The Complete Guide to Loan Forgiveness Programs For Doctors and Nurses in Rural Areas

The demand for health care professionals will always exist. This is especially true in rural areas that have a shortage of primary care. The need for doctors and nurses in rural areas is directly impacted by the large amounts of medical school debt. To combat this need, there are several types of rural medicine loan forgiveness programs to help with recruitment and retention.

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3 types of rural medicine loan forgiveness

Rural medicine loan forgiveness programs are the perfect way to attract health professionals to areas that are a bit more remote. Each of the programs requires service in a specific area based on a shortage.

There are three main categories for rural student loan programs: loan forgiveness, loan repayment and scholarships.

Loan forgiveness

This term is used frequently as a general way of talking about removing student loan debt. However, there are specific loan forgiveness rural health programs for a student finishing their degree. Loans are provided to the student for education expenses.

In exchange, the student will sign a contract to work at a rural facility. Once the service obligation is fulfilled, their loans are then forgiven.

Loan repayment

The rural health loan repayment programs offer student loan debt relief for professionals who have already finished their degrees. But professionals must meet the eligibility requirements and complete the required years of service.

In exchange, they receive money to eliminate or reduce medical student loan debt.

Scholarships

There are a few scholarship programs offered to students in exchange for service. You’ll serve in an area that has a shortage or high need of medical professionals. You can apply for these programs upon enrollment in a medical program.

The number of years you’re required to serve and the amount of student loans that will be forgiven varies based on each program. “Rural” is the term used to describe all the programs, but the area you serve may not be completely remote. However, locations for medical sites in need are located all over the United States.

How can you find rural medicine loan forgiveness locations?

The areas of need are determined by the federal government. The site where you agree to complete your service must be classified as either a:

• Health Professional Shortage Area (HPSA); or
• Medically Underserved Area/Population (MUA-P).

You’ll find everything you need to know about locations on the National Health Service Corps (NHSC) website. NHSC is a federal program housed under the Health Resources and Services Administration (HRSA). Its role is to connect primary care medical professionals to high-need areas.

NHSC’s online database, HPSA Find, has a list of all approved federal sites.

7 major rural medicine loan forgiveness programs

The major rural medicine student loan forgiveness programs are offered by both the NHSC and HRSA.

• The NHSC Scholarship is for primary care health profession students who commit to serving in a rural or urban HPSA upon completion of a degree.
• The NHSC Loan Repayment Program gives student loan forgiveness to licensed primary care professionals. You can apply for this program if you already serve or are applying at an approved NHSC site.
• The HRSA oversees the Nurse Corps Scholarship Program. Students working toward a diploma, associate, baccalaureate or graduate nursing program can be eligible. You’ll sign a two-year contract to serve in an HPSA after you complete your degree.
• The HRSA runs the Nurse Corps Loan Repayment Program. It's available to nurses who commit to serving in a Critical Shortage Facility located in an HPSA. Nurse faculty must commit to working full-time at an accredited school of nursing.
• The Faculty Loan Repayment Program offers faculty at eligible health professions schools assistance with repaying their student loans. But you must agree to teach for a minimum of two years.
• The HRSA offers the NHSC Substance Use Disorder Workforce Loan Repayment Program to medical professionals who serve substance use disorder patients. You must agree to serve at an HPSA for at least three years.
• Indian Health Service Loan Repayment Program is available to many types of health professionals who commit to two years of service. During this time, you must work full-time at an Indian Health Service Facility or approved Indian Health Program.

You can find a complete list of all rural medicine forgiveness programs at the Rural Health Information Hub loan repayment directory. Additionally, individual states offer loan repayment assistance programs for medical professionals.

State-based loan forgiveness for doctors and nurses in rural areas

There's a good chance your state has a program incentivizing medical professionals to work in high-need areas. The funding for State Loan Repayment Programs (SLRP) comes through the HRSA in most cases. More than 40 states currently receive grants to run SLRPs.

However, a few states provide their own funding for loan forgiveness programs. Due to budget changes, the amount of forgiveness can fluctuate each year.

SLRP programs in each state can use different vocabulary to describe the loan repayment program. For example, they might be referred to as:

• Incentive plans
• Loan forgiveness plans
• Scholarships

Regardless of the wording, they generally all operate as an SLRP. The NHSC houses the database for State Loan Repayment Programs. You can also directly reach out to your SLRP contact or your State Office of Rural Health to receive more information about an SLRP within your state.

Eligible professions for SLRPs

Eligibility for an SLRP varies between each state, but the following disciplines might be included:

• Physicians
• Nurse Practitioners
• Physician Assistants
• Dental Professionals
• Mental Health Professionals
• Registered Nurses
• Pharmacists
• Substance Abuse Counselors

SLRPs require two years of service at minimum for loan repayment. Additionally, some offer extra amounts of repayment in exchange for additional years of work. Some states may have longer service commitments, depending on your profession and on community needs.

Some loan repayment programs are tax-free

If you didn’t know, student loan forgiveness is taxable in many cases, such as with income-driven repayment plans. Therefore, the IRS considers any forgiven amount as taxable income. However, some programs aren't taxed, as is the case with Public Service Loan Forgiveness (PSLF).

An added benefit of some student loan forgiveness programs for health professionals is that they’re tax-free — meaning you won’t have to prepare for a huge tax bill down the line.

The following programs offer fully tax-free loan forgiveness:

• State loan repayment programs
• NHSC Loan Repayment Program
• NHSC Substance Use Disorder Workforce Loan Repayment Program

Becoming a doctor or nurse probably gave you more than your share of student loan debt. Fortunately, all three of these SLRPs offer an enormous benefit to any medical professional with student loan debt.

Explore rural medicine loan forgiveness programs

First, look into the SLRP programs and the other rural medicine loan forgiveness programs. Depending on where you live, there might be opportunities for fields like general pediatrics, family medicine, gynecology, obstetrics, psychiatry and more. One of them may be the debt relief that you need.

They offer a high reward for a small amount of time, especially when compared to traditional federal student loan forgiveness programs like IDR plans. For example, a plan like the Kentucky State Loan Repayment Program can take a good chunk out of your student loan debt burden — or even remove it entirely.

If you need help navigating your rural medicine loan forgiveness options, the team at Student Loan Planner® can help you with your search. Schedule a consultation to get started with your student loan debt payoff plan.