On top of caring for patients in a profession that’s often short-staffed and overworked, many U.S. nurses have another issue to worry about: student debt.
The average nurse has $44,393 in student loan debt and a $399 monthly payment, according to data from NerdWallet’s partner Credible, a student loan refinancing marketplace. That’s substantially higher than the $28,950 average student loan debt for the class of 2014, according to an October 2015 survey from the Institute for College Access and Success.
When it comes to paying back that debt, the best repayment option for nurses depends on the type of student loans — federal or private — and where the nurse works. Below we outline the best repayment options for nurses.
Do you have a federal loan and work for a nonprofit or the government?
Nurses who work for a nonprofit or the government qualify for Public Service Loan Forgiveness, a federal program that forgives participants’ remaining debt after they work and make payments for 10 years. This is likely the best option for nurses who qualify, says Jan Miller, a student loan consultant who previously worked for the student loan servicer Nelnet.
“Public service loan forgiveness is going to dominate any repayment strategy,” he says.
To make the most of the program, nurses should switch to an income-driven repayment plan. Income-driven plans cap borrowers’ monthly payments at a percentage of their income and extend their term from the standard 10 years to 20 to 25 years, depending on when they first borrowed.
To learn more about this option and other forgiveness programs, check out our guide to student loan forgiveness and also your student loan repayment options.
Do you have federal or private loans and work in a critical nursing shortage area?
Nurses who work two years in a qualifying hospital or clinic that has a critical nursing shortage can apply for the NURSE Corps Loan Repayment Program. This federal program repays 60% of a nurse’s outstanding loan balance, and nurses who work a third year can get an extra 25% paid off.
To see if a hospital or clinic qualifies, enter the address in this tool. Each facility has three Health Professional Shortage Area scores — for primary care, mental health and dentistry — from 0 to 25. A higher number indicates an area with a bigger shortage.
The program is competitive: Over 6,000 nurses applied in 2015, and only about 600 nurses received repayment, according to the program website. However, nurses are more likely to qualify if they work in an area with a large nurse shortage (with a primary care or mental health HPSA score of 14 or higher), and have a high debt-to-salary ratio (100% or higher), according to a representative at the Health Resources and Services Administration.
Applications for 2016 are available on the program website and due by Feb. 25. Nurses must already be working at the qualifying hospital or clinic by the application deadline.
Do you have a private loan and don’t qualify for federal loan forgiveness?
Borrowers with private loans don’t qualify for federal forgiveness programs, but they may be able to get a lower interest rate by refinancing their student loans. Nurses who refinance save an average of $12,716, according to Credible’s data.
“This is a good time to refinance,” says Heather Jarvis, an attorney specializing in student loan law. “Most people think that interest rates are as low as they’re going to be.”
To meet the minimum qualifications for a lender on Credible’s platform, borrowers need to earn at least $24,000 a year and have a credit score that’s at least 680 (or 620 if the borrower has a co-signer). The average Credible borrower also has a debt-to-income ratio of about 35%, says David Lewis, Credible’s director of operations.
But Miller, the student loan consultant, says in his experience, nurses — even those with good credit — often find it difficult to get approved for refinancing.
“Nurses just have so much more debt than they do yearly income,” Miller says. “So they’re usually upside-down there.”
To see how much you could save by refinancing your student loans, add your information to the student loan refinancing calculator below. (Note that using the calculator will not hurt your credit.) If you like what you see, click the “Get personalized offers” button to apply for student loan refinancing on Credible’s website. With one application, you’ll receive offers from up to eight lenders.
Learn more about repaying student loans:
- 10 questions to ask before refinancing your student loans
- Should I consolidate my student loans?
- NerdWallet’s guide to federal student loan consolidation
Teddy Nykiel is a staff writer at NerdWallet, a personal finance website. Email: teddy@nerdwallet.com. Twitter: @teddynykiel.
Image via iStock.
No comments:
Post a Comment