How Does Student Loan Forgiveness for Nurses Work? | Student Loans and Advice

Nursing professionals who have student loans can look into a variety of loan forgiveness and repayment programs, which could potentially wipe away thousands or even tens of thousands of dollars in debt.

If you qualify for a federal loan forgiveness program, you will no longer have to pay a portion of your remaining loan balance. With loan repayment programs, you’ll unlock funds to help you pay off eligible loans.

But there are often employment and geographic requirements that nurses must meet to be eligible for these programs. Read below to learn how student loan forgiveness for nurses works, how to qualify for forgiveness and repayment programs, and which programs provide the most relief.

Nurses who work for the government or a nonprofit may qualify for the Public Service Loan Forgiveness Program through the Department of Education. To be eligible for PSLF, you must make 120 eligible monthly payments on your federal direct student loans while working full-time for a qualifying employer. You can check your employer’s eligibility online.

While working toward PSLF, you must be on an income-driven repayment, or IDR, plan. There are four IDR plans, and each typically determines your monthly payment by taking a percentage of your discretionary income. If you used a different repayment plan, you may still qualify under Temporary Expanded Public Service Loan Forgiveness.

After the 120-month repayment period, the federal government will forgive any remaining loan balances. The forgiven balance will not be taxed. Eligible nurses who have both federal and private loans can have their federal loans forgiven through PSLF, but not their private loans.

PSLF is popular with borrowers because there are fewer employer restrictions than with other forgiveness programs, says Betsy Mayotte, president and founder of The Institute of Student Loan Advisors. Borrowers can also see a huge drop in their monthly payments under IDR plans, but this depends on your loan balance and income.

“If your balance is fairly low compared to your income, then that one might not be the best choice for you,” Mayotte says.

Nurses who don’t want to be tied down to a specific employer or otherwise won’t qualify for PSLF may still be able to get federal loan forgiveness on any remaining balance after 20 or 25 years of making payments on an IDR plan.

The repayment term depends on the IDR plan, and you’ll have to meet the eligibility requirements to use an IDR plan. This is significantly longer than the 10 years required for PSLF or for the standard repayment plan for federal direct loans (except direct consolidation loans). Unlike with PSLF, you may owe income taxes on any forgiven amount.

The Federal Perkins Loan Program is a now-defunct student loan program. If you still have Perkins loans, you may be able to qualify to have those loans canceled. As with federal loan forgiveness, you are no longer required to pay back a canceled loan balance.

You can apply for loan cancellation through the school that issued your Perkins loans or through your loan servicer.

The Bureau of Health Workforce, which is part of the Health Resources and Services Administration within the Department of Health and Human Services, could pay up to 85% of your student loan balance through the Nurse Corps Loan Repayment Program.

Nurses may qualify if they work in a public or private health care facility designated as a Critical Shortage Facility, meaning that it is located in, serves, or is itself a Health Professional Shortage Area. You may also qualify as faculty at a qualifying nursing school.

In either case, you will need to apply, and applicants with higher financial need receive preference. There is an initial two-year commitment, which will result in 60% loan repayment. If you qualify for and complete a third year, you will have an additional 25% of the original loan balance repaid.

“That’s the one I know personally a lot of people have gotten forgiveness for,” says Naseema McElroy, a registered nurse and creator of Financially Intentional, a personal finance platform.

Nurse practitioners and certified nurse-midwives may also qualify for the National Health Service Corps Loan Repayment Program. Through this program, the Secretary of Health and Human Services provides up to $50,000 in loan repayment after two years of full-time service, or $25,000 after two years of part-time service not in private practice.

Nurses may be able to renew the contracts after the initial two years to have more of their loans repaid. Nurses must work in an HSPA to be eligible for this program.

You will not owe federal income taxes or employment taxes on funds from this program, and you can use funds to cover government and commercial student loans.

Nurses who make a two-year commitment to work with American Indian and Alaska Native communities may be eligible for the Indian Health Service Loan Repayment Program, or IHS LRP, which will cover up to $40,000 of student loans.

Nurses may also be able to extend the contract to have more of their loans repaid. Unlike PSLF, the IHS LRP is available for both federal and private student loans. Funds from this program are taxable, though IHS provides extra funds to help offset federal taxes.

Depending on the branch, nurses may be eligible for loan repayment programs from the military. For example, those in the army may qualify to receive up to $40,000 in loan repayment annually for up to three years through the Active Duty Health Professions Loan Repayment Program. Those funds are taxable.

Most states offer loan repayment programs for qualified nursing professionals who meet requirements such as working in an HPSA. And in some cases, you can utilize a state program and a federal program at the same time.

“Every program is going to be different,” Mayotte says. “Most of the time with the state programs, you can double dip with PSLF.”

According to Mayotte, borrowers with private loans should also pursue state programs because many of them cover private loans.

If you don’t qualify for a loan forgiveness or a repayment program, you may still be able to refinance student loans to a lower interest rate, which could save you hundreds or even thousands of dollars in total interest paid.

If you have federal loans, avoid refinancing unless you’re sure you don’t want to pursue PSLF or another feature specific to federal loans. Once you refinance, your loans will be converted into private loans and cannot be changed back.

Some employers will provide loan payment assistance or signing bonuses that you can use for a variety of reasons, including applying toward your student loans. The exact details may vary depending on the organization, but McElroy said these offers usually range from $10,000 to $20,000 in total.

“They’re all structured differently,” she says. “Usually what happens is you’ll get a big portion up front, and then you’ll get incremental payments as you go on.”

As the Supreme Court considers President Joe Biden’s student loan cancellation program, it’s possible that borrowers with federal loan debt could see some of their loan balances erased. Putting that aside, there are pros and cons to the existing loan forgiveness and repayment programs.

“You’ve got to run the numbers,” Mayotte says. “I think people get caught up in the word ‘forgiveness.’ The goal isn’t forgiveness. The goal is to pay the least amount of money over time. You also have to consider what you’re giving up in income.”