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Student Loan Forgiveness for Healthcare Workers: What Are Your Options?

Frontline health workers are heroes of the pandemic. Doctors, nurses, nurse practitioners, and other healthcare professionals have been doing overtime and putting themselves at great personal risk caring for others. On top of this, many struggle with the weight of student loans as well as all the burdens of working.

Help is on the way, though.

Many Healthcare Workers Are Eligible for Federal Student Loan Forgiveness

Healthcare workers, especially frontline health workers, made the most significant contributions in serving our country in the COVID-19 pandemic era. These healthcare professionals spent extra hours in; patient care services, medical research – literally working as essential workers since businesses were not functional during this period. Amidst all this hard work, they still have to deal with their unpaid student loans.

The pandemic, with its downside, also came with its benefits – the payment pause, interest waiver, and student loan frontline healthcare workers act. If there was a time where frontline healthcare workers were overqualified and most likely to enter student loan forgiveness programs, it is now.

Health care professionals like nurse practitioners, medical researchers, lab workers are eligible for federal student loan forgiveness as long as they are in the employment of a government employer (health workers working for a government contractor do not meet eligibility requirements regardless of their job title) and more eligibility requirements to be discussed shortly.

The Public Service Loan Forgiveness (PSLF) Program

The public service loan forgiveness program was set up by the United States government to provide student loan forgiveness to professionals working full time in public services of their student loan debt.

There are guidelines to receiving student loan forgiveness:

  • You must be a US citizen
  • You must also have eligible loans; private student loans (if any) and federal student loans merged into one direct consolidation loan.
  • Private student loans for necessary living expenses only to aid comfortable education.
  • Working with a qualified public health agency, non-profit agency, or tribal public health agency.
  • Monthly payments of 120 months qualifying payments, if on an income-driven repayment plan.

But unfortunately, since 2007 when the PSLF was created by Congress and signed by President George W. Bush, a whopping 99% of student loans were unforgiven – The strict, demanding and very misunderstood application process was a huge contributor to the failure of the program.

President Joe Biden, upon starting his administration, in the pact to honor the promise of the student loan forgiveness program and making room for healthcare workers and other citizens to recover from the financial backtrack, the department of education was asked to put a payment pause on all student loan payments. The student loan payment pause started in March 2020 and recently has been extended to November 2022.

During this forbearance period, there is an interest waiver. Federal student and private student loans that were not paid within this time frame will not be subtracted from their qualifying payments towards loan forgiveness for healthcare workers and other public service-related disciplines. Borrowers are advised to use this interest waiver period and payment pause to sort out their employer’s eligibility as well as apply for the student loan forgiveness programs.

The Student Loan Forgiveness Front Line Healthcare Workers Act

During the pandemic when public health measures were put in place to stop the spread of coronavirus, businesses were forced to shut down, and daily life activities were put on hold. While the public was at home facing only financial concerns, healthcare workers like doctors, nurses, mental health professionals, and lots of other medical professionals were at the frontline fighting for the lives of the public. They were at the greatest risk, but still, they put in the effort to battle the virus.

This wouldn’t have been possible without the help of their student loan debt.

In immense consideration of their heroic contributions, Congresswoman Carolyn Maloney, representing New York, in May 2020, joined hands with educational institutions and healthcare professionals to propose new legislation – much needed for our pandemic heroes – the frontline health workers act.

In the bill, Congresswoman proposed that both federal student loans and private student loans of frontline health workers receive student loan forgiveness. Both principal balance and interest debts are eligible for loan forgiveness for frontline workers and the forgiven student loans will be non-taxable – refunds would not be made for already paid loans.

Doctors, nurses, lab workers, essential worker(s), basically all front-line healthcare workers would qualify for this student loan forgiveness – student loan forgiveness for healthcare workers.

The biggest endorsers of the legislation were the association of American medical colleges among others. Unfortunately, the student loan forgiveness for frontline healthcare workers bill was not passed into law. But not to worry, in 2021, the bill was reintroduced into congress. We only hope that the bill would be passed into the legislature and provide student loan forgiveness for front-line healthcare workers as planned.

Public Service Loan Forgiveness Program (PSLF) for Healthcare Workers

All qualified professionals in the healthcare industry are eligible for any kind of student loan forgiveness program. The government has made student loan forgiveness for healthcare workers even merrier. Healthcare professionals after the payment pause and interest waiver, are automatically eligible for student loan forgiveness. Only direct loans qualify for this student loan forgiveness; private student loans are to be merged with direct loans.

National Health Service Corps (NHSC) Loan Repayment Programs (LRPs)

The National Health Service Corps (NHSC) loan repayment program is a unique student LRP aimed to help lacking communities at the same time rewarding healthcare professionals who choose to volunteer their services by paying off their student loans while earning a competitive salary. Healthcare professionals; Dentists, clinical health, certified nurse practitioners, mental health professionals, etc are benefactors and are hired and assigned to healthcare facilities that have a shortage of professionals, also known as Critical Shortage Facility (CSF) to work for a period of two years. During this period of their service, $25,000 of their loans are being paid for each year. If they still have leftover student loans to pay, eligible applicants can extend their contract every year until their loans are fully paid. After their contract expires, they can now move on to work at other eligible healthcare facilities.

To qualify for NHSCLRP, applicants need to;

  • Be licensed to work as healthcare providers in their state.
  • Have unpaid both federal student loans and other relevant private student loans for necessary living expenses.
  • Be either a certified mental health professional, dentist, healthcare psychologist, nurse practitioner, midwife, social worker, certified family and marriage therapist, professional counselor.
  • Have a history of commitment to completing.
  • Be working in an NHSC approved facility.

Successful applicants are required to choose from 2 contract plans: a full-time contract (40 hours/week) and a half-time contract (20 hours a week)

Nurse Corps Loan Repayment (NCLR) Program

It is without a doubt that nurse practitioners, among other healthcare professionals, have the most expensive education. According to research, students take out from $20,000 and above to get a degree as nurse practitioners, hence the nurse corps LRP.

Unlike the NHSCLRP, the NCLR program was made only for registered nurses with direct loans.

In comparison to the public service loan forgiveness program, the NCLR program requires nurses to make Zero payments to qualify for the

National Institutes of Health (NIH) Loan Repayment Programs

Most healthcare student loan debt repayment programs are dedicated to repaying student loans for healthcare workers. Although they were not direct front-line healthcare workers, medical researchers were at the heart of protecting public health. Their relevance was felt during the pandemic scare, working extra hours to make research.

The cost of getting a degree is just as expensive as getting a nursing degree or medical degree. With how little they earn, the loan payment could take forever. That is why these medical researchers, after getting a degree, seek jobs in for-profit private medical institutions to work. Therefore, LRPs were set up by the National Institutes for Health – that are now beneficial for frontline healthcare workers like medical researchers to repay the student loans. Federal and private student loans qualify for this student loan LRPs.

The requirements for this LRP are very high. Applicants need to have a doctorate degree or higher to qualify. But once accepted, the professionals will spend 20 hours/week full time or 10 hours/week part-time in medical labs making research.

Indian Health Services Loan Repayment Program

The IHSLRP offers to make loan repayments for eligible certain healthcare professionals in exchange for working in Indian health services that are facing staffing needs as healthcare workers.

To qualify for the program, applicants must have outstanding federal student loan debt, be certified healthcare workers in specific healthcare disciplines, and be a US citizen.

These healthcare workers must be ready to commit their services to native American and Alaska communities in need of healthcare providers for a minimum of 2 years full-time (40 hours/week) and halftime (20 hours/week).

Slots in this program are very limited and competitive. Opportunities depend on the availability of Native American and Alaska communities in need of healthcare professionals. In this wake, the application of native Americans and Alaskans is prioritized over that of other applicants. Another determining factor in availability is funding.

Perkins Loan Cancellation

Perkins loans are federal student loans. It is the only federal student loan that is not issued by the government but the institution. This student loan is issued by the college of choice for students with an extreme need for financial assistance and most of the interest is paid by the government (only 5% of the interest rates is paid by the student.)

Qualification for this type of student loan is determined by the college’s requirements alongside information provided by the students in a Free Application for Federal Students Aid form.

However, this federal student loan has been discontinued since 2017 due to budget costs as the federal government was the funder of the federal student loan. But despite the discontinuation, there are still unpaid student loans under this program.

Technically, the federal loan is to be repaid in a period of 10 years. But it can be paid way before that time. Perkins loans are eligible for student loan cancellation, public service federal student loan forgiveness program inclusive.

To receive student loan forgiveness, the borrower needs to be working in the public service. Teachers and healthcare workers can cancel their loans after a number of years in active service.

Qualification for student loan forgiveness goes deeper than the job title, active roles are also put into consideration. A teacher for example has to be a full-time employee in either a non-profit or public school as a special needs education teacher, elementary school or secondary school teacher, teaching science subjects or bilingual subjects to receive student loan forgiveness.

Perkins federal student loan can also be canceled by student loan refinance.

Income-Driven Repayment Plans & Taxable Student Loan Forgiveness for Medical Professionals

Choosing the right income-driven repayment plan is the first step to getting your student loan forgiven. The department of education introduced the income-driven repayment plan to ensure that student loan borrowers do not spend eternity paying off their loans. This is the best way to take full advantage of the PSFL. It enables you to make a monthly payment based on your income to make the 120 monthly qualifying payments.

There are various available income-driven repayment plans with varying loan-term;

  • PAYE (Pay As You Earn repayment plan, 20-25 years loan term)
  • REPAYE( Revised Pay As You Earn)
  • IBR(Income-Based Repayment plan)
  • ICR(Income-Contingent Repayment Plan)

Medical professionals enrolled in income contingent repayment plans, even after their student loan is forgiven may still be taxable for the forgiven student loan.

Student Loan Forgiveness vs. Student Loan Cancellation

Student loan forgiveness and student loan cancellation are usually used interchangeably, but they are very distinct.

Both student loan forgiveness and student loan cancellation have one aim – to make your student loans disappear… mostly.

While student loan cancellation prompts for total student loans removal, for the number of years the loan was canceled, you will be taxed – in other words, you still owe the government. Student loan forgiveness is quite the opposite. If your student loans are forgiven, the number of years that were forgiven will be tax-free.

Student loan forgiveness is a more attractive loan repayment option, where you might save thousands of dollars. But other times, going for student loan cancellation might be ideal. Either of these options is the perfect option. The decision depends on your loan repayment plan and income.

Refinancing Is A Logical Option 

Another viable option towards student loan forgiveness is student loan refinance. A lot of borrowers take out a bunch of unrelated student loans; both private loans and federal student loans. Individually, these distinct loans have different interest rates. Over time, the interests will build up with monthly payments.

Student loan refinancing will enable borrowers to take out lower interest.

Private student loans and federal student loans can be refinanced. But it is not advisable to refinance a federal student loan as they come with demerits that are absent with a private student loan.

Can You File Bankruptcy?

If you’re struggling to make your payments, a student loan lawyer might be able to help. While in most cases student loans cannot be discharged through bankruptcy, an experienced lawyer can help you find the best solution for your debt and loan problems. At Stiberman Law, we have helped hundreds of student loan clients throughout Florida, and we have worked with almost all of the major student loan lenders, servicers, and private collection agencies in Florida.

Contact a Student Loan Lawyer to Discuss Your Options

With more than 13 years experience, we are here to help you navigate the complexities of student loan debt and find the best option for you. Call us today at (954) 922-2283 or fill out the form below to schedule a free consultation.

Written By:

Attorney Robert Stiberman

Robert is an experienced bankruptcy attorney adept at handling Chapter 7, 13, and 11 filings, with more than 15 years of experience in bankruptcy cases. Robert represents clients in both consumer and business bankruptcy ... Read More

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