Student Loan Forgiveness Programs for Nurses

In this article, you will learn about student loan forgiveness programs available to nurses. Loan forgiveness eligibility qualifies you to have your loan eliminated. Forgiveness programs are only available for federal loans. The following will guide you on how you can reduce or eliminate your student loan debt if you are a nurse.

If you have federal student loans, you have many options to reduce or eliminate your debt. Maybe you’ve tried to refinance your student loans but haven’t been able to get a good interest rate from a lender. One option, the Nurse Corps Loan Repayment Program, helps nurses financially while also helping address the serious need for nurses in critical shortage facilities in the United States. 

Student Loan Forgiveness Programs

It is possible to have your federal student loans forgiven or to get help repaying them. Student loan forgiveness releases you from your obligation to repay part or all of your federal loan debt. 

The terms forgiveness, cancellation, and discharge are closely related in meaning as they apply to student loans. These terms are used by loan servicers in different ways to mean slightly different things.  If you’re no longer required to make payments on your loans because of an employment issue, this is usually referred to as forgiveness or cancellation. It’s called a “discharge” which usually applies if you’re no longer required to make payments on your loans for other reasons such as a disability or bankruptcy.

Borrowers may qualify for forgiveness through work-driven and income-driven forgiveness plans. Programs often require documentation annually as part of eligibility. Many loan forgiveness options are based on employment in certain vocations. These loan forgiveness programs are available if you work a certain amount of time in your vocation or profession. 

Student loan borrowers may also earn forgiveness of their loans by working in public service. The largest work-related loan forgiveness programs are the Public Service Loan Forgiveness (PSLF) Program, the Perkins Loan Cancellation Program, and the Teacher Loan Forgiveness Program.

Income-Driven Repayments (IDR) forgiveness programs are also available to student loan borrowers. These approaches allow borrowers to make payments through an income-contingent payment plan over time. Once eligible borrowers have met the program criteria, the government will forgive the remaining balance on their student loans. These payments must usually be made under a qualifying repayment plan while working full-time for a qualifying employer. The IDR programs are often used alongside other forgiveness programs.

The four IDR programs available are Income-Based Repayment (IBR), Pay As You Earn (PAYE) Repayment, Revised Pay As You Earn (REPAYE) Repayment, and Income-Contingent Repayment (ICR). Each of these programs requires you to pay a percentage of your discretionary income for a certain time. At the end of this period, the student loan debt is forgiven. 

If your school closes while you’re enrolled or soon after you withdraw, you may be eligible for discharge of your federal student loans. You may be eligible to have all or a portion of your student loans canceled based on your employment or volunteer service. You may also be eligible to have your debt discharged under certain conditions. For example, if you’re totally and permanently disabled, you may also qualify for a discharge of your federal student loans.

Nurse Corps Loan Repayment Program

Nurses can find relief from their student loan debt through the Nurse Corps Loan Repayment Program. The Nurse Corps Loan Repayment Program provides nurses to underserved communities at critical shortage facilities (CSFs). This loan forgiveness program pays up to 85% of unpaid nursing education debt for registered nurses (RNs), advanced practice registered nurses (APRNs), and nurse faculty (NF). 

The program has a two-year service requirement. If you receive an award from this program, you must work two years at either a Critical Shortage Facility or as a faculty member at an eligible nursing school. These facilities serve health professional shortage areas (HPSA). These areas lack enough primary care or mental health professionals to adequately meet the community’s needs.

Successful applicants receive 60% of their total outstanding, qualifying, nursing education loans forgiven in exchange for a two-year commitment. After this commitment is completed, applicants may be eligible for a third year and an additional 25% of their student loans forgiven. The full loan repayment award - the total amount of loans forgiven - is taxable.

Qualifying for the Nurse Corps Loan Repayment Program

To qualify for the Nurse Corps Loan Repayment Program and be eligible for loan repayment, an applicant must:

• Be a U.S. citizen, U.S. national, or lawful permanent resident;

• Have a current, full, permanent, unencumbered, unrestricted license;

• Have earned a diploma, associate, baccalaureate, graduate, or doctorate degree in nursing and have outstanding nursing educational loans;

• Be employed as a full-time RN or APRN working at least 32 hours per week at an eligible CSF or an eligible school of nursing.

The Health Resources and Services Administration (HRSA), the body that administers the program, gives funding preference to those who need the most help financially. The HRSA collects information from applicants to evaluate their eligibility, qualifications, and suitability for participating in the program. 

The following loans qualify for the Nurse Corps Loan Repayment Program:

• Consolidation loans

• Perkins loans

• Stafford loans

• Grad PLUS loans

• Private student loans

The Nurse Corps LRP application consists of an online application, required supporting documentation, and any additional supporting documentation, if applicable. Note that the HRSA only accepts and processes applications once a year.

National Health Service Corps

The National Health Service Corps (NHSC) loan repayment program provides awards for many healthcare professionals. It also helps underserved communities receive improved access to primary care services. Once the initial two-year service contract is completed, participants may be eligible to apply for additional loan repayment funds to pay remaining loans through one-year continuation service contracts. There is no guarantee that you will receive a continuation contract.

Qualifying for the National Health Service Corps

You should qualify for NHSC relief if you are:

• A United States citizen (U.S. born or naturalized) or U.S. national;

• A provider (or eligible to participate as a provider) in the Medicare, Medicaid and the State Children’s Health Insurance Program, as appropriate;

• Fully trained and licensed to practice in the NHSC-eligible primary care medical, dental, or mental/behavioral health discipline and state in which you are applying to serve; 

• A health professional in an eligible discipline with qualified student loan debt for education that led to your degree; and

• Working at an NHSC-approved site.

Eligible disciplines include physicians, nurse practitioners, physician assistants, certified nurse midwives, health service psychologists, licensed clinical social workers, psychiatric nurse specialists, marriage and family therapists, licensed professional counselors, dentists, and dental hygienists.

The program includes a service commitment of two years. You have a choice of service options. The first is a two-year full-time clinical practice commitment at an NHSC-approved site. The second is a two-year half-time clinical practice at an NHSC-approved site. Awards up to $50,000 are available for those working full-time and up to $25,000 for those working part-time. If you serve in private practice, you cannot practice half-time and remain eligible for the program.

Non-Healthcare Related Student Loan Forgiveness Programs

There are other student loan forgiveness programs that nurses can take advantage of, even though these programs don’t target healthcare professionals specifically. In addition to national programs, many states also offer assistance programs for nurses.

For example, the purpose of Alaska’s SHARP program is to recruit healthcare professionals to work in underserved areas. In return for this service, nurses can receive up to $27,000 per year in loan forgiveness. An added benefit is that the program requires employers to match the state’s loan forgiveness. 

The Michigan State Loan Repayment Program (MSLRP) recruits both medical and dental providers to practice in underserved communities that are designated as HRSAs. Only advanced practice nurses qualify for this loan, regular registered nurses do not qualify. This loan forgiveness program offers up to $200,000 for qualifying loans.  

Public Service Loan Forgiveness Program (PSLF)

Participation in the Public Service Loan Forgiveness Program (PSLF) can help you get the balances of your student loans forgiven after 10 years of repayment. Not all loans or loan repayment programs qualify for PSLF, only qualifying repayment plans. Only those people who work in public service - through the government or a qualifying nonprofit - are eligible for Public Service Loan Forgiveness. 

Only Direct Loans qualify for PSLF. Loans under the Federal Family Education Loan (FFEL) Program and Federal Perkins Loan Program may become eligible if consolidated with a Direct Consolidation Loan.

Only income-driven repayment plans are “qualifying repayment plans” for PSLF purposes. The available income-driven repayment options for federal direct loans are Income-Based Repayment (IBR), Income-Contingent Repayment (ICR), Pay As You Earn (PAYE), and Revised Pay As You Earn (REPAYE).

While there is no income requirement to qualify for PSLF, if your current required monthly payment amount is based on your income, your income level as it changes over time may be a factor. Most of the qualifying PSLF repayment plans are based on income. This means that there is a good chance that your income if it fluctuates dramatically, these changes may affect whether the remaining balance of your student loans qualifies for forgiveness. Eligibility shifts can occur even if you make the 120 required payments.

Those individuals working as part-time nurses will not qualify for this particular program. Under the Public Service Loan Forgiveness Program, you must work full-time and you must make 120 payments. These payments do not have to be consecutive. Student loan borrowers who make the complete number of PSLF payments on eligible loans can apply for forgiveness of the remaining balance. 

Federal direct loans in good standing, not in default, are eligible for forgiveness. Borrowers must work at least 30 hours per week for a government or nonprofit, to qualify. Only payments made after October 2007 qualify for this program. 

It’s important to make sure that you certify your employment once a year. This means that you must submit a PSLF Employment Certification Form whenever you change employers. This may seem troublesome but it will allow you to verify your qualifying payments. It will also verify that you’re working full-time for a qualifying employer. 

The Temporary Expanded Public Service Loan Forgiveness Program allows you to count qualifying monthly payments made after October 1, 2007, even if you were not in an income-driven repayment plan as required. This exception is available only for Direct Loans. 

Having your student loans forgiven through PSLF is difficult, however, due to the specificity of the program’s requirements. As of September 2020, less than 2% (3,469 out of 171,371 applicants) received forgiveness, according to the Department of Education. So, take care to understand the requirements before you pursue this debt relief option.

A benefit of PSLF is the lack of tax consequences. Unlike forgiveness through an income-driven plan, your forgiven balance under PSLF is not considered taxable income by the IRS. You won't have to claim it on your federal tax return. Under PSLF, if you're employed by a nonprofit organization and you meet the qualification requirements, then the amount of the forgiven loan is tax-free.

Federal Perkins Loan Cancellation and Discharge

When the program remained active, the Federal Perkins Loan program provided low-interest student loans for undergraduate and graduate students with exceptional financial needs. Students attending any one of approximately 1,700 participating postsecondary institutions were eligible to obtain a Perkins loan.

Known simply as Perkins Loans, these loans are no longer available. The authority for schools to make new Perkins Loans ended on Sept. 30, 2017. Anyone who has difficulty repaying a Perkins Loan should find out if they are eligible for a deferment or forbearance based on economic hardship or other circumstances.

Borrowers with Perkins Loans can still get them canceled if they meet certain requirements. If you have federal Perkins Loans and work as a nurse, you may qualify to have up to 100% of your loans discharged. Only those working as full-time nurses qualify for discharge. This is an important requirement that may be difficult for some to meet. If you qualify, your loans will be forgiven over five years. You must apply either through the school that dispersed the Perkins loans to you or through your loan servicer.

Federal Student Loan Repayment Plans

There are payment plan options for borrowers who are struggling to make their monthly payments but aren’t eligible for one of the loan forgiveness programs.  

While this isn’t a forgiveness program in the typical sense, you can get your loans forgiven through the Income-Based Repayment program. Through IBR, your student loan payments are capped at 10% or 15% of your discretionary income. After making consistent payments under IBR for 20 or 25 years (terms depend on when you borrowed), any remaining loan balance will be forgiven.

Pay As You Earn (PAYE) is similar to Income-Based Repayment (IBR). Both are typical loan forgiveness programs. Both provide a way for you to qualify for forgiveness after a certain period of time. The PAYE plan caps your monthly payment at 10% of your discretionary income. After borrowers make payments for 20 years, any remaining balance becomes eligible for forgiveness. As with IBR, your forgiven balance might be treated as taxable income.

Revised Pay As You Earn (REPAYE) works a lot like Pay As You Earn (PAYE). Under this plan, your payments are capped at 10% of your discretionary income. Undergraduate loans are forgiven after 20 years. Graduate school loans are forgiven after 25 years. Unlike IBR and PAYE, however, there’s no income eligibility requirement for using REPAYE. Anyone with eligible loans can apply.

Let’s Summarize…

While nursing can be a fulfilling career that allows you to give back to your community, it can also force you to incur expensive student loans. Don’t despair. The federal government and many states offer programs that provide nursing student loan forgiveness and loan repayment assistance.

National programs like the Nurse Corps Loan Repayment Program, Public Service Loan Forgiveness Program, Federal Perkins loan cancellation and discharge, and National Health Service Corps provide options for getting your loans forgiven if you’re a nurse. The requirements are strict but it is possible to find some relief.