You’re done with nursing school and survived graduation! Time to don scrubs and care for others' health as a nurse practitioner. But your financial health will also need some attention after grad school. Nursing student loan debt can be overwhelming and raise your blood pressure.
The good news is that you have several options for nursing school loan repayment, including refinancing your student loans to a lower interest rate. It’s time to figure out if nursing student loan refinancing is a good choice for you.
Before deciding what to do with your nursing student loans, you should know which ones you have. There's a big difference between federal loans and private loans, as each has different borrower benefits. There are three places to find your student loan information:
- The National Student Loan Data System will have all of your federal student loan information.
- Your credit report will have your private student loan information.
- The Health Resources and Services Administration (HRSA) houses any health profession student loans.
After gathering information for all of your federal and private student loans, you can now weigh your options.
Student loan refinance for nursing professionals
The nursing student loan refinance option is available for any of your student loans. It’s a way to get better loan terms and hopefully pay less over the life of your loan by scoring a lower interest rate from a private lender.
A refinanced loan is a private student loan with a bank, credit union, or online financial institution. When you refinance your student loans, the lender will pay off your old loans and create one new loan for you. The new loan should have a lower interest rate. You can also refinance for a shorter loan term to pay off your loans aggressively.
Student loan refinancing can make your loan pay off easier with a single loan payment — not to mention save you some serious money in interest, especially for former graduate students with Grad PLUS loans. This doesn’t mean refinancing is the best choice for one or all of your student loans, though.
Nurses might also be eligible for student loan forgiveness programs or flexible student loan repayment options. In which case, loan forgiveness for nurses can keep more money in your pocket than a lower interest rate with refinancing.
Other nursing loan repayment options
If you have federal student loans you can pursue student loan forgiveness programs. You’ll want to look into the following major programs to see if you’re eligible.
1. Public Service Loan Forgiveness
Public Service Loan Forgiveness (PSLF) offers complete federal student loan forgiveness after 120 qualifying payments. This works out to be about 10 years if you make the monthly payments consecutively (that’s not required, though).
You need to work for a government or nonprofit employer to be eligible, and your loans must be federal Direct Loans. If you have PLUS Loans, HRSA loans or Federal Perkins Loans, consolidating to a Direct Consolidation Loan makes these loans eligible.
A note of caution if you’re already pursuing Public Service Loan Forgiveness: You may not want to consolidate your loans. This will start your payment count over. In this case, you might refinance only your Grad PLUS Loans and continue pursuing PSLF for your other loans.
2. Income-driven repayment forgiveness program
If you choose to go for PSLF, you’ll need to enroll in an income-driven repayment (IDR) plan. These plans also offer student loan forgiveness. After 20 to 25 years of monthly payments, your remaining student loan balance will be forgiven.
It’s not the most ideal path for nurses, especially if you qualify for PSLF or the Nurse Corps Loan Repayment Program (NCLRP). However, if you work at a for-profit hospital, this could be a viable option.
3. Nurse Corps Loan Repayment Program
The HRSA runs the Nurse Corps Loan Repayment Program. This program is specific to registered nurses (or advanced practice registered nurses or nurse faculty) who make a commitment to work full-time at a public or private nonprofit critical shortage facility or Health Professional Shortage Area (HPSA).
Qualifying practitioners or faculty members can have 60% of their nursing loans forgiven over the course of two years. You may be eligible to get an additional 25% of your loans forgiven for a third year of service.
This service commitment can often mean working in rural communities. You’ll want to consider what you want your life to look like when looking at this option.
The period of time required is much shorter than PSLF or IDR, though. You could have 85% of your total outstanding loans forgiven in a matter of three years which is pretty significant when it comes to loan repayment assistance.
You may also be eligible for state-specific student loan forgiveness programs. There’s a serious shortage of nurses all across the U.S. In order to fill this need, states have created programs that will provide student loan forgiveness for nurses in exchange for service.
Be aware that not all of the repayment and forgiveness options are tax-free. If you decide to pursue one of them, remember that you’ll also need to prepare to pay for the tax bomb once you hit forgiveness eligibility.
Should nurses refinance student loans or not?
The student loan forgiveness and repayment options take time, with 20 to 25 years being the longest if you choose the IDR forgiveness route. So, nursing student loan refinancing is a faster way to pay back your student loan debt. You can be aggressive about it and find a loan term as short as five years.
Even if you can pay back your debt faster by refinancing your student loans, you need to ask if it's worth the money that you’re losing.
You might need to get rid of your loans as soon as possible for your peace of mind and mental health. That can make refinancing a great choice. However, you can save and invest more with an income-based repayment plan pursuing PSLF. Your future financial self might thank you for that.
It’s not all or nothing with student loan refinancing. Federal student loans are eligible for forgiveness and carry protections. You can make income-based payments and will have payment options if you hit a period of financial hardship.
If you have private student loans, you don’t have these same protections. You should look into refinancing because you can only gain from a lower interest rate. You can create a different game plan for your federal student loans and your private student loans.
Reminders for refinancing your nursing student loans
If you decide to refinance your nursing student loans, there are some things you’ll want to do. Shop around and take your time to review options:
- Review the eligibility requirements for each lender. This includes its minimum required credit score and the minimum loan amount.
- Compare interest rate offers from various lenders. Decide if you want to go for a fixed or variable interest rate.
- Look at all loan terms, including the monthly payment amount and duration of the loan.
- Review other benefits offered by the lenders. This could be flexible payment plans or a cash-back bonus.
Before you apply for any loan, be sure to do your research on the lender, not just the offer. You may find that a lender has a social mission you agree with or that it only operates in certain states.
It can be a lot to look at all of your nursing student loan refinancing options. If you have questions about your student loan debt payoff plan, we’re here to help because Student Loan Planner® does exactly that — creates a plan for you to pay off your student loans. Whether you have $50,000 or over $200,000 of debt, we’ll find the best path for you.