Paying off student loan debt can be a major encumbrance for nurses starting their careers. You’re at the stage in life where your income is the lowest it will ever be during your career as a healthcare professional, but your student loan debt is probably the highest it will ever be.
Pressure from student loan debt can delay important life milestones, like buying a new car or a new house or having kids. Unfortunately, it’s all too easy to let your career and life choices be guided by your loan payments rather than your dreams and ambitions.
Luckily for nurses, there are several ways to pay off student loan debt faster and begin living life sooner. In this article, we’re covering the most effective methods nurses can use to pay off their student loans fast.
When plotting your next steps to pay off nursing school debt, the first thing to consider is whether you have federal student loans or loans from a private lender. Federal student loans are generally the better option because there are a variety of benefits such as loan repayment and forgiveness programs that nurses can take advantage of. But not everyone is eligible for federal student loans.
According to studentaid.gov, students who are not U.S. citizens (with some exceptions, such as green card holders) are not eligible for federal student loans, nor are students who have been convicted of a drug offense. Students may also find themselves ineligible for federal loans if they fail to meet academic performance requirements, if they have defaulted on a previous loan, or if they have already received the maximum loan amount allowed for their level of education. The latter example is particularly relevant in the field of nursing, where many individuals enter accelerated nursing programs after earning a bachelor’s degree in another field of study.
Because there are so many ways to become ineligible for federal student loans, many nurses find themselves financing at least part of their education through loans from private lenders. For this reason, this article will delve into loan repayment methods for both federal and private loans. If you took out private student loans to pay for nursing school, feel free to skip to the first section of this article focusing on federal student loan forgiveness and repayment options.
Loan Forgiveness Programs: The Best Way to Pay Off Federal Student Loans
One of the biggest advantages of federal student loans is the multitude of loan forgiveness programs available.There are five major student loan forgiveness programs offered.
Public Service Loan Forgiveness
The one that is applicable to the most healthcare professionals is Public Service Loan Forgiveness (PSLF), which gives any remaining deb after 120 payments have been made. To qualify, individuals must be employed by a U.S. federal, state, local, or tribal government of a not-for profit organization. Only Direct Loans qualify for PSLF. Loans from the Family Education Loan (FEEL) Program and the Federal Perkins Loan Program do not qualify – unless you consolidate them into a Direct Consolidation Loan.
National Health Service Corps (NHSC) Loan Repayment Program
The National Health Service Corps helps pay healthcare professionals’ qualifying student loans in return for working in ce
rtain health professional shortage areas. Under the NHSC’s Loan Repayment Program, up to $50,000 of student debt could be forgiven after two years of full-time service to a qualifying position, or $25,000 for part-time service. If you are approved for a continuation contract, full-time workers can receive an additional $25,000 per year for full-time workers, or $15,000 for part-time workers, for as long as you have unpaid debt and work at an eligible site.
The NHSC’s Loan Repayment Program is a great option for healthcare professionals whose career path leads them to eligible sites, however, pursuing employment at higher-paying private practices of for-profit medical institutions which do not qualify for the program could more than offset the loss of credit, especially if you are a physician.
There is also the NHSC Students to Service Loan Repayment Program, which offers up to $130,000 to medical, dental and nursing students in their last year of school who commit to working full-time clinical practice for three years in an NHSC-approved site. You can read about it in our blog dedicated to NHSC offerings.
Indian Health Services Loan Repayment Program
This program offers up to $40,000 in loan repayment credit in exchange for at least two years spent working in medical facilities designed to serve American Indian or Alaska Native Communities. While any loan repayment is good loan repayment, it can’t be ignored that IHS’ Loan Repayment Program offers a relatively small amount of return for a large investment of time and energy. Therefore, this program is really only ideal for medical students who have an interest in helping underserved communities and are willing to relocate.
State Student Loan Forgiveness Programs
Many states offer loan forgiveness programs to doctors, nurses and other healthcare professionals who work in underserved communities. The repayment amount and qualifications vary from state to state. A great resource to see what you state offers is the American Association of Medical College’s database.
Ways to Pay Off Any Kind of Nursing School Student Loans
Although many consider federal student loans to be a given, a surprising number of nursing students do not qualify. Probably the most common reason is that nursing students have already received the maximum amount of funds allowed for their level of education. Nursing is a common second degree plan. In fact, the average age of nursing students is older than most other fields, with nursinglicensure.org reporting that nursing students average “in the late 20s in BSN programs and early 30s in ANDN programs. In tracks specifically designed for R.N.’s, the average age of BSN is higher still.”
In the remaining sections of this article, we’re exploring methods of paying off your loans faster that work for private and federal loans. All of these methods can help you pay off your debt faster, but that doesn’t necessarily mean it will be easy. So as you explore the options listed below, keep and mind your current needs and want to determine which option – or options – work for you.
Employer Loan Repayment Programs
Employer Student Loans Assistance is an employee benefit wherein the employer makes payments for an employee’s student loans. The amount of repayment and conditions such as lifetime caps (the maximum the employer will pay towards debt) are determined by the employer. The schedule of payments, whether monthly, quarterly, or yearly, and how they will be paid out at a given time also vary.
As part of the CARES Act and Consolidated Appropriations Act in response to the COVID-10 pandemic, employers can offer up to $5,250 in student loan repayment benefits tax-free through 2025. In response, the number of employers offering student loan repayment benefits doubled in 2020 and remains a popular offer as of the publishing of this article.
Employer student Loan repayment benefits are a great way to contribute to paying off your medical school loans without reaching into your own pocket, but relatively few businesses offer this benefit, and with the tax-free status of these payments ending in 2025, the future of these benefits is up in the air.
How would you like to travel the country, see new places, meet new people, and get paid up to three times what the average staff nurse gets paid while you’re at it? It may sound like a dream, but that’s exactly what travel nursing is. There are drawbacks, of course, like spending time away from home, having to quickly learn the ropes in new working environments, and really staying on top of your finances (it’s surprisingly easy to spend all of your money when you’re away from home), but many nurses have paid off their entire medical school debts in mere months working as a travel nurse.
Move to a Higher-Paying Area
While nursing is generally guaranteed to bring a higher-than-average salary, there are significant differences in how much you can get paid as a nurse from city to city. For example, according to registerednursern.com, the average salary for a registered nurse in Santa Rosa, California, is $124, 840, while in Las Cruces, New Mexico, R.N.’s are earning $78, 870 and a mere $58, 600 in Huntsville, Alabama. Of course, these salary differences are often partly due to differences in the cost of living across U.S. cities, but that’s not always the case, and it’s common for nurses to find better opportunities waiting for them outside their hometowns.
Though it may sound too simple to be true, merely setting a budget can help you pay off your debt much sooner than you would have otherwise. Nurse Liz, of imnurseliz.com, says to pick an amount that covers all of your expenses, including monthly savings, and anything above that number that remains in your checking account should go towards paying off your student loans.
There are two ways you can approach paying off student loans:
- Snowball Method of Repayment
- Avalanche Method of Repayment
This method works well if you are paying off multiple student loans, or a mix of student and loans for other purposes. Using this method, you focus on paying off small debts first. Once you’ve paid off your smallest loan, you move up to the next smallest. Since you’ve paid off one loan already, you now have more to pay toward the next one, meaning you can pay it off faster. Your ability to pay larger amounts toward loans snowballs as you get closer to the top of your list. The true advantage of this method is the feeling of achievement you get by paying loans off, helping you stay motivated.
The avalanche method moves in the other direction. Using this method, you start with loans with the highest interest. This is considered the fastest way to pay off debt and save money; however it lacks that feeling of achievement that comes with quickly paying off small loans, which means it takes more resolve and patients to get through.
If you have multiple private student loans that seem to be draining both your time and money, debt consolidation might be a good option for you. Debt consolidation involves taking out a new loan to pay off several existing loans. If your credit score is higher than it was when you originally took those loans out, then you may get a lower interest rate, which will save you money in the long run. It’s also common to lower you monthly payment when you consolidate your debts.
And, last but not lest, it’s far easier to simply make one monthly payment than it is to keep track of several. According to a survey by the American Association of Colleges of Nursing, 29% of graduate-level nursing students have student loan debts exceeding $70,000. Only 20% of respondents reported receiving institutional or employer aid. Stress around debt can weigh heavily on any individual. For nurses, who already experience significant occupational stress, finances are an extra source of anxiety that you simply don’t need. Although debt consolidation won’t make your loans disappear, it can at least ease your burden.
How Hippo Can Help
As a nurse, you work hard to help those in need. When you’re working to help your patients, the last thing you want to worry about is your finances. That’s where Hippo comes in. Hippo offers to finance designed for Healthcare professionals and help ease some of the everyday stresses nurses deal with. We understand the challenges of working in the healthcare industry and use a value-based business model to evaluate each individual applicant based not just on a credit score but their work ethic, values, and potential. We’ve helped thousands of nurses and doctors achieve their financial goals.