Should You Participate in a Student Loan Forgiveness Program?

Many nurses consider entering into a public service or government position after graduation in hopes of qualifying for a student loan forgiveness program.

It sounds great, right? Work for 10 years in the public sector and your student loan balance will disappear. It does sound great, but recent news that the Department of Education (DOE) is calling the approval letters of the Public Service Loan Forgivness (PSLF) program “invalid” have many borrowers concerned.

Launched in 2007, the PSLF program agreed to forgive student loan debt for borrowers who worked for 10 years in qualifying public-sector jobs, made 120 timely loan payments, and submitted an annual employment certification form. Many professionals, including nurses, entered the program with hopes that their years of public service would result in their student loan debt being wiped out.

This fall, borrowers who entered the PSLF program in 2007 are scheduled to have their loans forgiven. But the DOE sent notices last year that many workers were no longer eligible and that previous letters of acceptance were no longer binding. The American Bar Association responded with a lawsuit against the DOE, and many of the nearly half a million borrowers in the program are left in confusion over the status of their loans.

PSLF isn’t the only student loan forgiveness program out there for nurses. If you are thinking about entering a loan forgiveness program, here are some important factors to consider.

Make Sure You Know the Rules

Many borrowers in the PSLF program are facing challenges with ensuring they are following the program’s guidelines over 10 years. For example, borrowers who received letters that their promise letters may be invalid thought they were in good standing with the program, were working for qualifying organizations, and were making income-based repayments based on the program’s guidelines.

It’s important to keep on top of any repayment programs you may enter and watch for changes in the requirements. However, this isn’t a sure-fire guarantee of repayment as the borrowers in the PSLF program are currently experiencing uncertainty.

Limited Earning Potential

Many of the borrowers currently in the PSLF program have worked for lower incomes in public service jobs for nearly 10 years, greatly limiting their earning potential. Before you enter a public service nursing position for the sole purpose of loan forgiveness, do the math to make sure it will actually pay off in the long run. For instance, if you could make a much higher salary and increase your repayments over 10 years, is it worth it to limit your salary/career prospects for a decade?

Be sure to evaluate the time commitment required in the program to ensure it’s not keeping you in debt longer than necessary.

It Could Slow Down Debt Reduction

Many nurses are able to repay student loans on their own by cutting expenses and avoiding lifestyle inflation. If you could get yourself out of student debt in a few years, why wait 10 years?

Research the Program’s Track Record

Despite the controversy surrounding the PSLF program, there are programs out there with good track records. It’s a good idea to look for programs with strong histories and examples of nurses who have had their loans paid off.

For example, programs like NURSE Corps, which awards scholarships and loan repayment to nurses, nursing students and nurse faculty, have long track records of student loan forgiveness.

NURSE Corps pays for 60% of unpaid nursing education debt over two years, with an option to extend to a third year for an additional 25% of the original balance. Program participants are required to “work for a minimum of two years in one of the thousands of Critical Shortage Facilities across the country, including hospitals, clinics, and other facilities experiencing a critical shortage of nurses.”

Since 2007, 8,321 nurses have successfully completed the NURSE Corps Loan Repayment Program.

In addition to the NURSE Corps program, the National Health Service Corps offers a loan repayment program that funds nursing awards to primary care nurses. Since its inception, 4,655 nurses have successfully completed the NHSC Loan Repayment Program.

Evaluate Your Career Goals and Passion

In conclusion, many nurses are passionate about working in the public sector and would happily choose to work for clinics and non-profits with strong missions to help underserved communities – whether it came with the promise of loan forgiveness or not.

But for others, it wouldn’t be a first choice and they should use caution when making career and financial decisions within a loan forgiveness program.

Student loan forgiveness programs can be complicated to understand and something that nurses should thoroughly research before committing to them.

If you decide to participate in a loan forgiveness program, be sure you are complying with the rules by evaluating your status on a regular basis and keeping up with the latest news about the program to make certain it’s still a viable repayment option.