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Comparing Student Loan Repayment Options for Nurses

How can busy RNs meet the challenge of paying off student loan debt while managing a busy work schedule and enjoying a fulfilling lifestyle outside of work? Let’s explore a few strategies.

Published June 16, 2022

Nurses are an essential and integral part our healthcare system. With over 4.2 million nurses sharing their caregiving skills, compassion, and dedication each year, nurses continue to be one of the most in-demand professions in the United States. In fact, Registered Nurses (RNs) are expected to be among the top professions for job growth through 2029, according to the Bureau of Labor Statistics.

Even with this high job growth and demand, nearly 70% of nurses graduate with the significant financial challenge of student loan debt. The good news is there are various student loan repayment options available to help nurses manage student loan debt. Some of the options to make your payments more manageable include loan forgiveness, assistance, and refinancing. Let’s explore the circumstances around each option.

Student Loan Forgiveness Options for Nurses

Student loan forgiveness options are highly dependent on the type of employer. Nurses may be eligible for student loan forgiveness through public service with a non-for-profit organization, federal or state-sponsored programs, or through U.S. military service. Let’s take a closer look at some of these programs.

Public Service Loan Forgiveness

If you have Federal Student Loans and work in the public sector, Public Student Loan Forgiveness (PSLF) may be an option.

A U.S. government program, PSLF forgives the remaining balance on Direct Loans after 120 monthly payments have been made under a qualifying repayment plan. To be eligible for the program, you must:

  • be employed by a non-profit or U.S. government organization (this includes U.S. military service)
  • work full-time for that entity
  • have Federal Direct Loans
  • be enrolled in an income-driven repayment plan

It is important to note that PSLF is not available for private loans. Additionally, while on an income-driven repayment plan, you should avoid refinancing your loans as it creates a new debt, terminating your eligibility for forgiveness. To learn more, visit studentaid.gov.

The National Health Service Corps (NHSC) Loan Repayment Program

If you are a nurse working in an underserved area and specialize in a specific discipline, you may be eligible for loan repayment assistance through the NHSC Loan Repayment Program.

Eligible specializations include, but are not limited to:

  • Certified Nurse-Midwife
  • Dental Hygienist
  • General Internal Medicine
  • Mental and Behavioral Health
  • Nurse Practitioner
  • Physician Assistant

To qualify, you must:

  • work a minimum of two years at an NHSC-approved site
  • be a United States citizen or national
  • be a provider in the Medicare, Medicaid, and/or the State Children’s Health Insurance Program
  • be fully trained and licensed to practice in the NHSC-eligible discipline and state in which you are applying for
  • have qualifying student loan debt for your health provider education

Thresholds for forgiveness are:

  • Part-time: up to $25,000 in forgiveness
  • Full-time: up to $50,000 in forgiveness

Applications generally take about three weeks to complete and must be submitted by the application deadline to be considered. Forgiveness amounts are not taxed. To learn more, visit https://nhsc.hrsa.gov/loan-repayment/.

State Loan Forgiveness

Depending on the state you live in, you may be eligible for state-sponsored student loan forgiveness.

As of 2021, every US state except Mississippi and South Dakota offers at least one student loan forgiveness program. You can check which options are available in your state on the Federal Student Aid website.

Perkins Loan Cancellation

Similar to PSLF, Perkins Loan cancellation can help you achieve student loan forgiveness once you meet the program’s eligibility conditions.

To enroll in this program, you would need to apply through the school in which you received your degree. Once you have submitted all required and supporting documentation, your school will determine whether you can have all or part of your loan canceled.

To be eligible, you must be a:

  • Registered Nurse
  • American Registered Nursing Practitioner
  • Medical Assistant
  • Licensed Practical Nurse
  • Certified Nursing Assistant
  • Licensed Medical Technician

Perkins Loan cancellation forgives a certain percentage of your loan for each year of service you complete according to the following schedule:

  • 1-2 years of full-time employment: 15% of the loan principal and interest
  • 3–4 years of full-time employment: 20% of the loan principal and interest
  • 5 years of full-time employment: 30% of the loan principal and interest

Military Student Loan Forgiveness

When it comes to military student loan forgiveness, nurses have a few options to help pay down student loan debt.

If you served in the Army, Navy, Air Force, Marine Corps, or Coast Guard, you may qualify for The National Defense Student Loan Discharge program.

According to Federal law (34 CFR 674.59), if you served in a hostile area that qualifies for special pay under section 310 of title 37 of the United States Code, an institution must:

  • Cancel up to 100% of the outstanding balance on a Perkins or NDSL loan for service members that completed a full year of active duty on or after August 14, 2008.
  • Cancel up to 50 percent of the outstanding balance on a Perkins or NDSL for service members that completed a full year of active duty before August 14, 2008.

A full year constitutes 12 consecutive months. Therefore, if you were not on active duty for that full period, you cannot qualify for this program.

If you plan to enlist in the military to become a nurse in the Army, you may be eligible for the Army Active Duty Health Professions Loan Repayment Program.

Certified RNs and APRNs can qualify for repayment up to $120K when they enlist for a minimum of 3 years – that’s $40K per year in repayment.

In addition, nurses can also earn sign-on bonuses for joining the program.

Student Loan Assistance Options for Nurses

There are many student loan assistance options for nurses, some of which vary by state. The Nurse Corps, which only requires 2 years of service, is one of the most popular.

The Nurse Corps Loan Repayment Program

The Nurse Corps Loan Repayment Program applies to both federal and private loans. It repays 60% of your unpaid nursing school loans after two years of full-time employment, and an additional 25% of your original balance if you opt for a third year.

To receive funds from the Nurse Corps Loan Repayment Program, you must either work for two years in a critical shortage facility (CSF) or at an accredited nursing school. Nurses must already be working for a qualifying employer by the application deadline. You can apply to the program on the HRSA’s government website.

Student Loan Refinancing for Nurses

Student loan refinancing is the process of applying for a new private loan to cover and pay off your current student loan(s). Refinancing can lower your interest rate and either shorten or extend your repayment terms. If you are not eligible for repayment assistance or loan forgiveness programs, and/or if you have private student loans, refinancing may be right for you.

Benefits of Refinancing

For nurses with stable jobs and good credit, refinancing could help you lower your monthly payments, save money, and pay off loans faster. Laurel Road also offers an additional discount off your refinancing rate when you open a Laurel Road Linked Checking account and make qualifying monthly direct deposits.

While student loan assistance programs like the Nurse Corps and PSLF offer some loan forgiveness, they require nurses to work for a qualifying employer for several years. With refinancing, you may have greater flexibility to change jobs or employers. The ability to change jobs can lead to higher earning potential and/or a less stressful workplace environment, and even free up your budget/time to pursue advanced nursing degrees and certifications.

Downsides of Refinancing

There are a few cons to refinancing federal loans as a nurse. For example, if you refinance your federal loans, you will lose access to certain income-drive repayment plans or loan forgiveness programs, like PSLF, as those programs only apply to federal student loans.

Refinancing federal loans also changes your access to federal loan protections, such as deferment and forbearance. In addition to the current federal payment and interest pause due to COVID-19, federal loans come with multiple options for forbearance or deferment based on circumstances and life events.

The Bottom Line: Choosing a Student Loan Repayment Option as a Nurse

With so many options, it can be difficult to decide which loan repayment or loan forgiveness option to pursue.

If you have private student loans, the best option may be to refinance or consider pursuing an eligible loan forgiveness program, like the Nurse Corps. For federal student loans, always look at your forgiveness or assistance options, then consider potentially refinancing any leftover balance if you can get a lower rate.

To learn more about student loan refinancing options, click here.

In providing this information, neither Laurel Road or KeyBank nor its affiliates are acting as your agent or is offering any tax, financial, accounting, or legal advice.

Any third-party linked content is provided for informational purposes and should not be viewed as an endorsement by Laurel Road or KeyBank of any third-party product or service mentioned. Laurel Road’s Online Privacy Statement does not apply to third-party linked websites and you should consult the privacy disclosures of each site you visit for further information.

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