Its loan forgiveness program provides up to $4,000 a year for up to four years of service for nurses who work in critical-need areas in the state. This could include public schools, county health departments, teaching hospitals, and other sites. Applications can be found through the Florida Department of Education website.
In Maryland, the Janet L. Hoffman Loan Assistance Repayment Program is available to nurses, speech pathologists, teachers, and lawyers who earned a degree in the state and who work for an employer assisting low-income or underserved residents. Award amounts can total up to $10,000 per year. Applications are available on the Maryland Higher Education Commission website.
Additional programs are available for nurses working in Wisconsin, Delaware, Missouri, and other states. For some of these programs, nurses may need to work in underserved areas to be eligible for repayment assistance. To search for more nurse repayment programs by state, simply go to the Rural Health Information Hub. This website is supported with grant funding through the Health Resources and Services Administration and the US Department of Health and Human Services, and provides many state-specific opportunities for the healthcare professions.