What Nurses Need to Know About Student Loan Forgiveness
Nursing can be a rewarding career, but training to become a nurse can be costly. Many nurses start their careers with hefty student loan balances.
However, n urses can qualify to pay down or eliminate student loan balances with a variety of federal, state, local and private loan repayment assistance programs and forgiveness programs.
Federal Loan Repayment Plans for Nurses
Federal agencies offer several student loan repayment options for nurses. Depending on the program, you may receive assistance with your federal and private student loans. However, some programs only offer repayment assistance with loans taken while you pursued a nursing degree.
Health Resources and Services Administration Programs
The Health Resources and Services Administration, part of the Department of Health and Human Services and commonly known as the HRSA, administers two federal loan repayment assistance programs for nurses: the National Health Service Corps Loan Repayment Program and the NURSE Corps Loan Repayment Program. The HRSA has a helpful side-by-side comparison of the two programs.
There are some similarities between the programs, such as the requirement to work for two years at a facility that has a critical shortage of nurses. Nurses can apply to both programs, but you can only receive assistance from one.
There are important differences to consider, including eligible work facilities and disciplines. The National Health Service Corps program awards up to $50,000 in loan repayment assistance if you're working full time. You may be able to receive a smaller award if you work part time. The award isn't taxable.
The NURSE Corps program doesn't place a dollar limit on the award, which can be for up to 60 percent of your outstanding balance if you work full time for two years. You may qualify for assistance with an additional 25 percent of your original loan balance with a third-year commitment. However, there's no part-time option. The award is taxable, and federal taxes will be withheld when it's disbursed.
"Accepting a National Health Service Corps Loan Repayment Program award is a rewarding experience for both the clinician and the high-need community where they choose to serve," says Scott Kodish, HRSA Office of Communications public health analyst. While the program only requires a two-year commitment, Kodish says 93 percent of clinicians in the program continue to serve in high-need areas up to two years more.
Kodish suggests visiting one of HRSA's virtual job fairs held throughout the year if you're interested in either program. Job fairs allow sites and clinicians to meet online, and you can learn more about health profession positions open at eligible sites throughout the U.S. and its territories.
[Read: Getting Student Loans Without a Co-Signer.]
Indian Health Service Loan Repayment Program
The Indian Health Service Loan Repayment Program could repay up to $40,000 in educational loans for eligible nurses who serve a two-year, full-time commitment in American Indian or Alaska Native communities.
You'll receive the award directly, and it's paid out in two installments at the beginning of each year of service. Although the awarded amount is taxable, the program will pay 20 percent of your federal tax.
There are more stringent health profession limitations with this program than some others. You must be an advanced practice nurse or have a Bachelor of Science in nursing to qualify.
Military loan repayment programs
Several branches of the military offer sign-on bonuses and loan repayment programs to nurses.
The Army's nursing program benefits may include up to $30,000 as a sign-on bonus and up to $120,000 to repay nursing school loans over three years of active-duty service. The Army Reserve offers up to $50,000 for nursing school loans with a three-year commitment.
The Navy's Health Professions Loan Repayment Program awards up to $40,000 in loan repayment assistance each year. There's also a Navy Nurse Candidate Program, which offers a $10,000 sign-on bonus and a $1,000 monthly stipend for up to 24 months for full-time students pursuing a B.S. in nursing at an eligible school. You must agree to serve in the Navy for four to five years to qualify.
The Air Force Active Duty Health Professions Loan Repayment Program is another option for military nurses. Reach out to an Air Force health profession recruiter to learn about the requirements and loan repayment amounts.
Family nurse practitioners may be eligible for a student loan repayment program from the National Guard with a seven-year service commitment.
Federal Student Loan Forgiveness Programs
There are several federal student loan forgiveness and cancellation programs that aren't specific to nurses but could help nurses with their student loans. These programs only apply to qualified federal student loans.
Public Service Loan Forgiveness
Federal Public Service Loan Forgiveness may be an option for nurses who have federal direct loans or have consolidated other federal student loans through the direct loan program.
[Read: Best Student Loan Consolidation Lenders of 2018.]
With this program, you'll have to make 120 qualified monthly payments while working full time with a qualified employer, or the equivalent with multiple part-time jobs. After you complete your qualified monthly payments, the remainder of your student loan balance will be forgiven.
Local, state, federal or nonprofit hospitals and medical facilities may qualify.
Income-driven repayment plan forgiveness
You may be able to repay your federal student loans using an income-driven repayment plan, which bases your monthly payment amount on the type of loan you have, your income, family size and where you live. In some cases, your monthly payment could drop to zero.
Depending on the repayment plan and when you initially took out the loan, the remainder of your loan's balance may be forgiven after you've made payments for 20 to 25 years.
Perkins loan cancellation
Full-time nurses can get up to 100 percent of their federal Perkins loans canceled over five years. Fifteen percent of your original loan principal could be canceled for the first and second years of work, 20 percent during the third and fourth years, and the remaining 30 percent after the fifth year.
Perkins loans are administered by schools, rather than the federal government, so you will have to contact the school or the school's loan servicer to apply for the cancellation program.
State Student Loan Repayment Programs for Nurses
Many states offer student loan repayment programs as an incentive for nurses to serve in a federally identified Health Professional Shortage Area or state-designated facility. The qualified loan types vary by program.
State | Program | Maximum annual award amount |
Alabama | $15,000 | |
Alaska | $47,000 | |
Arizona | $25,000 | |
California | $6,000 | |
California | $10,000 | |
Colorado | $16,667 | |
Delaware | $30,000 | |
Florida | $4,000 | |
Georgia | $10,000 | |
Hawaii | Varies based on funding | |
Idaho | $25,000 | |
Illinois | $5,000 | |
Illinois | $5,000 | |
Illinois | Illinois National Health Service Corps State Loan Repayment Program | $25,000 |
Iowa | Iowa Registered Nurse and Nurse Educator Loan Forgiveness Program | The cost of resident tuition at Iowa's Regent Universities |
Kansas | $20,000 | |
Kentucky | $20,000 | |
Louisiana | $15,000 | |
Maryland | $10,000 | |
Massachusetts | $25,000 | |
Michigan | $25,000 | |
Minnesota | Minnesota Nurses in Nursing Homes/Housing with Services Establishment/Home Care Loan Forgiveness | $5,000 |
Minnesota | $5,000 | |
Minnesota | $9,000 | |
Minnesota | $20,000 | |
Montana | $15,000 | |
Montana | Not disclosed | |
Nebraska | Nebraska Loan Repayment Program For Rural Health Professionals | $30,000 |
Nevada | Varies based on funding | |
New Hampshire | $15,000 | |
New Jersey | Primary Care Practitioner Loan Redemption Program of New Jersey | $33,600 |
New Mexico | $12,500 | |
New Mexico | $7,500 | |
New York | $8,000 | |
North Dakota | $25,000 | |
Ohio | $5,000 | |
Oregon | 25 percent of qualified educational debt | |
Pennsylvania | $30,000 | |
Rhode Island | Not disclosed | |
Vermont | Vermont Educational Loan Repayment Program for Health Care Professionals | $10,000 |
Virginia | $50,000 | |
Washington | $35,000 | |
Washington | $25,000 | |
Washington, D.C. | $22,365 | |
West Virginia | $25,000 | |
Wisconsin | $16,667 | |
Wyoming | $10,000 |
Employer-Based Loan Assistance for Nurses
In addition to government programs, nurses may be eligible for loan-related employer benefits. For example, some hospitals and health networks offer loan forgiveness awards to nurses, and others offer scholarships to nurses continuing their education. Some "grow-your-own" nursing programs offer employees money to attend a local nursing program, including funds for books and supplies.
Johnson & Johnson's Campaign for Nursing has an online directory of financial assistance programs for nurses, including many employer-sponsored loan repayment, tuition reimbursement and grow-your-own programs.
[Read: Best Private Student Loans of 2018.]
Program Requirements and Penalties
Be sure to fully research each program as you formulate your plan for student loan repayment. Some fine-print items to note include designation and license requirements, which loans are eligible and the program's restrictions.
For example, some state loan forgiveness programs may only be open to advanced practice nurses or BSNs who are licensed to practice in that state. Your loans may need to be in good standing, there could be a requirement that you've never defaulted on your educational loans and the program may only apply to federal loans or nursing-related loans. There could also be restrictions on receiving loan assistance from multiple programs that have similar service requirements.
"New graduates should carefully scrutinize the rules, regulations and conditions of loan forgiveness programs to avoid penalties," says Diane J. Mancino, National Student Nurses' Association executive director.
For example, you might have your nursing license revoked if you don't maintain the full-time work schedule that the program requires. Or you may have to repay the award amount plus fees and interest if you don't honor your commitment.
However, as long as you meet your requirements, you could get a significant portion or all of your loans repaid or forgiven through one of these programs.
Louis DeNicola is a personal finance writer who works with Fortune 500 financial services firms, FinTech startups and nonprofits to help promote financial literacy. He covers a variety of personal finance topics and especially likes writing about credit and debt.
