Getting a nursing education can be difficult, but repaying the debt for such education is way harder. Many borrowers think that the Public Service Loan Forgiveness is the only way out for them. However, there are other options that can help nurses to repay the debt.
This guide will discuss four effective ways of student loan forgiveness for nurses. It is essential to get familiar with each program to select the most suitable one. If you need further guidance, you can also contact Student Loans Resolved.
Student Loan Forgiveness for Nurses
This guide presents four important programs for nurses to eliminate or reduce the debt obligation:
- Public Service Loan Forgiveness
- Perkins Loan Forgiveness
- The Nurse Corps Loan Repayment
- The NHSC Loan Repayment
Each program has its eligibility conditions, award, and drawbacks. Read carefully to choose the best opportunity to solve your debt problems.
1. The Public Service Loan Forgiveness
Public Service Loan Forgiveness is a great opportunity for borrowers working in the public sector, including nurses. The program allows debtors to eliminate the whole debt once they make 120 qualifying payments. The qualifying payments have their requirements, which will be discussed in subsequent sections.
Additionally, the PSLF benefit is one of the best student loan forgiveness for nurses because it is non-taxable. Borrowers do not need to pay extra taxes from the forgiven loan amount. However, the downside of this program is that it has many requirements. Therefore, every year, thousands of borrowers get rejections due to ineligibility.
Different conditions exist about the workplace, work hours, loan type, repayment plan, payment qualification, etc. Borrowers need to get familiar with each element to maximize their chance for this student loan forgiveness for nurses.
Only governmental organizations- federal, state, local, tribal, and non-profit establishments qualify for this program. If you are serving in such a workplace, there is a high chance that you will qualify for forgiveness.
Unlike the programs discussed below, the Public Service Loan Forgiveness depends on the employer qualifications more than the job type. Hence, many qualifications for certifications, education, or service type does not exist. However, the nursing service should be full-time. The workplace can define full-time, but it cannot be less than 30 hours per week. If the employer defines it as more than 30 hours, then the higher amount- the employer’s definition- matters for this student loan forgiveness for nurses.
Yet, borrowers with half-time work can still qualify for the PSLF if they work more in more than one workplace. When the combined average of work hours is at least 30 hours weekly, the service will qualify.
This forgiveness opportunity only covers direct loans. Hence, if a nurse has other types of federal loans like the FFEL, Perkins, or private debt, he/she will not be able to utilize this program.
Some borrowers consolidate their loans to become eligible or simplify the repayment process. Keep in mind that only the payments after consolidation will be counted in the case of consolidation. For example, imagine you made ten qualifying payments before consolidation. If consolidated, you will lose ten payments and start all over again to progress toward 120 payments.
As mentioned before, this student loan forgiveness for nurses requires the borrower to make 120 payments. However, these payments should have some qualifications. They should be in the full amount shown on the bill. Besides, the borrowers should not miss the deadline for payment. Usually, the payments within 15 days later than the due date will count.
A time frame also applies to the repayment. Any payments before October 2007 are not counted. Meanwhile, the borrower should be employed based on the conditions described above. Keep in mind that during the 120 payment period, the debtor should utilize Income-driven plans.
Misconceptions about the PSLF
Some people might think that if they make payments when they are not required, they will qualify for this program faster. However, it is a misconception. Qualifying payments cannot be made when the borrower still studies or in the grace period. Besides, if the loan has deferment, forbearance status, the payments will not qualify.
Another misconception is that borrowers want to receive forgiveness fast by making excess payments. Be aware that you are only required to repay the amount shown on the bill each month. Any amount more than the required will count for the next month’s payment due, but it will not bring extra credits.
Lastly, the payments do not need to be consecutive. There can be times when a borrower stops working with a qualifying employer or misses the payment deadlines. The gained credits for 120 payments will not be lost in such cases. When the borrower finally qualifies for the program, the credits will continue to accrue.
The government provides multiple repayment plans with different payback periods, interest rates, and other functions. However, for this student loan forgiveness for nurses, borrowers can only use Income-driven repayment plans to make qualifying payments. These plans base the monthly payment amounts on the income level, making it more affordable for borrowers.
Before changing the repayment plan, borrowers should think twice. The current Standard Repayment Plan allows borrowers to eliminate debt after repaying the debt for ten years – after 120 payments. When moving to Income-driven plans, the monthly payment amount can increase depending on the revenue and debt owed. Hence, if a borrower does not wish to make higher payments every month, they can keep the Standard plan.
How to Apply?
While progressing toward 120 payments, debtors need to fill a PSLF form and submit it to the loan servicer. In this way, the loan servicer can check the progress and inform if the borrower makes a mistake. In other words, this form is necessary to ensure the debtor is on the right track for forgiveness.
The loan servicer is informed only through the PSLF form about the number of qualifying payments. The form will also involve the employer’s certification, which shows the employer’s qualifications, work hours, etc. If the borrower does not provide this certificate periodically or when he/she changes the workplace, at the time of forgiveness application, he/she will be required to submit multiple certificates for each employer.
The loan servicer of the PSLF is FedLoan Servicing. Hence, the PSLF form, together with the employer’s certification, should be sent to FedLoan Servicing by mail, fax, or through their online platform.
2. Perkins Loan Forgiveness
Previously, we mentioned that the Public Service Loan Forgiveness covers only Direct loans. If you have a Perkins loan, you cannot apply to that student loan forgiveness for nurses. However, borrowers with Perkins loans can utilize the Perkins Loan Forgiveness. Besides many different employment types, including firefighters, librarians, law enforcement officers, nurses, and medical technicians can also apply to this forgiveness opportunity.
The debt cancellation for nurses depends on how long they serve. It is still possible to achieve 100% debt reduction with this program.
Usually, in the first and second years of service, applicants receive 15% debt forgiveness. In the following two years, this amount increases to 20%. Finally, in the fifth year, borrowers get 30% student loan forgiveness.
Application to this program happens through the school or its Perkins loan servicer. If you want to benefit from this forgiveness opportunity for nurses, you can contact the school(or the servicer) to get the form and know about other instructions.
3. Nurse Corps Loan Repayment
If you are a Registered Nurse, Advanced Practice Registered Nurse, or Nurse Faculty, you can benefit from Nurse Corps Loan Repayment. Different from the PSLF, this program gives huge importance to nursing credentials. Hence, it is essential to fit one of the three categories mentioned. In return, this student loan forgiveness for nurses can cover 85% of the whole education debt.
In PSLF, we mentioned the importance of the workplace. In the Nurse Corps Loan Repayment plan, the workplace again matters. The program aims to provide uniform access to healthcare providers, including nurses, in different areas of the U.S. Hence, it requires the applicants to serve in a Critical Shortage Facility or qualifying nursing school in return for debt forgiveness. The mandatory service period is two years.
Eligibility in Details
Besides the conditions mentioned above, the applicant needs to get an education from a recognized U.S nursing school. Plus, the mandatory service should be full time. The applicant can serve as a nurse in a Critical Shortage Facility or be a Nurse Faculty in nursing school.
The Critical Shortage Facility is either a public or private healthcare organization in areas that lack professionals. Usually, such areas do not give enough access to primary care or mental health professionals. The debtors can find the list of eligible organizations on the official website. Similarly, it is possible to find the schools that have accreditation and can make the faculty working eligible for this student loan forgiveness for nurses.
Keep in mind that borrowers who need the forgiveness the most will get preference.
This student loan forgiveness for nurses can eliminate up to 85% of the loan. For the initial two-year service period, the borrower receives 60% discharge, 30% per year. After the mandatory service period ends, if the borrower agrees to serve an additional year, he/she will get a 25% reduction.
Unfortunately, the forgiveness amount is taxable. It means the applicant should recognize the forgiveness as income and pay extra income or employment taxes from that amount.
The Application Process
For 2021, the application process ends on February 25. Applicants will be informed about the final decisions till September end. It is advisable to check the Health Resources & Services Administration website for the exact dates for future years.
The application process consists of three parts: online application, supporting documents, and additional documents. In online applications, the borrower provides information regarding employment, debt, general info like contact details, etc.
The proof for residency, authorization for release, transcripts, resume, EVF, debt papers, and DAB documents are required in the following section. Lastly, additional documents can be needed for clarification, such as marriage license, divorce decree, etc.
4. NHSC Loan Repayment
Similar to Nurse Corps Loan Repayment, the NHSC Loan Repayment requires two years of service in return for the benefit. It is possible to serve full-time or half-time, but the benefit will change accordingly. Full-time applicants will be able to get $50,000 forgiveness if they work on-site with a 14 or higher score. For lower score workplaces, the benefit is $30,000.
Meanwhile, half-time service providers either get $25,000 or $15,000 awards, serving in 14 or higher and 13 or less scored sites, respectively. However, keep in mind that it is not allowed to work part-time in private practice.
This loan repayment option is available to Physicians, as well as Nurse Practitioners, Certified Nurse-Midwives, and Psychiatric Nurse Specialists in Behavioral and Mental Health facilities.
Besides, the applicants should be U.S citizens, fully trained and licensed service providers. The applicant needs to work in an NHSC-approved work side during the mandatory service period. It is possible to find the full list of such sites on the official websites.
This student loan forgiveness for nurses also requires a three-stage application process, similar to the Nurse Corps Loan Repayment program. It takes around three weeks to provide all documents and apply. Borrowers need to provide information matching with the supporting documents. Otherwise, the application will be rejected.
What Other Options are Available?
It is hard to understand that the government will erase the debt effortlessly. If forgiveness is provided, it will not be accessible to many people. Only a few borrowers are lucky enough to meet all eligibility criteria and get approval from the forgiveness funder. Others would still be required to repay the debt.
Hence, if you are not eligible for the programs mentioned above, don’t get disappointed. Many borrowers are facing the same struggles as you. Instead of giving up, try to find another program. That program might not eliminate the debt, but at least it can reduce the debt obligations or simplify the repayment process.
Student Loan Refinancing
Refinancing is one of the options that a multitude of debtors can qualify for. This program is accessible both to private and federal loan borrowers. However, as federal debtors can apply to multiple government-funded opportunities, they need to think more before applying for refinancing.
In general, student loan refinancing involves getting a new loan. The borrower uses these funds to repay all existing debts effectively. As a result, the debtor is left with a single loan. If refinancing is handled correctly, the borrower’s new loan will bring better loan terms, such as reduced monthly payments.
In the refinancing process, borrowers need to have two main elements: a good credit score and stable income. However, in some cases, a co-signer can also be required.
Usually, a good credit score is higher than 600. Such a score ensures that the borrower will most likely repay the debt and not default. Stable income is necessary to guarantee that the borrower will still have money to repay the debt on future dates.
If the borrower lacks reliability, a co-signer can be mandatory. For example, borrowers with bad debt might need a cosigner to back up their claims. In case the debtor is unable to make payments, the co-signer will be responsible for providing funds.
Which Program to Choose?
Applying to the forgiveness program is difficult. If one program is selected, the borrower might lose eligibility to others for a short period. The application can also get rejected for thousands of reasons, like unclear information, ineligible qualifications, wrong documentation, false application, etc. Therefore, borrowers need to think twice before applying.
It is much recommended to get expert help before choosing a program. Third-party debt specialists like those in Student Loans Resolved can help borrowers determine the most suitable program. The experts have years of experience and are well-aware of financial operations. Hence, they can analyze the debtors’ financial standings and match them with the best forgiveness options.
Besides, the debt specialists will be by your side in every step and ensure a smooth application process. If you want to stop debt struggles in a short period, contact us now.