Tackling Student Loan Debt

Tackling Student Loan Debt

Advancing your education isn’t a prescription for debt. Here’s how to earn that degree without interest.

One out of 10 Americans has student loan debt. That debt is steadily on the rise, with projections putting the total at $1 trillion this year, according to numbers compiled by Consolidated Credit. That number may seem unfathomable to many, but how big is your slice of that debt pie? Do you view student loans as the only way to fund your nursing education?

If you answered yes, it’s understandable why you may feel that loans just come with the territory of higher education. After all, tuition is at an all-time high—with no signs of slowing down. According to The College Board’s Annual Survey of Colleges, average in-state tuition and fees are $8,893 for public four-year and $3,264 for public two-year institutions. To put those numbers into perspective, the average yearly tuition at a four-year school in the 1980s was $3,449.

If you dream of becoming a nurse or if you are already a nurse and wish to earn an advanced degree (or two), know that you don’t have to contribute to those startling national student debt totals. Take the time to become financially savvy and seek out the right opportunities, and you could come out with substantially less student loan debt than your fellow classmates.

One of the first steps before making decisions about funding your education is to step back and thoroughly research your options. Look at the type of degree you are considering and make sure there is a high enough demand in the job market and job growth projections for that specialty. Also, look at salary averages for your chosen degree/career plan.

“Very few people can afford to pay for college out-of-pocket,” says Tiffany “The Budgetnista” Aliche, author of The One Week Budget: Learn to Create Your Money Management System in 7 Days or Less! “But student loans are avoidable if you plan carefully. Student loan debt in itself is not bad. The problem is that most people chose student loan debt as their first option and it really should be their last.”

Aliche stresses that getting an education is an investment. “What you put in should give you more money back in return, and if it doesn’t then you have made a gross error,” she warns. “If you invest $150,000 and only make $40,000 coming out, that’s a mistake. It doesn’t make sense. For example, if a doctor invests $100,000— that’s OK because they’re probably going to make over $100,000.”

Shannon McNay, community outreach and customer support manager at ReadyForZero, an online debt elimination tool, agrees. “Crunching the numbers is the absolute best way a nurse can decide if he or she should pursue an advanced degree,” she says. “What are the projected earnings for the position a higher degree will get you? Compare the price of the schools you’d go to and see which one you’d pick. If the tuition is equal to one year of the pay, it could be a worthwhile opportunity.”

The college or university you select can instantly drive up or reduce the cost of your education. “People will say ‘go to the best college you can.’ I disagree. I say go to the college that offers you the most money,” argues Aliche. “If you go to this amazing college and they offer you no money [scholarships], and you come out owing hundreds of thousands of dollars, no one cares that you went to Princeton and you don’t have a job. If you work really hard and do internships, you can compensate for not going to a school with a big name. But you can’t compensate for owing $100,000 in debt. And then you’re going to be stuck with a job that you hate because you have to pay off the student loan debt.”

The Importance of a Nursing Education 

The Institute of Medicine’s 2010 report The Future of Nursing reported that the Bachelor of Science in Nursing (BSN) degree is the new starting point to get hired as a registered nurse. In fact, according to the findings, nurses with a BSN will increase from 50% to 80% by 2020.

There’s no denying that the higher you go in your nursing education, the higher you can go in your nursing career and earning potential. With our ever-changing health care landscape that is a result of the Affordable Care Act, advanced practice nurses (e.g., nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists, and certified nurse-midwives) are often primary care providers. Those roles require a master’s or doctorate degree. They also require a large investment of time and money.

Paying for Your Education 

Before you sign on the dotted line for that student loan, it’s wise to explore other options for paying for your degree. For starters, look into scholarship opportunities—you may find easy money waiting for someone like you to claim it.

Aliche says that most students never apply for any scholarships. “It’s smart to explore scholarships as many programs offer them but have no applicants, making the competition low,” she explains. “There are a lot of people who say ‘I don’t want to apply’ or ‘I won’t get it.’ Apply, since you may be the only one. There may be three scholarships and three people applied; so by default, you win.”

Another alternative to student loans is to work while you’re in school and pay as you go. Many students can’t go to college full-time and literally work their way through evening and weekend programs. Accelerated master’s programs can be good options for parents who need to maintain employment while working on their degree.

“I think employment during your college/advanced degree experience is a good way to pay for—or at least offset—the cost of tuition, fees, books, and living expenses,” says John Heath, an attorney with Lexington Law, a credit repair firm. “Further, there are employers that will pay for college/advanced degree courses as long as the course fits their respective business model and you meet the criteria expected by the employer.”

If you have exhausted all other options for paying for your education, it’s time to look into student loans to help fill the gaps. But it’s vital that students fully understand the various types of loans and the terms and conditions.

As a general rule of thumb, Aliche advises students to steer clear of private loans because of interest fluctuation. She says federal loans are the best choice because they offer a fixed interest rate and less risk overall.

“With private loans, if you get sick or even if you pass away, you may still owe because, usually with a private loan, you have to get a co-signer—making that person equally responsible for the loan,” explains Aliche. “If you pass away, that person may still have to pay. But with a federal loan, if you pass away or become disabled, your student loan is forgiven. If you can no longer perform those tasks or face financial hardship, you can apply for forbearance, which means they allow you not to pay [on the loan] for six months to a year until you get back on your feet. Private loans do not offer that option. That’s why I tell people, if you’re going to get a loan, try not to get private loans because, when it comes to repaying it, there are very strict guidelines that are not there for federal loans.”

Loan Repayment Programs

Because skilled nurses are in high demand, especially in urban and rural areas, there are programs through the government, nonprofits, and employers offering loan forgiveness to nurses who are willing to work in underserved areas for a specified amount of time.

The US Department of Health and Human Services Health Resources and Services Administration offers the NURSE Corps Loan Repayment Program (http://nhsc.hrsa.gov) for professional registered nurses working in a critical shortage facility. Those accepted receive 60% of their total qualifying nursing education loan balance for two years of service.

National Health Service Corps alumna Tamara Bumpus, MSN, NP-C, a nurse based in Toledo, Ohio, took advantage of the loan repayment program and has already completed her two-year commitment.

“I work for the Neighborhood Health Association, which serves the homeless, and the other office I work at serves the underserved— people with low-to-no insurance,” says Bumpus. “I always heard that there’s money out there. I researched and found that the National Health Service Corps was available, and I applied for it. It seemed like a difficult process at first, but it was more of a waiting game—waiting to see if you were going to be approved or not for the loan reimbursement—and I was approved the first time I applied. There’s nothing better than getting money back after you’ve taken out student loans. I wanted to be a nurse practitioner, and it was so helpful to have that burden removed. If I had known about the scholarships, I would have done that also.”

Smart Budgeting for Repayment

If you already have existing student loans or plan to get one in the future, it’s smart to plan early for how you will repay the debt. Aliche says an old-fashioned budget is the best place to start.

“Include everything from your rent to getting your hair done,” Aliche says. “Before you can pay a loan back, you need to know how much you can afford. So if you add up your money list and your life costs you $2,500 per month and you make $4,000, you will know how much you can afford to make in payments.”

Aliche says that only you can know how much you can truly afford to pay each month— not your lender.

“No one should tell you how much your payment should be, you should tell them,” she argues. “You can say, ‘Honestly, I did my budget and, with my bills, I don’t have $300 per month . I have $150 that I can guarantee.’ It’s a different conversation when you say that. ‘I have a budget and you want me to promise you $300, but you’re not going to get that.’ That’s the kind of conversation that you want to have. You can definitely try to negotiate your monthly payment. It may take you talking to five people on the phone or a week of calling. I know someone whose monthly payment was $900 and she got it down to $400 per month. You can e-mail them a copy of your budget so they can see that you don’t have things like cable. Most people are not having that conversation with their lender, so that’s why it’s easier for someone to say yes to you.”

Another good strategy for those still in school is to make payments now, not after graduation.

“Calculate a small amount of money to pay each month so you can get a head start,” McNay suggests. “You may also want to dedicate some monthly savings to building an emergency fund. If you end up finding a higher-paying job out of state, you’ll want some startup money to get you there. Don’t lose out on opportunities just because you’re not financially ready for them. School is a great time to save.”

McNay says nursing students should stay mindful of what’s available to them after graduation. “If you’re really struggling, the [federal government’s] Income-Based Repayment Program [https://studentaid.ed.gov] can be an absolute lifesaver— yet so few people know about it,” she says. “Stay up-to-date on changes in legislation that can benefit your finances—these changes aren’t just for current students.”

By educating yourself on the various options for funding your education, you can avoid the many pitfalls that land so many students in mountains of debt. Careful planning will allow you to begin to build the life you dream of after you graduate, whether that’s traveling the world or buying a home. The less student loan debt you have, the faster you can finance your other dreams.


Student Loan Do’s and Don’ts

There is so much information out there about student loans. Keep these expert tips in mind to keep your loans in check. 

Do Face Your Debt

“If you don’t already know who you owe or how much you owe, drop everything and find out right now. Ignoring the student loans will not make them go away. This website will help you figure it out: www.nslds.ed.gov.”  —Shannon McNay, community outreach and customer support manager, ReadyForZero

Do Be Careful When Consolidating

“Do not refinance a federal loan to a private company. All of the protection you get with a federal loan, you will not get it if you refinance with a private company. With a federal loan you can consolidate. So if you have 10 federal loans, they will take the average interest and give you one payment.”  —Tiffany “The Budgetnista” Aliche

Do Shop Around

“Pick your top five schools and talk to each of them about the real cost of your degree. Financial aid packages vary greatly, so let the schools make you an offer.”  —Matt Kelly, founder, Momentum: Personal Finance Coaching

Don’t Waste Refund Checks

“If you get back $2,000, some people think that’s free money. No, that’s money that you owe. If you don’t need that money, send it back. That will lower how much you owe when you get out of school.”  —Tiffany “The Budgetnista” Aliche

Don’t Overborrow

“It’s a mistake to take a large amount (more than needed) of student loans to maintain the lifestyle you were accustomed to at your parents’ house. It is better to live like a student while you are a student than to live like a student after you have graduated because of your large student loan payment.”  —John Heath, attorney at Lexington Law



Denene Brox is a freelance writer based in Kansas City, Kansas.