Student Loan Forgiveness For Healthcare Workers: Everything You Need to Know

Healthcare worker in scrubs wearing a mask

You have selflessly dedicated your healthcare career to providing compassionate care to those in need. This unwavering desire to help others is admirable. However, it is essential to recognize that, as you fulfill your calling, you may also be burdened by student loan debt. You are not alone. According to a report by Education Data Initiative, 73% of medical school graduates have student loan debts, with the average debt totaling $250,990. 

The good news is that there are options to ease this burden. The COVID-19 pandemic put the spotlight on how healthcare workers have always put their lives on the line. Since then, lawmakers has been attempting to pass legislation that would forgive healthcare professional’s and other essential worker’s federal and private student loan debt, tax-free. While those proposals have yet to become law, healthcare workers still qualify for student loan forgiveness programs.

This article will discuss student loan forgiveness for healthcare workers and give you an overview of the programs, including eligibility requirements, how to apply, benefits and drawbacks, and alternative options for reducing student loan debt.

Student Loan Forgiveness for Healthcare Workers

Student loan forgiveness programs are intended to assist healthcare workers in reducing or eliminating student loan debt in exchange for service in specific healthcare professions or underserved communities. The federal government offers these programs to attract and retain qualified healthcare professionals in areas with a shortage of healthcare services. There are many programs available, each with its eligibility criteria and requirements.

Public Service Loan Forgiveness (PSLF)

Healthcare workers in qualifying public service organizations, such as non-profit hospitals, community health clinics, and government agencies, are eligible for the Public Service Loan Forgiveness program. The remaining loan balance may be forgiven after making 120 qualifying payments under a qualifying repayment plan. It should be noted that not all healthcare workers or employers are eligible for PSLF, so make sure to thoroughly review the eligibility requirements and application process before applying.

To qualify for PSLF, you must: 

  • – Be employed by a federal, state, local, or tribal government or a non-profit organization in the United States (federal service includes military service)
  • – Work for that agency or organization full-time
  • – Have direct loans (or have other federal student loans consolidated into a Direct Loan)
  • – Repay your loans per an income-driven repayment plan
  • – Must have completed 120 qualifying payments

Use the Public Service Loan Forgiveness (PSLF) Help Tool to apply, as well as to:

  • – See if your company is eligible
  • – Certify your employment annually
  • – Apply for forgiveness after completing the requirements
  • – Create your PSLF form, which you will sign and submit to the PSLF servicer

Aside from this widely available program, there are other options for healthcare workers:

  • – To qualify for service-based student loan assistance, healthcare graduates must frequently commit to working in an underserved area, for a specific government agency, or in a high-need specialty.
  • – There are states that offer loan repayment or forgiveness programs to healthcare workers in Health Professional Shortage Areas (HPSA). They may forgive a portion of a participant’s loan debt after a period of service. 

National Health Service Corps (NHSC) Loan Repayment Programs

The Federal Health Resources and Services Administration’s National Health Service Corps (NHSC) offers three loan repayment programs for healthcare providers. They offer loan repayment assistance to those who can work for at least two or three years in specific areas.

NHSC Loan Repayment Program

This option is only available to primary care medical, dental, and mental health providers. With this program, you can get up to $50,000 in loan repayment as a full-time worker or up to $25,000 as a part-time worker in an HPSA. You may also extend your contract beyond two years, allowing you to pay off your loan balance in full. However, the contract extension is not guaranteed.

NHSC Substance Use Disorder Workforce Loan Repayment Program 

This option is for substance use disorder treatment providers who are trained and licensed, particularly for opioid addiction. You must work in an HPSA at an NHSC-approved substance use disorder treatment site in a primary care medical, dental, or mental health discipline. For three years of full-time work, you can get up to $75,000 or $37,500 for part-time work.

NHSC Rural Community Loan Repayment Program

This program, also aimed at substance abuse and opioid addiction treatment providers, offers more student loan repayment assistance to those who commit to working in a rural area. For three years of full-time work, you can earn up to $100,000 in aid or $50,000 for part-time work.

All three programs have the same application process, and you can find all details and instructions on the Health Resources and Services Administration (HRSA)’s website.

Nurse Corps Loan Repayment Program

Nurse Corps is another NHSC-run loan repayment assistance program available to nurses. If you are a registered nurse, advanced practice registered nurse or nurse faculty, you may have up to 85% of your nursing school debt forgiven.

You must work at least 32 hours per week in a qualified critical shortage facility or an accredited nursing school to be eligible. The student loan repayment award is 60% of debt over two years, with an additional 25% paid off for an optional third year.

Benefits and Drawbacks of Student Loan Forgiveness for Healthcare Workers

Student loan forgiveness programs provide much-needed debt relief, service opportunities, and increased career flexibility. The ease of financial burdens through debt forgiveness can provide financial freedom. Service commitments in underserved areas or facilities enable healthcare workers to give back to communities, making a difference in the lives of others. This will also allow them to pursue their passions without the burden of student loan debt.

However, there are disadvantages to consider. Service commitments may limit career opportunities and personal choices, so you must carefully consider them before committing. Another issue is tax implications, as forgiven student loan amounts may be taxable income, resulting in potential tax bills. Eligibility requirements, such as specific employment criteria, loan type restrictions, and other eligibility criteria, may also limit access to these programs.

Alternative Options for Reducing Student Loan Debt

Student loan forgiveness programs are not for everyone, so here are a couple of alternative ways to reduce student loan debt:

  • Income-Driven Repayment Plans (IDRPs). These are federal loan repayment options that make your monthly payment on your income and family size as a basis. These plans can help you lower your monthly payments and sometimes result in loan forgiveness after a set period, typically 20-25 years of payments. This may be a viable option if you do not qualify for student loan forgiveness programs or have a large loan balance.
  • Loan refinancing. Another option is to take out a new loan with a private lender to pay off your existing student loans. This can reduce your interest rate and monthly payments, potentially saving you money over the life of your loan. However, it’s critical to carefully consider the terms and conditions of refinancing because it could result in the loss of federal loan benefits like income-driven repayment plans or loan forgiveness options.

Payment1 can be your valuable resource in navigating your student loan debt and achieving your financial goals. Talk to our expert lending team today to learn about our flexible loan options.

It also helps to take proactive steps to reduce student loan debt and achieve long-term financial success. For more financial tips for college students, check out Payment1’s article 7 Ways to Save Money in College and the rest of the Payment1 blog.