Student loan forgiveness for healthcare workers

One of the issues any healthcare worker is likely to encounter is difficulty repaying student loans. Becoming a doctor, for example, is a particularly long and expensive process. Depending on your specialty and how long you went to school, it’s possible to have tens of thousands — or even hundreds of thousands — of dollars in student loans.

Fortunately, loan forgiveness for healthcare workers is available, which can help medical workers to reduce what they owe over time. This article provides the information you need to know about Public Service Loan Forgiveness (PSLF), as well as the other forgiveness programs healthcare workers are eligible for.

What is PSLF?

Public Service Loan Forgiveness was introduced in 2007 and is designed to encourage people to work with government and nonprofit organizations. After making 120 qualifying repayments, your remaining balance is forgiven.

It’s important to note that only certain types of student loans are eligible for PSLF, so double-check to make sure yours is a federal loan and qualifies.

One of the major benefits to PSLF is that your forgiven amount isn’t subject to taxes. Some loan forgiveness programs result in taxes on the forgiven loans, making it somewhat expensive once the debt is discharged.

» Read: Student loan horror stories

How to qualify for Public Service Loan Forgiveness

Most healthcare careers qualify for PSLF, because eligibility is based on the following factors rather than job role.

Work for a qualifying employer

This can be a government or tribal organization, a 501(c)(3) nonprofit, or another nonprofit that does certain kinds of work. For healthcare professionals, this can include those working in public health roles. There are hospitals that also qualify, along with government health programs and the Veterans Administration.

Work a minimum of 30 hours a week

If you work full time for a qualifying employer, you can get PSLF. The same is true if you work part-time for at least 30 hours a week. You can even work part-time for more than one employer, as long as your total hours working for qualifying employers adds up to 30 hours a week.

Get on a qualifying income-driven repayment plan

Standard repayment is 10 years, so if you pay off your loans during the 10 years you’re working for a qualified employer, you won’t have a balance left. In order to have money left, get on a qualifying income-driven repayment plan. This can make your payments more manageable since they will be based on your discretionary income.

Make 120 qualifying payments

Once you’re on an income-driven plan, it is time to make your payments. You need to make 120 qualifying payments while working for a qualifying employer. Payments don’t have to be consecutive, but your fastest path to repayment is to stick with it for 10 years.

Tips for speeding up the PSLF process

Because things can sometimes move at the speed of bureaucracy, there are some steps you can take to ensure that your paperwork is in order and speed up your ability to receive PSLF in a timely fashion.

Keep your loan out of default

Defaulted loans aren’t eligible for PSLF, so make sure that you make your payments as required under your income-driven repayment plan. If your loan does end up in default, work to rehabilitate the loan as quickly as possible.

Fill out a PSLF form every year

There is a PSLF form you can fill out each year to certify your employer and make sure you’re on track with payments. Filling out this form each year creates a paper trail that makes applying for PSLF easier once the time comes.

Check for temporary eligibility

In some cases, due to COVID-19, there is a chance you might be temporarily eligible for PSLF, or some of your payments might now qualify. Review the guidelines so you can submit a form claiming the temporary eligibility and moving forward with PSLF.

Does PSLF make sense for healthcare workers?

One of the reasons that PSLF can make sense for workers is due to the relatively low pay that often comes with qualifying employment. It’s easier to get on income-driven repayment and still have a balance remaining at the end of the 120 qualifying payments.

On the other hand, some healthcare professionals end up working for companies or in private practice and have higher-paying jobs. If you can make more money in a different healthcare setting, it might make more sense to pay off your loans faster and save on interest. For those who don’t qualify for PSLF and who aren’t worried about maintaining federal benefits for student loans, refinancing can be a good choice.

Student loan refinancing is a way of paying off your smaller loans with one big loan. Often, if you have good credit and can verify your income, you can get a good deal on refinancing and save thousands of dollars in interest. If you know you won’t qualify for PSLF, and you aren’t interested in income-driven repayment, refinancing can be an option. Just realize that once you refinance, your loans become private. It can’t be undone, and you no longer have access to federal loan forgiveness programs or other benefits like income-driven repayment and automatic deferment in some cases.

Loan forgiveness for healthcare workers – alternative programs

In addition to PSLF, there are other loan forgiveness programs for healthcare professionals. Many of these offer the chance to get some or all of your student loans forgiven, without the requirement to work for the equivalent of 10 years.

National Health Service Corps (NHSC)

The NHSC loan repayment program offers different programs aimed at recruiting healthcare professionals to work in certain areas and fields that are routinely understaffed; for instance, substance abuse and rural areas. Different healthcare workers can access these loan programs, including:

• Licensed clinical social workers
• Marriage and family therapists
• Nurse practitioners
• Physicians
• Physician assistants
• Veterinarians

In general, depending on the program and whether you work for 2 or 3 years, and whether you work full time or part time, you could receive forgiveness of up to $100,000. After receiving forgiveness, you would then have a much smaller balance to tackle later on.

Does NHSC work with PSLF?

Another benefit of the NHSC loan repayment program is that you can also use it as part of your PSLF strategy. As long as the place you’re working is an eligible employer, the payments you make while working could potentially be applied toward your 120 qualifying payments for PSLF.

Using this strategy, though, requires some ingenuity. In general, you get a lump sum for NHSC, and you have 2 years to apply it to your student loans. If you want to maximize your PSLF, divide your payments up over that time, while still working at the eligible employer and getting your credit over time.

For healthcare professionals who have a large amount in student loans remaining after finishing the requirements for NHSC loan repayment assistance, combining with PSLF can help for the future.

National Institutes of Health (NIH)

The NIH also has a loan repayment program. You can get up to $200,000 in student loan forgiveness, depending on how much debt you have and how long you work as a researcher at the NIH.  The healthcare roles eligible for the NIH loan repayment program include:

• Dentists
• Nurses
• Pharmacists
• Psychologists

Loan repayment is made directly to the servicer on a quarterly basis, so you can see a reduction in your student loans quickly. On top of that, some private loans are eligible for repayment under this program. If you have private loans that aren’t eligible for PSLF or other federal programs, you might be able to reduce your debt with the help of the NIH program.

Indian Health Services (IHS)

You can also work with Indian Health Services in Alaska Native or American Indian communities in order to work toward loan forgiveness. This program offers up to $40,000 in forgiveness after you serve a 2-year term. One of the benefits of this program is that you can keep extending your contract in one-year increments until your loans are paid off. With a relatively small amount of debt, you can have your loans paid off well before you would make your qualifying payments for PSLF.

Final thoughts on loan forgiveness for healthcare workers

Public Service Loan Forgiveness is the broadest option for receiving loan forgiveness, but it can take 10 or more years. By using other programs, it is possible to tackle debt faster. Additionally, before deciding on PSLF, it’s important to consider whether you could save money by reducing your balance through another program and then refinancing the rest when you get a higher-paying job.