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Are you a nurse or medical technician? Here are the steps to qualify for Public Service Loan Forgiveness (PSLF)
Public Service Loan Forgiveness (PSLF) is a federal student loan forgiveness program for nurses and other public servants, including medical technicians that work in the public sector. If you work for a city, municipal or county hospital, there’s a strong chance you can qualify for student loan forgiveness for nurses, if you meet all the qualification requirements. The PSLF program will forgive a good portion of your student loan debt without penalties. In fact, you can actually get out of debt for less than what you borrowed. This program takes 10 years or more to qualify, though, and it’s not guaranteed.
Are you a nurse or medical technician?
Because you heal people, the federal government wants to make your bank account healthier. Student loan forgiveness for nurses is a thing and something you may be eligible for. If that sounds too good to be true, it’s not. You might actually get a huge chunk of your student loan balance surgically removed.
Of course, this being the government, there are lots of rules. You must have federal student loans, and you must work in the public sector. Even then, you need to make 120 on-time payments first.
There are some other hoops to jump through, too. You can save thousands of dollars if you do. Want to know the details in plain English? Debt.com will break it down for you.
PSLF only applies to federal student loans taken out through either the Federal Direct Loan Program or the Federal Family Education Loan (FFEL). You can also include Stafford and even Perkins loans if you consolidate them with your other Direct Loan Program or FFEL debts. In other words, you may need to consolidate using something like a Federal Direct Consolidation Loan first.
Once you have your loans consolidated, you must enroll in a federal hardship-based student loan repayment plan. You have three options:
These programs match your student loan payments to your income level and family size. This makes it easier to keep up with the payments even on a limited budget. To qualify, your Adjusted Gross Income (AGI) must be no more than 150% of the Federal Poverty Line (FPL) in your state for your family size.
As you can see, there’s a lot of red tape to even become eligible for PSLF. You must enroll in one of the hardship-based repayment plans. In some cases, you may need to consolidate first to ensure all your debts qualify for forgiveness.
ensure all your debts qualify for forgiveness.
PSLF only applies if you work in the public sector. Student loan forgiveness for nurses is possible if you work as a registered nurse (RN) at the local county hospital, for example. However, if you work as an RN at a private nursing home facility, you would not qualify because it’s a private company.
If you’re unsure if you work in a position that qualifies forgiveness, fill out the Employment Certification Form through the Federal Student Aid website. This can help certify that your employment qualifies. It’s recommended that you re-certify each year, or at least any time you change jobs. This gives you the best assurance that you will qualify for PSLF.
Note: The Department of Education does not require annual certification for you to qualify for forgiveness. If you are confident that your employment qualifies, you can skip certification; it’s just not recommended.
If you do everything right and start immediately, the earliest you will qualify for PSLF will be in 10 years. You must make 120 qualified payments to the federal repayment plan you chose. You can even switch to a different hardship-based repayment plan, if you stay in one of the programs listed above.
For example, if you enroll in an IBR and then decide to switch to PayE because your payments are still too high, you still qualify for PSLF and the clock doesn’t reset. Continue making payments, and after the 120th payment, you can officially apply for PSLF.
During that time, you can also switch jobs, but you must maintain employment in the public sector. Again, your safest bet is to re-certify your new position through the Employment Certification form.
It’s also important to note that “qualified payment” can mean a few things. It primarily refers to a scheduled payment that you make on time. However, in some cases depending on your repayment plan, you may also qualify to not make a payment.
For example, let’s say you enroll in PayE. If your income is 75% or less than the FPL in your state, your payments may be reduced or eliminated. You pay $0, but the federal government credits you for a qualified payment. Your balances don’t change, but you avoid penalties and maintain eligibility for PSLF. This usually only happens on PayE. Payments that you miss during forbearance or deferment do not count as qualified payments.
The final secret to qualifying for PSLF is also the most startling and troubling. PSLF is a government relief program – some would call it an “entitlement” program. That means that the program is subject to change by the federal government. The current administration under Betsy DeVos, is already adjusting the program.
Under the Obama administration, PSLF expanded so more people were eligible. That’s why PSLF is often called “Obama Student Loan Forgiveness” even though the program originated under Bush in 2007. However, since you must make 10 years of qualified payments, the first graduates to qualify only became eligible for student loan forgiveness for nurses in October 2017.
So far, the Trump administration has limited the employment positions that qualify PSLF. Even if you previously certified your employment, you may no longer be eligible. There are reports of people that maintained ongoing employment certification, who now say they’ve been rejected. Public professionals including nurses have been holding their breath to see if their colleagues qualify for student loan forgiveness.
A report by the Department of Education reveals that 99% of the 29,000 PSLF applications processed since October 2017 have been rejected. Only 289 were approved. One third were rejected for incomplete paperwork, but the other two-thirds were denied for not meeting program requirements, from not having the right loans to not being enrolled in the right repayment plan.
This shows how critical it is to follow the requirements for PSLF qualification exactly. This is also where working with a professional student debt resolution specialist can help. Loan servicers are notoriously bad about providing the information that borrowers need to qualify for PSLF, so you often need a third party that can help you navigate the paperwork and processes.
Public Service Student Loan Forgiveness (PSLF) isn’t the only way nurses can get rid of their student debt. Here are a few other places to look when you’re hunting for forgiveness funds.
The Health Resources and Service Administration (HRSA) has two programs that can help nurses with student loans. They both work through federal loan repayment and require that you work at least two years at an institution suffering from a nurse shortage.
This HRSA program could get you up to 60% of your outstanding loan balance. If you qualify for more, you could even get an extra 25% for working an additional third year in a public or private nonprofit Critical Shortage Facility. This award can be taxed, but the federal taxes are already deducted from the award.
With the NHSC loan repayment program, you could receive up to $50,000 toward your loans. You must either work at a qualifying location or work in a certain discipline to qualify. These disciplines include primary care nurse practitioner, certified nurse-midwife, and psychiatric nurse specialist. The award isn’t taxable, but you do have to work at an NHSC-approved site.
For more details about how these two programs compare and which sites are NHCS-approved, take a look at HRSA’s comparison chart.
If you took out your Federal Perkins Loans after October 1, 2007, and before September 30, 2017, you could get 100% of your loans forgiven.
To qualify, you must work as a nurse full time. Your Perkins Loans will be discharged over the course of 5 years.
Qualifying nurses in the Faculty Loan Repayment Program can receive up to $40,000 for repaying their loans. Applicants have to come from an economically or environmentally disadvantaged background and get a full- or part-time position at a public or private nursing school for at least two years.
While the military doesn’t have student loan programs specifically for nurses, many of their programs apply. This program doesn’t cover interest charges and can be taxed.
Most states have their own student loan forgiveness programs for nurses. They often focus on areas with desperate need for nurses and nurse practitioners, usually referred to as Health Professional Shortage Areas (HPSAs).
Curious about what your state will offer you? Check your state’s website to see what kind of programs they have or look through this list for general student loan forgiveness programs by state.
Article last modified on October 14, 2019. Published by Debt.com, LLC