Student Loan Forgiveness for Healthcare Professionals in 2019

Whether you’re just thinking about entering the healthcare field or you’ve already graduated from your degree program, student loan debt is something you’re likely going to be impacted by. You may also have a family or mortgage to take care of as well, so being proactive about receiving any form of financial assistance is a smart move. Don’t worry, we hear you. This comprehensive guide first breaks down the types of student loans available and then covers loan forgiveness programs for healthcare professionals.

Because entering the healthcare field requires a solid education and training, you can rest a little easier knowing there are programs dedicated to helping you achieve healthcare student loan forgiveness.

What Is Loan Forgiveness?

Loan forgiveness means that the borrower of the loan, which is the person who took out the loan, is no longer required to repay all, or a portion of, the remaining principal and interest owed on the student loan.

Loan Basics 101

Principal–The total sum of money borrowed plus any interest that has been capitalized.

Interest Capitalization–The addition of unpaid interest to the principal balance of your loan.

Deferment–The temporary postponement of payment on a loan.

Forbearance–A temporary suspension of monthly loan payments.

Do Healthcare Workers Qualify for Student Loan Forgiveness?

The short answer is yes, and probably more than you think. With Americans collectively holding over $1.5 trillion in student loan debt as of 2018†, loan forgiveness programs are becoming increasingly more prevalent, especially considering the amount of training and education required for those in the healthcare field.

Which Healthcare Careers Are Eligible?

It’s important to remember that there is no blanket guarantee of loan forgiveness if you enter a particular profession, but there is a high likelihood of loan forgiveness if you work within certain healthcare fields and follow a set of rules outlined by each respective loan forgiveness program. Also, do note that every program and every state has its own system by which it determines whether your loans are to be forgiven, so make sure you research all of your options for where you live and for whom you work. For many, loan forgiveness for health professions is possible for, but is not limited to, the following:

Allied Health Professions

Non-Profit Hospital Worker
Physical Therapist
Allied Health Grad Program Graduate in Public/Behavioral/Mental Health
Emergency Medical Technician
Laboratory Technician
Occupational Therapist
Nutritionist
Radiology Technician
Respiratory Care Provider
Speech Language Pathologist

General Healthcare Professions

Physician
Physician Assistant
Dentist
Behavioral/Mental Health Professional
Pharmacist
Clinical Research Healthcare Professional
Veterinarian
Medical School Faculty

Federal Student Loans Eligible for Forgiveness

One of the most common and accessible types of student loans is a federal loan. When it comes to student loan forgiveness for healthcare workers, there are multiple types of loans from the federal government, so let’s do a quick review of the types of federal loans that are eligible. According to the Federal Student Aid Office of the U.S. Department of Education, there are two current loan programs.

The William D. Ford Federal Direct Loan (Direct Loan) Program: This is the largest federal student loan program, in which the U.S. Department of Education is your lender. Under this program, there are four types of Direct Loans that are available.

  • Direct Subsidized Loans are for eligible undergraduate students who demonstrate financial need to help cover the costs of higher education at a college or career school.
  • Direct Unsubsidized Loans are for eligible undergraduate, graduate and professional students, however, students are not required to demonstrate financial need.
  • Direct PLUS Loans are for graduate or professional students and parents of dependent undergraduate students to help pay for education expenses not covered by other financial aid.
  • Direct Consolidation Loans allow you to combine all of your eligible federal student loans into a single loan with a single loan servicer.

The Federal Perkins Loan Program: is a school-based loan program for undergraduate and graduate students with exceptional financial need, and in which the school is lender.

The Federal Family Education Loan (FFEL) Program: This discontinued program arranged for loans to be made by banks or other financial institutions. No new FFEL Program loans have been made since July 1, 2010. Though this loan program no longer exists, FFEL loans are still eligible for forgiveness. Find more on forgiveness options below.

Federal Loan Repayment Options

Once you’ve taken out a federal student loan, you’ll need to choose how you want to pay back the amount you owe before forgiveness is even an option. There are several repayment plans available, depending on your financial situation. It’s important to discuss all the details with your loan provider so that you are aware of your responsibilities. These repayment options, as described by Federal Student Aid, are available for all students in and out of the healthcare field.

Standard Repayment Plan: All borrowers have up to 10 years to repay their loans at a fixed amount each month. Eligible loans include:

  • Direct Subsidized Loans
  • Direct Unsubsidized Loans
  • Subsidized Federal Stafford Loans
  • Unsubsidized Federal Stafford Loans
  • Direct Plus Loans
  • FFEL Plus Loans

Graduated Repayment Plan: All borrowers have up to 10 years to repay their loans. Payments will start out low and increase every two years, but will not be more than three times greater than any other monthly payment. Eligible loans include:

  • Direct Subsidized Loans
  • Direct Unsubsidized Loans
  • Subsidized Federal Stafford Loans
  • Unsubsidized Federal Stafford Loans
  • Direct Plus Loans
  • FFEL Plus Loans

Extended Repayment Plan: To qualify, you must have more than $30,000 of Direct Loans or more than $30,000 of FFEL Program loans to repay. Borrowers have up to 25 years to repay with your choice of fixed or graduated payments. Eligible loans include:

  • Direct Subsidized Loans
  • Direct Unsubsidized Loans
  • Subsidized Federal Stafford Loans
  • Unsubsidized Federal Stafford Loans
  • Direct Plus Loans
  • FFEL Plus Loans

Revised Pay As You Earn Repayment (REPAYE) Plan: This is for Direct Loan Program borrowers. Monthly payments will be 10 percent of discretionary income, and, if you’re married, both parties’ loan debt will be considered. Eligible loans include:

  • Direct Subsidized Loans
  • Direct Unsubsidized Loans
  • Direct Plus Loans made to students
  • Direct Consolidation Loans that do not include PLUS loans (Direct or FFEL) made to parents

Pay As You Earn Repayment (PAYE) Plan: To qualify, you must be a Direct Loan Program borrower who 1) took out a loan on or after 10/1/2007, 2) has received a disbursement of a Direct Loan on or after 10/1/11 and 3) has a required payment amount that is initially under the 10-year Standard Repayment Plan. Your maximum monthly payments will be 10 percent of your discretionary income. Your spouse’s income or loan debt will be considered if you file a joint tax return. Also, you must have high debt relative to your income. Eligible loans include:

  • Direct Subsidized Loans
  • Direct Unsubsidized Loans
  • Direct Plus Loans made to students
  • Direct Consolidation Loans that do not include PLUS loans (Direct or FFEL) made to parents

Income-Based Repayment (IBR) Plan: This is for Direct Loan Program and FFEL Programs borrowers who have a required payment amount that is initially under the 10-year Standard Repayment Plan. Your monthly payments will be 10 or 15 percent of your discretionary income, and, if you’re married, your spouse’s income or loan debt will be considered if you file a joint tax return. You must also have high debt relative to your income. Eligible loans include:

  • Direct Subsidized Loans
  • Direct Unsubsidized Loans
  • Subsidized Federal Stafford Loans
  • Unsubsidized Federal Stafford Loans
  • Direct or FFEL Plus Loans made to students
  • Direct or FFEL Consolidation Loans that do not include PLUS loans made to parents

Income-Contingent Repayment (ICR) Plan: This plan is for Direct Loan Program borrowers. Your payments will be lesser of 1) 20 percent of your discretionary income or 2) the amount you would pay on a repayment plan with a fixed payment over 12 years that is adjusted to your income. Eligible loans include:

  • Direct Subsidized Loans
  • Direct Unsubsidized Loans
  • Direct Plus Loans made to students
  • Direct Consolidation Loans (including Direct Consolidation Loans made after 7/1/06 that repaid PLUS loans made to parents)

Federal Loan Forgiveness Programs

The federal government has created a number of options for students to eliminate a portion of their student loan debt if they qualify. All of the forgiveness options are dependent on time and making qualifying payments, so it’s important to know the facts ahead of time. Keep reading to find out if you qualify.

Repayment Plan Loan Forgiveness

Depending on the repayment plan you chose or were eligible for, there are forgiveness options that come standard with some of them.

REPAYE Plan: If you haven’t repaid your loan in full after 20 or 25 years, your outstanding balance will be forgiven, though you may have to pay income tax on any amount that is forgiven.

PAYE Plan: If you haven’t repaid your loan in full after 20 years, your outstanding balance will be forgiven, though you may have to pay income tax on any amount that is forgiven.

IBR Plan: If you haven’t repaid your loan in full after 20 or 25 years, your outstanding balance will be forgiven, though you may have to pay income tax on any amount that is forgiven.

ICR Plan: If you haven’t repaid your loan in full after 25 years, your outstanding balance will be forgiven, though you may have to pay income tax on any amount that is forgiven.

The Public Service Loan Forgiveness (PSLF) Program

The Public Service Loan Forgiveness Program forgives the remaining balance on a public service employee’s Direct Loans after you have made 120 qualifying monthly payments. You must not default on your loans, and you must be using a qualifying repayment plan while working for a qualifying employer.

  • A qualifying payment is made after 10/1/07, for the full amount due and no later than 15 days after the due date.
  • A qualifying employer means that you work for:
    • Government organization at any level (federal, state, local, or tribal)
    • Not-for-profit organizations that are tax-exempt under Section 501(c)(3) of the Internal Revenue Code
    • Other types of not-for-profit organizations that are not tax-exempt under Section 501(c)(3) of the Internal Revenue Code, if their primary purpose is to provide certain types of qualifying public services
    • AmeriCorps or Peace Corps serving as a full-time volunteer

Loans under the FFEL Program or the Federal Perkins Loan Program do not qualify, since they are not Direct Loans, but they may become eligible if you consolidate them into a Direct Consolidation Loan. Any payments made on the FFEL Program or Perkins Loans before the consolidation do not count towards the 120 qualifying loan payments.

Note that because you must make 120 qualifying payments before you are eligible for loan forgiveness, it will be at least 10 years before you can apply for PSLF. If you want to apply, you must complete and submit the Employment Certification for Public Service Loan Forgiveness form (Employment Certification form) annually or when you change employers for the government to verify that you are making qualifying PSLF payments.

Send the completed form, with your employer’s certification, to FedLoan Servicing, the U.S. Department of Education’s federal loan servicer for the PSLF Program:

U.S. Department of Education
FedLoan Servicing
P.O. Box 69184
Harrisburg, PA 17106-9184

If you wish to fax it, fax it to 717-720-1628.

If FedLoan Servicing is already your servicer, you may upload your Employment Certification form on their website.

Federal Perkins Loan Cancellation

Loan cancellation and loan forgiveness both generally refer to a borrower no longer being obligated to pay back some or all of the remaining amount of their loan, however, loan cancellation typically references the Perkins Loan Program. There are a number of reasons for a loan to be cancelled, or forgiven, which are touched on later, but for those in the healthcare field, there are a few notable circumstances. Federal Perkins Loan forgiveness requirements for healthcare professionals include the following:

  • Full-time nurse or medical technician: Up to 100 percent forgiven
  • Full-time qualified professional provider of early intervention services for the disabled: Up to 100 percent forgiven
  • Full-time speech language pathologist with a master’s degree working in a Title I-eligible elementary or secondary school who began service on or after 7/14/08: Up to 100 percent forgiven

To apply, you’ll need to contact your loan servicer. If you’re not sure who your servicer is, you can use the My Federal Student Aid portal to find out.

Student Loan Relief for Nurses

While nursing isn’t an allied health career, there is federal student loan relief available to nurses. If you’re thinking about going into nursing, take a look at the NURSE Corps Loan Repayment Program.

Healthcare Loan Forgiveness by State

Many states offer state-specific student loan forgiveness for healthcare workers, so it’s advised that you check with your state to see what your options are. Some common loan repayment assistance options include programs aimed at healthcare professionals who work with high-needs communities, in rural areas or as educators teaching healthcare fields at a state college or university.

The federal government funds a grant program known as the State Loan Repayment Program (SLRP) to states and territories that provides cost-sharing grants to assist in operating state education loan repayment programs for primary care providers working in Health Professional Shortage Areas (HPSAs). Not all states offer SLRP, however.

Healthcare Loan Repayment Programs

In addition to the widely available federal student loan forgiveness relief options mentioned above, there are loan repayment programs dedicated just to those who studied and work in allied health or healthcare. Here are a couple of options:

National Health Service Corps Loan Repayment Program (NHSC LRP)

The NHSC LRP is a program allowing licensed healthcare providers up to $50,000 toward student loans in exchange for two years of work at an NHSC-approved site. Federal loans, state loans and loans from local entities, as well as commercial institutions, qualify. There are several additional requirements for eligibility:

  • Be a U.S. citizen (either U.S. born or naturalized) or U.S. National
  • Be eligible to participate as a provider in the Medicare, Medicaid and the State Children’s Health Insurance Program, as appropriate
  • Be a fully trained and licensed practitioner in an NHSC-eligible primary care medical, dental or mental/behavioral health discipline
  • Have unpaid student loans that have been taken before your application to the NHSC Loan Repayment Program
  • Be working at or have an accepted offer of employment at an NHSC-approved service site that begins no late than 7/18/18

If you’re looking for opportunities at NHSC-approved sites, visit the Health Workforce Connector online. Two popular healthcare careers that are eligible include Physician Assistants and Registered Dental Hygienists. In order to apply, you should follow the application guidance provided online.

National Health Service Corps (NHSC) Students to Service Loan Repayment Program (S2S LRP)

The Students to Service Repayment Program provides up to $12,000 in aid to medical or dental students in their final year of school with a commitment that the student will work full-time as a primary healthcare provider at an NHSC-approved site for at least three years. The student must work in a Health Professional Shortage Area of the greatest need.

Faculty Loan Repayment Program (FLRP)

If you love teaching and healthcare, this may be of particular interest to you. The Faculty Loan Repayment Program is designed to provide loan assistance of up to $40,000 to those who pursue a career as a faculty member at a health professions school.

Besides having an eligible healthcare degree or certificate, you must come from a disadvantaged background (based on environmental and/or economic factors) and have an employment commitment as a faculty member for at least two years. To apply, review the application guidance online.

Indian Health Services (IHS) Educational Loan Repayment

The IHS Educational Loan Repayment aims to ensure that Indian health program facilities have enough trained health professionals by offering loan repayment for individuals who agree to serve an applicable time at an IHS-designed site.

The minimum amount of time required is two years, and, in return, individuals receive up to $20,000 per year and an additional 20 percent of the award for tax liability. Applicants can apply on their website.

National Institutes of Health (NIH) Loan Repayment Programs (LRPs)

The NIH Loan Repayment Programs were designed to recruit and retain qualified health professionals in biomedical and biobehavioral research careers. With up to $35,000 in repayment annually, this loan repayment program requires graduates to work within NIH research. Applications can be found through their website.

Health Professionals Loan Repayment Program (HPLRP)

The Health Professions Loan Repayment Program is designed for individuals to join the U.S. Navy or for current active duty medical personnel to commit to active duty in exchange for repayment of their student loans. Repayment is up to $40,000 annually, excluding about 25 percent in federal income taxes. You can apply through their website.

Other Conditions for Loan Cancellation or Discharge

There are several conditions whereby your student loans may be cancelled or discharged for 100 percent of the amount of the loan, both Direct Loans and Federal Perkins Loans.

  • Borrower’s total disability or death
  • Bankruptcy (in rare cases)
  • Permanent school closure
  • False loan certification
  • False certification through identity theft
  • School does not make required return of loan funds to lender

Private Loans for Healthcare Students

There are many options for private loans dedicated to student in the healthcare field. If you’re interested in receiving a loan from a private lender, such as a bank, credit union or school, you can compare their general and healthcare specialty student loans to see which offers you the best deal given your financial situation.

While federal loans have a fixed interest rate, private loans’ interest rate is variable and can often be quite high. You may also need a cosigner and an established credit record. These loans also cannot be consolidated into one. Most importantly, it is unlikely that there is a loan forgiveness program available for private loans.

Having a career as a healthcare professional is rewarding and respected, and it is one that requires a solid education. Whether you’re just thinking of applying or you’re already in your program, feel confident that the resources mentioned above are there to make life easier. Don’t forget that in addition the resources available online, it’s a great idea to make an appointment to talk with a financial aid advisor at your school to know more about your options.

Sources: †https://fred.stlouisfed.org/series/SLOAS

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