Student Loan Options for Nurses, Doctors, and Dentists
I typically work with doctors and nurses and as such I spend a good portion of my time discussing efficient student loan repayment strategies. To this end, I am going to spend some time discussing three of these different strategies that are available to doctors and nurses who qualify. However, the goal of this blog is to give you a general overview of each program and is in no way intended to promote one repayment strategy over another, that should be done on an individual basis. If you’re looking for more advanced help with student loans, please schedule a time to meet with me. For doctors and some nurse specialities, I’ll be looking at the National Health Service Corps Loan Repayment Program (NHSC LRP), for nurses it’s the HRSA Nurse Corps Loan Repayment Plan, and last but definitely not least is our old friend Public Service Loan Forgiveness (PSLF). While I have already written about PSLF, it can be useful to have a refresher as well as put it into context with these other options. The first two options are focused on those who want or are willing to work in designated areas of need, so keep that in mind as we discuss their benefits. I will also supply links to apply for these loans (or get on the email list for when the application windows open) at the bottom of this post. Let’s start with the HRSA Loan Repayment Plan.
HRSA Loan Repayment
First, let’s take a look at who qualifies for the HRSA Repayment Plan and what you must do in order to receive the benefits. This plan applies to RNs, APRNs, and nurse faculty who are willing to work in underserved communities who have graduated from an accredited nursing school. You must also be a US citizen or a permanent resident to be accepted into this program, and unfortunately travel nurses, pool nurses, and those who work for nurse staffing agencies are excluded. In order to qualify, you will need to agree to at least two years of service in an underserved area with the option to add an additional year in order to capture greater loan repayment options. The HRSA program pays off 60% of your qualifying nursing school debt over two years, given that you work full time with the option to work full time for a third year for an additional 25% repayment. For those wondering about how to locate underserved areas, this website gives you the ability to search for jobs in these areas. Now that we have a sense of who they’re looking for and what they require, let’s take a deeper dive on what they offer.
As I mentioned earlier, in return for a minimum of two years of full time service in an area of need they are willing to repay 60% of your qualifying student loans that directly apply to nursing school. If you sign on for an additional year at full time, they will add 25% to the repayment amount, which will account for 85% of student loan repayment. This repayment amount covers the following type of loans:
Government and private commercial loans
Loans that were used to cover education and living expenses where you received your nursing education.
Loans that were used to cover nursing school prerequisite courses from other schools as long as those classes counted towards the nursing education provided by the nursing school where you received your education.
This means that the non-qualifying loans are:
Loans received for education other than your nursing degree.
Loans taken after you apply to this program.
Loans from non-qualified lenders such as family members.
Parent Plus loans.
Loans that have been consolidated with other loans that weren’t for your nursing education.
So basically, it covers all loans that were used to pay for your actual nursing education as long as you submit them via this program. Unfortunately, there is a downside to using this type of repayment and that is that the amount they repay on your loans is taxable to you. They will deduct federal taxes, but their repayment counts as taxable income. Which means that if you’re working for two years and get 60% of your loans repaid, whatever that dollar amount comes out to acts like taxable income to the IRS. This is something to be very aware of as you plan out repayment options as you will likely be hit with a big tax bill when all is said and done. That warning aside, for those who are interested in working in underserved areas and want to accelerate their student loan repayments, this can be a great option.
NHSC Loan Repayment Plan
The NHSC plan is more geared towards doctors, nurse practitioners, and dentists but still focuses on those who are willing to work in underserved communities. Like the HRSA loans, you must also be a citizen of the US or a US national. The qualifying loans are very similar to the HRSA program as well, with government and private commercial loans being accepted, even those that have been consolidated. Basically, as long as you can show that the loans were used for your education, you’ll be fine. The NHSC plan has the same types of unqualified loans, those from family members, those that don’t apply to your specific education, and Parent Plus loans. However, unlike HRSA there are provisions for continuing in the program after the contract is up. These continuation contracts are for a year each and can be taken until your entire student loan balance in repaid, however there is no guarantee that you’ll get a continuation contract from year to year. Also unlike HRSA, there are more options for service, as you can work full time or half time (which changes how much you’re awarded in repayment funds) unless you work in a private practice in which case you must work full time.
This loan repayment plan takes a different approach from the HRSA plan by providing a dollar amount for repayment as opposed to a percentage of the loans and can be different depending on full time or half time, and how much your worksite is in need. The acceptable sites are scored via this rubrik to determine areas of greatest need, which will in turn determine how much you are eligible for in terms of repayment. This means those sites that score 0-13 pay less than those that score 14-26 on their scale of need. For full time employment at a higher scoring site you’ll be given $50,000 for two years, and $30,000 for a site that’s ranked 0-13. Working only half time at a 14-26 site earns $25,000 and $15,000 for a site ranked 0-13. Unlike the HRSA program’s taxable repayment, these awards are not taxable and so you won’t be hit with an unexpectedly large tax bill. That’s definitely a big benefit over the HRSA plan, but it may be more difficult to get all of your loans repaid this way. However, both the HRSA and the NHSC loans are in short supply and the demand is quite high. There is no guarantee that you’ll be able to get either type of loan, but that doesn’t mean you shouldn’t apply for either if they are your best option. Now that we’ve looked at these two, let’s take a refresher look at Public Service Loan Forgiveness.
Public Service Loan Forgiveness (PSLF)
Unlike the previous two loan repayment options which require you to work in underserved communities, PSLF simply requires you to work at a certified 501(c)(3) non-profit or be employed by the government. Most hospitals and clinics are registered as non-profits, so finding a location that fits the bill shouldn’t be too hard regardless of where you’re located. You also don’t need to be a specific specialty, as long as you work for a qualified hospital/clinic, you’re eligible to take advantage of the PSLF program. Because it’s not limited to nurses, doctors, and other healthcare professionals, the qualifications are slightly more broad and easy to attain. This repayment strategy requires you to work for a 501(c)(3) company for 10 years, and to make payments on your student loans every month using an income based repayment plan, so 120 qualifying payments. For doctors, residency is usually done at a 501(c)(3) hospital or clinic so you should be able to start early and knock out a few years before you graduate.
At the end of those 10 years, the remaining balance on your loans is forgiven tax free, like the NHSC plan. Not having the forgiveness be counted as taxable income is an absolutely huge benefit to these programs and one that can make a lot of difference in your financial well-being. However, there are a few hoops that you must jump through in order to take advantage of this program. You must also make sure to certify that you’re employed by a qualified company to begin the program as well as submit that paperwork every year in order to remain qualified. The form you’ll need to submit is here. The other hoop is that unlike the previous two strategies, PSLF only applies to federal loans. You may not use the PSLF program to forgive private commercial loans which could be problematic for those who got through nursing or medical school primarily with private loans. All of that being said, the PSLF program is incredibly beneficial to those who can follow through and stay on top of the required paperwork.
I mentioned at the top that I would provide links to apply or get on the email list for the application windows for the above programs, so here they are. For the HRSA nurses program, the link is here. For the NHSC program, the link is here (I know they look like the same link, but both programs are run by the same agency). The PSLF application page is right above, but here it is again. Now that you have a bit more knowledge about each of these programs, which one fits your student loan repayment strategy? Are you planning on using a different plan? If you want more details on any of these plans or to discuss your personal situation, send me an email and we can find a time to chat in person.