Home > Your Personal Side > Your Finances: Student Loans

Forgive and Forget Your Student Loans

by Barbara Eisner Bayer

Story Features

Email This Story Print This Story

An old Chinese proverb says, "Forgive others whenever you can." Don't you wish America would adopt this wisdom from China and forgive your costly student loans?

Wish no more. On August 1, 2002, President Bush signed into law the Nurse Reinvestment Act, which forgives a portion of student loans for nurses who work in areas that are in critical need.

Loan Forgiveness for RNs

Side Light If You Can't Pay, There's Still A Way If you don't want to commit to two years at a specific institution, or if you're tied down to a specific city, help is still available. More>

If you are a registered nurse with outstanding student loans, here's some outstanding news: You now may receive substantial repayment assistance via the Nursing Education Loan Repayment Program (NELRP). Commit to two years of service at a critical-shortage facility, and the NELRP will pay 30 percent of your qualifying loan balance each year. That's a total of 60 percent towards your balance, with no dollar cap on the amount eligible. But that's not all. Agree to work an additional year, and the NELRP will fork over another 25 percent of the original loan balance.

Naturally, you must meet certain criteria to take advantage of this federal support. First, you must be a registered nurse (RN), employed weekly for 32 hours or more at a critical nursing facility. Second, your loans must have been incurred while receiving a baccalaureate or associate degree in nursing, or a nursing degree from an accredited nursing school. And finally, you must be a citizen or permanent legal resident of the United States and be licensed to work in the state where you'll be practicing.

There's more good news: A wide variety of healthcare facilities participate in the program. If you'd like to give back to Native Americans, consider serving at an Indian Health Center, which provides outpatient treatment to people of Native American or Alaskan descent. Or if you'd like to say aloha, go west, young nurse, and investigate a Native Hawaiian Health Center. Other eligible facilities include rural health clinics, nursing homes, hospice programs, and many hospitals. A list of eligible critical nursing facilities is located on the U.S. Department of Health and Human Resources Web site. Applications are available there as well. Deadline for submission is late March 2003.

If you are approved for the program, you'll receive a monthly payment on the 15th of each month through an electronic transfer into your checking or savings account. Paying your lender will be your responsibility. Don't get any ideas, though, about using Uncle Sam's monies for some R&R in Jamaica: The Bureau of Health Professions checks with your lender to make sure you're paying the loans.

Loan Forgiveness for Nurse Practitioners

Another organization providing loan forgiveness is the National Health Service Corps (NHSC), an agency that also works under the auspices of the U.S. Department of Health and Human Services. NHSC loan forgiveness terms are similar to those of the NELRP, except they are designed for primary care nurse practitioners, certified nurse-midwives, and psychiatric nurse specialists who work 40 hours a week.

This program has a maximum repayment cap of $25,000 annually. If you still have additional loans after two years of service, however, you may be eligible to receive continuing awards of up to $35,000 per year. Application is on a yearly basis. More information about this program can be found at the NHSC Web site.

The Nurse Reinvestment Act also allows individual states to administer their own loan forgiveness programs under the NHSC/State Loan Repayment Program for nurse practitioners and certified nurse-midwives. The amount of loan forgiveness and specifics of the program vary from state to state. Contact the NHSC or your state's nurses association for more information.

Help for Educators

If you have a desire to help train other nurses, the Nurse Reinvestment Act hasn't forgotten you. Nursing schools are eligible for grants for loan cancellation programs. In this case, the school offers loans to qualified students pursuing advanced degrees as nursing teachers, with the expectation they'll join the faculty after graduation. As the new teachers fulfill their teaching requirement, a portion of their loan is canceled. Check with the nursing school of your choice for available opportunities. Even though the legislation has been passed, it may not be adequately funded at the school you choose.

Other Types of Service

If you're interested in a loan forgiveness program but want to explore other opportunities before beginning your nursing career, choose an option non-specific to nurses, such as programs run by Americorps, the Peace Corps, and Volunteers in Service to America (VISTA). Americorps, for example, enables people to serve communities through more than 2,100 public agencies and organizations by working with children and teens, building affordable housing, or helping communities in times of distress. Volunteers serve up to 12 months and can receive $9,300 in stipends. After the work is completed, you'll receive an additional $4,725 to be applied to your loan payments. As a nurse, however, the financial rewards are greater by participating through the loan repayment programs geared specifically to you.

A World of Opportunity

With the current labor shortage, there's an abundance of employment opportunities for nurses, a trend that runs contrary to so many other sectors of the economy. This is a great time to be a nurse. And now, with loan forgiveness, it's even better. As Norman Cousins once said, "Life is an adventure in forgiveness." The government agrees.