Now that you graduated, you get to manage payments. Fortunately, you have options.
There are 4 main options:
- Public Service Loan Forgiveness
- Perkins Loan discharge
- National Health Service Corps
- Indian Health
- State programs (only for specific states)
Public Service Loan Forgiveness
The Public Service Loan Forgiveness (PSLF) is the most generous of the options to eliminate student loans after 10 years of service. The government commits to writing off any debt that remains after you make a minimum of 120 payments on time. These payments are also based on your income. However, the program is tricky and there are many pitfalls. Check out the pitfalls of the Public Service Loan Forgiveness Program here.
You are required to make 120 qualifying monthly payments while working a minimum of 30 hours per week for a nonprofit or government entity. In addition, you must file two forms of paperwork annually ON-TIME and keep track of your payments.
The benefit is that the amount that is forgiven after 10 years is not taxable!
Requirements to make sure you qualify:
- Work 30 hours a week for a nonprofit or government entity. It doesn't matter if you have a side-hustle, as long as you work 30 hours a week for a nonprofit or government organization.
- Have direct loans or consider consolidating into a direct consolidated loan and file into a income-driven plan. Income-driven plans include: Pay As You Earn(PAYE), Revised Pay As You Earn (REPAYE), Income-Based Repayment (IBR) or Income-Contingency Repayment (ICR)
- If you are unsure you qualify, get started on the LoanSense application, we will tell you if your loans qualify, assist you in filing in under 10 minutes and help you get on track and on time.
Perkins loan cancellation and discharge
Social workers who choose a career working with a children's services agency, for instance, can get up to 100% of their loans discharged. The Perkins loan discharge is for those who serve children in low-income communities.
Remember PSLF forgives your direct student loans after 10 years of filing properly. Perkins loans, on the other hand, discharge a portion each year over 5 years. Although the Perkins program is newer, you can still check to see if you are eligible for Perkins loan cancellation and discharge. Each loan servicer and your school financial aid officer should have details on the Perkins Loan discharge.
Here is the discharge percentage:
- 15 percent of the original principal loan amount for each of the first and second years;
- 20 percent of the original principal loan amount for each of the third and fourth years; and
- 30 percent of the original principal loan amount for the fifth year.
National Health Services Corp
The National Health Services Corp Loan Repayment Program gives certain licensed clinical social workers up to $50,000 to assist in paying off your student loans. The amount that is forgiven is based on where you serve and how many hours you work. To be eligible, you need to serve for two years at an approved site in a high-need area.
To qualify for the National Health Service Corp Loan Repayment Program, you must be fully trained and licensed as a Mental or Behavioral Health Professional.
- HSP, LCSW, PNS, MFT, LPC
Loans that qualify are associated with the undergraduate or graduate education that directly led to your credentials. For example, if you studied history in undergrad, these loans do not qualify. Also, student debt incurred to support your residency training does not qualify.
The NHSC works with the State Loan Repayment Program. Through this program, the Corp provides assistance to states to help their local social workers repay their loans faster. Here is a listing of state-specific programs available on the NHSC site: State Loan Repayment Program contacts.
The National Health Service Corps offers webinars and details to assist you in qualifying and filing for the program. Sign up for updates. This year's deadline has been extended to May 21, 2020. General requirements retrieved from the NHSC website include:
- A United States citizen (U.S. born or naturalized) or a United States national;
- A provider (or eligible to participate as a provider) in the Medicare, Medicaid and the State Children’s Health Insurance Program, as appropriate;
- Fully trained and licensed to practice in the NHSC-eligible primary care medical, dental or mental/behavioral health discipline and state in which you are applying to serve; and
- A health professional in an eligible discipline with qualified student loan debt for the education that led to your degree.
- Working at an NHSC-approved site.
Indian Health Service Loan Repayment Program
The Indian Health Service (IHS) Loan Repayment Program is another federal loan repayment program to bring health professionals to serve American Indian and Alaska Native communities. The IHS provides funds to pay off student loan debt for licensed social workers.
The IHS awards up to $40,000 for an initial two-year agreement, and if your student loan debt isn’t paid off by the end of your obligation, you can extend your commitment and receive one year of loan repayment for each extra year of service until your qualifying loans are fully paid.
Applications will be accepted beginning in October and are funded in cycles starting in January. Learn about the full eligibility requirements and timeline here.
Many states offer state-specific programs. This guide will only list a few of them. However, you should research state-specific loan programs for the state in which you reside.
Michigan State Loan Repayment Program
The Michigan state program was set up to help full-time health care professionals in Health Professional Shortage Areas (HPSAs) at not-for-profit health clinics for two years.
Michigan offers up to $200,000 in tax-free funds to repay student loans for up to eight years. To be eligible, you must have a master’s in social work and agree to work for at least two consecutive years at an eligible nonprofit practice site located in a Health Professional Shortage Area.
For more information or to apply, visit the Michigan Department of Health & Human Services website.
New York State Loan Forgiveness Program
New York state has a generous program and will forgive up to $26,000 of your student loans— up to $6,500 per year you complete qualified service. Both federal and private loans qualify for forgiveness. However, parent plus loans do not qualify.
- citizen or eligible non-citizen
- you must be a resident of New York State for 12 months and qualified to practice in NYS;
- you must work for a minimum of 35 hours as a licensed social worker with at least one year of experience in a critical human service area, such as home care or mental health.
For more information or to apply for loan forgiveness for social workers, visit the New York State Higher Education Services Corporation website.
North Carolina Loan Repayment Program
Licensed clinical social workers who are willing to provide services in a variety of practice settings including Federal Community Health Centers, State-Sponsored Rural Health Centers, County Health Departments, State Mental Health Hospitals, Alcohol and Drug Abuse Treatment Centers, Community Mental Health Facilities are eligible for the state loan repayment program.
You can get up to $50,000 of your loans forgiven in return for a two-year agreement to work in the above listed clinical settings. Additional awards may be available for those who remain for an additional year. Both private and federal loans are eligible, and the amount forgiven is not taxable income. Be careful to not consolidate loans with non-educational loans in the private sector as this may disqualify you.
Visit the North Carolina Department of Health & Human Services website for full eligibility requirements and the timeline to apply.
Licensed Mental Health Services Provider Education Program
California social workers with various degrees who are certified to practice in California may be able to receive up to $15,000 after working for up to 24 months in an eligible site. These sites include publicly funded or nonprofit mental health facilities or areas with shortages of mental health professionals. Social workers can receive these awards up to 3 times.
Find out the full details and role criteria, including the application timeline at the Health Professions Education Foundation (HPEF) website.
Use the National Health Service State Repayment program website to learn about programs in each state.
Private Sector Social Workers
You can ask your employer to assist in paying off your student loans. Otherwise, there are two options if you work in the private sector and need help managing your loans, you can enter into an income-driven repayment program or consider refinance. With the income-driven plan, you can still receive loan forgiveness after 20 or 25 years. Your forgiveness amount will have tax implications.
These programs include:
- Income-based repayment
- Revised Pay as you Earn
- Pay as you Earn
- Income-Contingency Repayment
Or you can consider refinancing your student loans. Before ever refinancing your student loans, you should fully understand the cons of refinancing as well. Check out the article on income-driven plan versus refinance.
LoanSense can guide you through all options and help you understand the best path for you.
We'll give you the best strategies and keep you up-to-date on loan programs. We keep our communications short and helpful.