Many people struggle when it comes to student loan repayment. Every year thousands of students finance their education through debt with the hope that they will find a better job opportunity and repay the obligation. Unfortunately, not all get a well-paid employment chance. Social workers are no exception. The average amount of debt highly exceeds the salary of social workers, which makes them unable to afford debt repayment. Social workers who received federal loans qualify for social workers loan forgiveness programs. Currently, several programs are available, but not all are suitable and effective to solve the debt challenges. This guide will give a detailed introduction to the existing social worker’s loan forgiveness programs.
If you think you might qualify for one of the programs or you have any concerns, contact Student Loans Resolved debt specialists. Our experts will analyze your finances and develop the most suitable option to get rid of debt concerns.
Short Overview of Social Workers Loan Forgiveness
Currently, social work loan forgiveness programs involve several opportunities. In this section, we will give an introduction to these programs. However, in subsequent sections, you can get more detailed information.
- First, Public Service Loan Forgiveness is available for social workers. This program grants debt cancellation when the borrower makes 120 payments. Therefore, it takes around ten years to meet the eligibility condition.
- Second, the National Health Service Corps Loan Repayment Program helps social workers to get $50,000 forgiveness to pay their loans. This social work loan forgiveness is delivered for two-year service in needed areas.
- Next, borrowers can apply for Income-driven Repayment plans to get forgiveness. When an Income-driven repayment plan is utilized, the remaining debt after the payback period is forgiven.
- Lastly, state governments can offer their benefits to social workers. For example, Oregon provides social workers loan forgiveness of up to $35,000 for those working full-time for a minimum of two years.
1. What is Public Service Loan Forgiveness?
PSLF is a type of social worker’s loan forgiveness that involves full-time employees in federal, local, state, tribal governments, and non-profit organizations. This program eliminates the rest of the outstanding balance after the debtor affords 120 qualifying payments.
Throughout the whole period, which takes a minimum of 10 years, the borrower should continue meeting the eligibility conditions for employment. In general, the eligibility list for this social work loan forgiveness is extensive, and you need to be well aware of the conditions before you apply.
Eligibility Conditions
Borrowers should have many qualifications for this loan forgiveness for social workers. As mentioned, only public work or non-profit employment qualifies for this program which also includes social workers. The social workers should serve full-time, defined as at least 30 hours per week.
The employer’s full-time work conditions can be higher than 30 hours but not lower. It is also possible to work part-time. However, you will need to find two or more employment opportunities so that the total of work hours will equal to full-time requirement. Besides, each employment chance you have should meet the employment criterion.
Only the borrowers of Direct Loans qualify for PSLF social workers loan forgiveness. Direct loans do not involve FFEL or Perkins Loan. Plus, if you have private student loans, this program is not for you.
Borrowers need to make 120 payments before they request this social work loan forgiveness program. These payments also require different details. Qualifying payments will be those:
- Made on time -within 15 days after the due date
- In full amount shown on the bill
- Through Income-driven repayment plans
- While having a qualifying employment
- After October 2007
It is not obligatory to pay the debt when you are not required to do so- when you are in a loan forbearance period, deferment, in-school, or grace period.
10 Year Requirement
As mentioned, PSLF social workers loan forgiveness program demands 120 qualifying payments before the borrower requests the debt to be canceled. 120 payments take a minimum of 10 years to be completed. It can take longer if the borrower misses some payments or the payments made do not qualify.
Keep in mind that this social work loan forgiveness program cannot be achieved in less than ten years. You cannot make payments of higher amounts such as payments of 3 months worth to speed up the process. In such a case, you will get 3 points out of 120, but you will need to wait three months to make another payment and receive the 4th point.
Repayment Plans
The eligibility condition requires that the borrower makes payments under Income-driven repayment plans. Such repayment plans have four different sub-plans for federal loan borrowers, including Revised Pay as You Earn, Pay as You Earn, etc. We will discuss four plans in detail later.
For now, keep in mind that those programs are based on income level and family size. It means, if you earn less, you will pay less. Similarly, if your income is high, the debt repayment amount will also be high. Such an approach to repayment makes it affordable to any borrower regardless of income level.
Besides, after the payback period, any remaining debt is canceled. We will discuss these programs in detail in the third section when we explain forgiveness through Income-driven repayment plans.
Application to PSLF
This social worker loan forgiveness program is easy to apply if you meet all requirements. As mentioned, it takes a minimum of 10 years to meet eligibility conditions. During such a long period, many conditions can change. Borrowers can stay up-to-date with their payment progress by submitting a PSLF form to the loan servicer.
After the form is submitted, the loan servicer will count how many qualifying payments the borrower made and will notify the requestor. In this way, the borrower will avoid finding out that the payments he/she made for such a long time do not qualify for social worker’s loan forgiveness.
Besides, social workers will need to submit employment certification. This certificate validates that the borrower works with a qualifying employer. If not submitted regularly, such as annually or when the employment is changed, the borrower will have to submit different documents for each employer that he/she worked with during the repayment period.
Taxability
Tax is one of the most important issues when it comes to debt forgiveness. Many borrowers fear that when they are finally out of debt, they will be required to pay huge taxes. Affording these taxes will not be easy for borrowers who struggle with financial challenges. Besides, in some programs, the tax is deducted from the forgiveness amount, which is again not so desirable.
Luckily, social workers loan forgiveness through Public Service Loan Forgiveness is not taxable.
2. What is National Health Service Corps Loan Repayment?
If the borrower is a licensed clinical social worker, they can enjoy another repayment program called Health Service Corps Loan Repayment. Social worker’s loan forgiveness grants up to $50,000 for full-time social workers and up to $25,000 for part-time servicers. The social workers need to serve for a minimum of two years. Keep in mind that there is no option for serving half-time if the borrower works in private practice.
Eligibility Conditions
As mentioned, only licensed clinical social workers in the Behavioral and Mental Health discipline can apply to this program. The unique benefit of this program is that it involves private student loans. Whether you got a loan from the federal, state, local government, or private lender, you can use the repayment amount to decrease your debt burden. The loans should be received only for educational purposes.
The applicants of this social worker’s loan forgiveness program should be U.S citizens working in an NHSC-approved site. Such sites usually lack health professionals, and the program aims to increase access to health services in poorly-served areas. You can check if your workplace is on the list of approved facilities by the NHSC on the official student loan repayment website.
Application
You can apply to this social worker’s loan forgiveness program online. The online application requires information about eligibility, personal details, employment details, employment verification, loan qualification, etc. The application can also ask for supporting documents for your employment, loan, and personal details.
Borrowers should be informed about selection factors and funding priorities to maximize their chances to get repayment amount. The selection factors will focus on how reliable and trusted the borrower is. Any breach of legal obligation -default on loans or service breach- can cost the borrower.
The applicants who are current NHSC scholarship holders who completed special training, come from poor families, and are likely to stay and serve in the NHSC-site can be among the best candidates for the repayment program. For detailed information, borrowers can check the National Health Service Corps website or contact Student Loans Resolved for further questions and concerns.
3. Income-driven Repayment Plans
Another option to get a social worker’s loan forgiveness program is enrolling in an Income-driven repayment plan. As mentioned before, Income-driven repayment plans have four categories- REPAYE, PAYE, IBR, ICR.
Each of these plans has different payback periods and interest rates. However, all of them forgive the remaining debt after the payback period. Hence, if you choose to repay the debt through one of these plans, you can achieve a loan forgiveness program for social workers.
Income-driven plans are based on the income level and family size of a borrower. If a borrower faces challenges to allocate low income for high debt, these plans can be the solution. Through these plans, borrowers with low incomes pay lower amounts for repayment, which makes debt challenges disappear. Specifically for social workers, the average debt exceeds the annual salary, and they might have a hard time affording the payments. However, before choosing a plan, first, get familiar with your options.
Besides, these plans are the qualifying repayment methods for Public Service Loan Forgiveness. If you want to apply to that social worker loan forgiveness program, you should get familiar with Income-driven repayment plans and choose one.
Revised as You Earn (REPAYE)
Revised as You Earn program is available to undergraduate and graduate or professional borrowers. This program requires 10% of the discretionary income as a repayment amount. Discretionary income is the amount of revenue left after deducting necessary living expenditures and taxes.
Borrowers can repay the student loans in 20 or 25 years through this repayment plan. Undergraduate students repay the debt in a shorter period -20 years, while this period increases to 25 years for graduate and professional study borrowers.
The eligibility criteria for REPAYE are very flexible. Almost all federal loan borrowers, regardless of the loan type, can apply to this program. Direct, Direct PLUS loans made to students (or Graduate PLUS), and Direct Consolidation loans without Parent PLUS loans qualify for this repayment plan.
As mentioned before, social workers loan forgiveness through an Income-driven repayment plan happens after the payback period. It means, after 20 or 25 years, depending on your qualifications, any remaining debt will be canceled.
Pay As You Earn (PAYE)
The eligibility conditions for PAYE are similar to REPAYE as it is also available to Direct, Graduate PLUS, and Direct Consolidation loans without Parent PLUS loans. However, social workers need to be new borrowers after October 2007 and should have received their disbursement after October 2011.
For this program, the borrowers pay 10% of their discretionary incomes. The payback period is 20 years, and after this period, the social worker’s loan forgiveness is applied. The borrowers get rid of the remaining debt after 20 years of repayment.
Income-based Repayment
The conditions of this repayment plan change depending on whether the borrower is a new borrower after July 2014 or not. Income-based repayment requires 20 years of repayment for new borrowers and 25 years of repayment for non-new borrowers. Besides, new debtors pay only 10% of the discretionary income while others pay 15% of discretionary income.
The eligibility criteria of this repayment plan involve social workers with Direct, all PLUS loans for students, and Consolidation Loans without parent PLUS loans.
Income-contingent Repayment
Till now, none of the programs involved Parent PLUS loans. Only Income-contingent repayment is available to social workers who generated student loans for the children through Parent PLUS loans. However, first, the social workers need to consolidate the debt to qualify.
This repayment plan demands either 20% or the discretionary income or amount that can repay the debt in 12 years - fixed payments. The repayment takes 25 years, and after the payback period, the rest of the debt is eliminated through this social worker’s loan forgiveness program.
Taxability
Currently, the Income-driven repayment plans are taxable. In other words, if any remaining amount exists after the payback period, the borrowers can get social workers loan forgiveness for the remaining debt. However, the forgiveness will be taxed.
When Biden developed the “Plan for Education beyond High School,” one of the concern points was the taxability of forgiveness options. He mentioned that when student loan borrowers finally feel relieved from debt challenges, they should not face another problem-taxes. Hence, he mentioned that his plan is eliminating taxes and specifically mentioned Income-driven repayment plans.
Sure, this suggestion is still a plan, and it is not certain that it will be accepted as a law. However, through this plan, we can at least hope that one day the conditions can change and people can enjoy tax-free forgiveness for this social work loan forgiveness program.
Recertification of Income and Family Size
Income-driven repayment plans can be utilized due to their embedded forgiveness or the Public Service Loan Forgiveness program that requires repayment under such plans. Besides forgiveness, social workers can apply for these plans because they might bring more affordable repayment amounts.
Regardless of the purpose, if you enroll in an Income-driven repayment plan, you have to certify your annual income and family size. In other words, you need to provide documentation so that a new repayment amount can be calculated. If you do not recertify the income and family size, you will face different consequences.
Under Pay as You Earn, Income-based, and Income-contingent plans, you will still be enrolled in the same repayment plan if you do not provide the necessary documentation. However, your monthly repayment amount will not be some percentage of discretionary income. Instead, you will pay as much as required to repay the debt through the Standard plan with a 10-year payback (which is usually a higher amount).
Under Revised Pay as You Earn (REPAYE), you will lose your enrollment to this program, and you will be migrated to an alternative repayment plan. In short, it is necessary to be transparent and provide any document asked properly.
4. Oregon State Loan Repayment
Besides federal programs, different states might offer their own social worker’s loan forgiveness opportunities. One of such states is Oregon which provides a State Loan Repayment program to social workers. This program grants up to 50%, but a maximum of $35,000 per year for full-time social workers, while this rate is only $17,500 yearly.
Full-time social workers need to work a minimum of two years, and part-time social workers should serve a minimum of four years for the forgiveness benefit. Besides, it is possible to extend the benefit for two additional years. However, the extension depends on the availability of the fund and the remaining percentage of the student loan debt.
Eligibility
Only clinical social workers serving in primary care service ( in outpatient ambulatory care) can apply to this program. All the applicants should be U.S citizens, and they should work in qualifying places. Qualifying practice sites include those located in areas where health professionals lack or a non-profit organization. Besides, facilities that are free or operate with decreased fees can qualify. Borrowers can get more information about the qualification on the official website for this student loan repayment program.
Keep in mind that full-time service is 40 hours per week, out of which 32 hours should be dedicated to direct patients for a minimum of 45 weeks in a year. Meanwhile, part-time social workers should serve a minimum of 20 hours weekly- 16 hours for direct patient care for at least 45 weeks in a year.
If you need a different program, you can check the information related to your state’s programs developed for student loan borrowers.
Final Words
Social workers’ student loans can exceed their income level. Facing debt concerns, many borrowers try to find an achievable student loan forgiveness program to decrease their debt obligations. This guide presented four different ways to eliminate student loan debt fully or partially.
If you do not qualify for any of these options, you can contact our debt specialists. There exist several other social workers loan forgiveness programs and options for private borrowers. Our experts will collect information about your challenges and finances to find a way out of your debt problems. We can develop a sound debt repayment plan for you to get out of debt as quickly as possible. Contact us now for a free consultation.
