Nursing School Debt: A Repayment Guide for Nurses

A career in nursing is a great choice for many reasons: You get to help people and earn a good salary. In fact, the mean salary for a registered nurse in May 2019 was around $77,460 a year, according to the Bureau of Labor Statistics.

But despite those positives, there’s one major drawback: nursing school loans. According to a 2017 report from the American Association of Colleges of Nursing (AACN), graduate-level nursing students said they expected to leave their program with a median debt of $40,000 to $54,999.

If you’re feeling the burden of paying off your student loans, know you have options. Here are some general tips and nursing school loan repayment options to consider.

How to pay off nursing loans

In 2016, 69% of graduate nursing students took out federal loans, according to the AACN report. These loans are put on a 10-year Standard Repayment plan. But you have other ways of repaying your federal debt.

Graduated Repayment Plan

With this plan, your payments start at a lower amount and then increase about every two years. Although you’ll still pay off your loan in 10 years, this repayment plan makes it easier to afford your payments when you’re first starting out.

Extended Repayment Plan

You must have over $30,000 worth of Direct Loans or Federal Family Education Loans (FFEL) to qualify for this repayment plan. Payments can either be fixed or graduated. Although you’ll end up paying more overall, your loan will be paid off within 25 years.

Income-driven repayment (IDR) plans

Among graduate nursing students who took out federal student loans, only 22% surveyed by the AACN planned to take advantage of an IDR plan.

Enrolling in an IDR plan could lower your monthly payments since the amount you pay would be based on a percentage of your discretionary income. You might not even have to make a payment. This is especially helpful if you’re just starting your nursing career and don’t have extra cash available.

Here are the four main options available:

• Income-Contingent Repayment
• Income-Based Repayment
• Pay As You Earn
• Revised Pay As You Earn

Remember that eligibility requirements vary by option. Your repayment period would also become either 20 or 25 years. That could mean you’ll be in debt longer and pay more in interest over time.

Direct Consolidation Loan

If you took out multiple federal loans, you could combine them with a Direct Consolidation Loan. That way, you’d have only one monthly payment to make. Although you’d lower your monthly payments, your interest rate could rise with a Direct Consolidation Loan.

Further, if you’ve been working toward loan forgiveness under an IDR plan or through another program, consolidating your loans would erase your progress.

Refinancing nursing school loans

Even if you scored some grants and scholarships, you might have taken out nursing loans to fill a funding gap. Whether you have federal or private student loans, refinancing can help you reduce your payments and interest charges.

With student loan refinancing, you take out a new loan with a private lender to pay off existing education debt. You could get a better interest rate or repayment schedule on the new loan. But there are many pros and cons of refinancing to consider.

Here are some benefits to refinancing your nursing loans:

• You could get a lower interest rate: One of the main reasons to refinance your loans is to reduce the interest you pay over time. Shopping around to find a lender who will give you a lower rate than your current one could lead to major savings.
• Consolidate monthly payments: If you have multiple student loans, you could combine them into one loan. You’d then have only one monthly payment to manage.

But, you should consider some drawbacks before taking out a new loan:

• Repayment terms aren’t as flexible: Federal student loans have many repayment plan options. If you refinanced your federal education debt into a private loan, you’d lose access to IDR plans.
• You lose access to federal protections: Private loans aren’t eligible for federal forbearance, deferment or forgiveness programs.

Student loan forgiveness for nurses

If you have federal education debt from nursing school, you could qualify for these student loan forgiveness programs:

Public Service Loan Forgiveness (PSLF)

The AACN report found that 57% of surveyed nurses planned to take advantage of Public Service Loan Forgiveness. Under this program, you could have certain federal debt forgiven after you make 120 qualifying payments.

To be eligible for this program, you must work full time for a qualifying employer, such as a government or nonprofit organization. You should also be making payments under an IDR plan.

Only Direct Loans qualify for PSLF. If you have an FFEL or Perkins Loan, you’ll need to consolidate it into a Direct Consolidation Loan before the payments you make would qualify for PSLF. Note that any payments you made on an FFEL or Perkins Loan before consolidation won’t count toward PSLF.

Be sure that using this program is worth the 10 years of service.

Federal Perkins Loan cancellation

Have a Federal Perkins Loan? Work full time as a nurse? Then 100% of your loan could be canceled or discharged.

To qualify for Perkins Loan cancellation, you must work full time as a nurse or medical technician and provide services directly to patients.

To have your Perkins Loan discharged, you must meet one of these conditions:

• Bankruptcy
• School closure
• Total and permanent disability
• Disability due to military service
• Spouse of a victim of 9/11

It’s important to note that the Perkins Loan program expired on Sept. 30, 2017. So, you must have borrowed before that date to be eligible.

Military repayment programs for nursing loans

Members of the armed forces could qualify for certain military repayment programs. Consider the following.

Air Force Active Duty Health Professions Loan Repayment Program (ADHPLRP)

The Air Force needs medical professionals and seeks out nurses. To incentivize nurses into the military, the ADHPLRP offers student loan repayment up to $40,000. This is in exchange for a minimum of two years of active-duty obligation or one year for each annual payment, whichever is greater.

Health Professionals Loan Repayment Program (HPLRP)

Nurses can get repayment assistance of a maximum of $40,000 per year minus taxes. Among other criteria, you’ll need to serve in the armed forces as an officer in the selected reserve. Only certain loans, such as those in the Direct Loan Program, are eligible. Be sure to check if your loans qualify.

Active Duty Health Professions Loan Repayment Program

Through the Army, nurses can get up to $120,000 (or $40,000 a year) of loan repayment for three years of service. You can also get a sign-up bonus of up to $10,000. That will certainly make a dent in your student loan debt.

Healthcare Professional Loan Repayment Program

As a member of the health care team for the U.S. Army Reserve, you could earn up to $50,000 in nursing loans repayment. Only selected specialties who enlist for six years meet the criteria. You might also be eligible to participate in another incentive program.

Other government-sponsored repayment programs

In addition to offering loan forgiveness and repayment for military service, the government has other programs to help you repay your nursing school debt.

National Health Service Corps (NHSC) Loan Repayment Program

In an attempt to bring better medical care to underserved areas, the NHSC has a program that pays up to $50,000 toward your loans in exchange for two years of service. The amount repaid on your nursing loans is dependent on the area you serve.

The Indian Health Service (IHS) Loan Repayment Program

IHS clinicians who serve American Indian or Alaska Native communities can get help repaying student debt. In exchange for two years of service, you can earn up to $40,000 in loan repayment. You might be eligible for more money with additional service.

NURSE Corps Loan Repayment Program

In exchange for working full time for two years in a high-need facility, you can get up to 60% of your student loan debt forgiven. An additional 25% of your original balance can be forgiven for your third year of service.

Nursing loan repayment assistance programs by state and employer

There are many state-sponsored programs that help nurses pay back student loans. Check out these student loan forgiveness programs for nurses. Just know that these programs can change and are dependent on funding.

In addition, seek out hospitals and other medical industry employers that offer student loan repayment assistance, either as a signing bonus to entice you to accept a job offer or as a 401(k)-style matching benefit. Consult Johnson & Johnson’s directory of such employers.

Paying back your nursing school loans

Although you might be overwhelmed with student loan debt from nursing school, you should feel more confident knowing that there are a ton of loan repayment options. Whether you choose a federal repayment plan, refinance or consolidate your loans or sign up for a military program, reducing your debt is possible.