Healthcare workers suffered physically, mentally, and financially through the pandemic. A survey from the HERO Registry, an organization that conducts studies about healthcare workers, found that a third are more worried about their finances now than they were before the pandemic.
That’s because about the same amount of healthcare workers—more than a third, according to a MagnifyMoney survey—faced pay cuts last year. Even though their pay went down, their debt didn’t go anywhere.
Healthcare workers especially suffer from student loan debt. That can become hard to manage when you’re facing pay cuts and the stress of a pandemic. Here’s how you can save money and pay off debt if you’re a healthcare worker both during and after COVID-19.
Table of Contents:
Dealing with student loan debt
Millions of Americans have student loan debt, but healthcare workers bear the brunt of it. According to a 2019 study by the Association of American Medical Colleges, the average amount of medical school debt is $200,000. It typically takes anywhere from 13 to 20 years to pay off, depending on your income and repayment plan.
The good news is healthcare workers may qualify for student loan forgiveness and repayment options that most people don’t. Here are a few of them:
- Public Service Loan Forgiveness (PSLF): This program is the most effective way for healthcare and other public service workers to get federal loan forgiveness. But there are several hoops you must jump through first. On top of working for a non-profit or public hospital, you need to:
- Health Resources and Service Administration (HRSA): Student loan forgiveness through HRSA works similar to PSLF—but you must be a nurse to qualify. These are the two programs that can help:
- NURSE Corps Loan Repayment Program: If you qualify, you could get up to 85 percent of your loans forgiven.
- National Health Service Corps (NHSC) Loan Repayment Program: This HRSA program can forgive up to $50,000 of your loans if you work at an NHSC-approved site.
- State programs: Federal assistance isn’t your only option. You can find state and local resources with the Association of American Medical College’s database of student loan repayment, forgiveness, and scholarship programs.
Crushed by student loan debt and worried you’ll never pay it off? There is help available.
What to do with hazard pay
One of the tenants in President Biden’s American Rescue Plan, the $1.9 trillion stimulus package passed in early 2021, was calling on employers to provide hazard pay for essential workers. That’s extra income for working in dangerous conditions, which healthcare workers certainly have experienced during the pandemic. The plan didn’t specifically provide funding for hazard pay, but it did provide $350 billion for local and state resources.
Advocacy groups like the Brookings Institution urged states to use those funds for hazard pay. The American Action Forum, a center-right political nonprofit, compiled this database of states and cities that are giving hazard pay and how much.
If you’re in one of those cities or states, here’s how you can use your hazard pay—if you have the means—to reach your long-term financial goals.
- Save for retirement: A Teachers Insurance and Annuity Institute survey last year found 38 percent of healthcare workers are less confident they’ll retire comfortably. Almost half (45 percent) say they’ll work past age 67. So, if you’re receiving hazard pay, putting that money toward your retirement funds may help prevent that.
- Start an emergency fund: Healthcare workers of all people should know that an emergency—especially a medical one—can strike at any time. An emergency fund could save you from worrying about your finances on top of your health.
- Pay off debt: According to the American Action Forum database, first responders in Brevard County, Florida received $1,500 in hazard pay. That’s a good amount of money to knock off of your credit card or student loan balance.
Discounts for healthcare workers
Regardless of your occupation, taking advantage of discounts can save you money and allow you to pay off your debt faster. It just so happens that healthcare workers receive tons of them.
Here are some of the biggest discounts that can help you save:
- Electronics: Tech can get really expensive really fast. Here’s how you can save on high-end items and plans:
- Apparel: When you’re on your feet all day, it’s smart to invest in a good pair of shoes. Here are some big-name brands offering discounts for you:
- Other: Here are some other freebies and discounts you may qualify for:
You can find nearly 200 more discounts for healthcare workers here.
How to pay off debt as a healthcare worker
Student loan forgiveness programs often have their own rules to follow when it comes to paying off debt. But student loan debt isn’t the only kind of debt out there.
If you’re facing other kinds of debt, you may have more flexibility with your options. Here are some methods that can help you pay off your debt faster and for less money, in some cases:
- Budgeting: Creating a budget can help you find areas to cut down on spending. A Debt.com survey found that 88 percent of people said budgeting has helped get them out or keep them out of debt.
- Debt consolidation: Debt consolidation combines several debts into one monthly payment. This helps reduce or even eliminate your interest charges and get out of debt faster. You can consolidate your federal student loans, but it may affect your PSLF qualification. Your credit score will also take less of a hit.
- Credit counseling: As a healthcare worker, the first thing you want to do when you get home from a long shift probably isn’t managing your finances. That’s where a credit counseling service can help you. A credit counselor can negotiate interest charges on your credit card and find a repayment plan that works for you. If you can’t afford the fees of a for-profit counseling agency, try non-profit credit counseling.
- Debt settlement: Debt settlement lets you pay back just a portion of what you owe. On average, people settle for 48 percent of their original balance. This is a quick and cost-effective way of getting rid of your debt. Debt settlement for private student loans is an option, but it’s rarely a successful one — so this works best for other types of debt. Be ready for your credit score to take some damage.
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Article last modified on July 15, 2021. Published by Debt.com, LLC