On top of caring for patients in a profession that’s often short-staffed and overworked, many U.S. nurses have another issue to worry about: student debt.
The average nurse with an undergraduate degree has about $30,000 in student loan debt, according to a 2014 analysis of National Student Nurses’ Association data.
Student loan forgiveness could cut the amount nurses have to pay back, depending on the type of loans they have and the number of years they work in their field. Student loan refinancing may also an be option, particularly for private student loans.
If you’re a nurse struggling to repay debt, one of these repayment options could get your loans in check — so you can focus on the work you love.
Public Service Loan Forgiveness
Nurses who work for a nonprofit or the government qualify for Public Service Loan Forgiveness, a federal program that forgives participants’ remaining direct loans after they work and make payments for 10 years. This is likely the best option for nurses who qualify, says Jan Miller, a student loan consultant who previously worked for the student loan servicer Nelnet.
“Public service loan forgiveness is going to dominate any repayment strategy,” he says.
To make the most of the program, nurses should switch to an income-driven repayment plan. Income-driven plans cap borrowers’ monthly payments at a percentage of their income and extend their term from the standard 10 years to 20 to 25 years, depending on when they first borrowed.
Applications for Public Service Loan Forgiveness will be available in October 2017, which is 10 years from when the program started. Tell your student loan servicer you’re interested; you may have to consolidate your student loans or switch servicers to participate. To make sure you’re on track to receive forgiveness, you’ll have to fill out an Employment Certification Form annually, or whenever you change jobs.
Perkins loan cancellation
Nurses with Perkins loans, which are available to students with especially high financial need, can have up to 100% of their Perkins loans cancelled. You can defer your loans — meaning you won’t have to make payments on them — while you work full-time as a nurse. Your loans will be forgiven in increments over five years, and you’ll be left with nothing to repay when your deferment period is over.
Since colleges and universities disburse Perkins loans directly, apply for cancellation through your school.
NURSE Corps Loan Repayment Program
Nurses who work two years in a qualifying hospital or clinic that has a critical nursing shortage can apply for the NURSE Corps Loan Repayment Program. This federal program repays 60% of a nurse’s outstanding loan balance, and nurses who work a third year can get an extra 25% paid off.
To see if a hospital or clinic qualifies, enter the address in this tool. Each facility has three Health Professional Shortage Area scores — for primary care, mental health and dentistry — from 0 to 25. A higher number indicates an area with a bigger shortage.
The program is competitive: Over 6,000 nurses applied in 2015, and only about 600 nurses received repayment, according to the program website. However, nurses are more likely to qualify if they work in an area with a large nurse shortage (with a primary care or mental health HPSA score of 14 or higher), and have a high debt-to-salary ratio (100% or higher), according to a representative at the Health Resources and Services Administration.
Applications are available on the program website. Nurses must already be working at the qualifying hospital or clinic by the application deadline.
In addition to these federal options, many states and nonprofits have their own student loan forgiveness programs for nurses. The American Association of Colleges of Nursing lists many of them; ask your school’s financial aid officer about additional opportunities available in your state.
Another option: Student loan refinancing
Borrowers with private loans don’t qualify for federal forgiveness programs, but they may be able to get a lower interest rate by refinancing their student loans. Nurses who refinance through Credible, a student loan refinancing marketplace, save an average of $12,716, according to the company’s data.
“This is a good time to refinance,” says Heather Jarvis, an attorney specializing in student loan law. “Most people think that interest rates are as low as they’re going to be.”
To meet the minimum qualifications for a lender on Credible’s platform, borrowers need to earn at least $24,000 a year and have a credit score that’s at least 680 (or 620 if the borrower has a co-signer). The average Credible borrower also has a debt-to-income ratio of about 35%, says David Lewis, Credible’s director of operations.
But Miller, the student loan consultant, says in his experience, nurses — even those with good credit — often find it difficult to get approved for refinancing.
“Nurses just have so much more debt than they do yearly income,” Miller says. “So they’re usually upside-down there.”
Learn more about repaying student loans:
This post was updated. It was originally published Feb. 2, 2016.