Counselors and mental health professionals provide essential care and treatment for people. The range of treatment is vast, from marriage and family counseling to substance abuse mental health therapy. Regardless of the treatment specialty, most counselors and mental health therapist positions require at least a bachelor’s degree. For most graduates, this means significant student loan debt.
Thankfully, there are student loan relief options for counselors. Student loan forgiveness programs for counselors and mental health therapists are put in place to encourage individuals to enter and stay in the profession. Below are some options to explore for student loan debt relief.
Federal loan forgiveness for mental health counselors and therapists
The federal government offers student loan forgiveness for counselors or mental health therapists. There are two main programs to consider.
1. Public Service Loan Forgiveness
Perhaps the most talked about plan is Public Service Loan Forgiveness (PSLF). PSLF provides complete student loan forgiveness of your remaining student loan balance after 10 years of service and 120 qualifying payments. Any amount that’s forgiven is also tax-free.
Counselors and mental health therapists often work for a nonprofit, school or agency that provides a service, making them good candidates for PSLF. To be eligible, you must work full time for one of the following organizations:
- Government organizations at any level (federal, state, local or tribal)
- Not-for-profit organizations that are tax-exempt under Section 501(c)(3) of the Internal Revenue Code
- Other types of not-for-profit organizations that are not tax-exempt under Section 501(c)(3) of the Internal Revenue Code, if their primary purpose is to provide certain types of qualifying public services
Along with a qualifying employer, you need to make sure you’re on a qualifying repayment plan.
A qualifying repayment plan means you’re enrolled in an income-driven repayment plan. These include:
- Income-Based Repayment (IBR)
- Income-Contingent Repayment (ICR)
- Pay As You Earn (PAYE)
- Revised Pay As You Earn (REPAYE)
Only Direct federal loans can be forgiven under PSLF. If you have federal PLUS Loans or Perkins Loans, you’ll need to complete a few different steps to have them considered for forgiveness. You can consolidate your PLUS Loans with a Direct Consolidation Loan. Once you do this, you’re then eligible for the ICR plan and can pursue PSLF.
Perkins Loans can be forgiven through a different program other than PSLF. The federal government has a Perkins Loan cancellation and discharge program that offers up to 100% forgiveness of these student loans. Specific eligibility requirements apply, so make sure to read the fine print when pursuing this program.
2. Income-driven repayment plan
If your place of work isn’t eligible for PSLF, you can consider an income-driven repayment (IDR) plan. To earn forgiveness through income-driven repayment, you need to be on one of the four IDR plans listed above for 20 to 25 years. After making payments for the required length of time, the remaining balance of your student loans will be forgiven.
It can be worth double checking if your employer qualifies you for PSLF as an IDR plan can be more expensive for you in two ways. First, you’ll have to pay taxes on the amount that’s forgiven. That can be a hefty bill for some. Second, you’ll be paying for at least double the time you would for PSLF. That means more money out of your pocket.
Before deciding on a federal loan forgiveness program, you’ll want to review the loan forgiveness programs at the state and national level specific to counselors and mental health professionals.
National and state student loan relief for counselors and mental health therapists
There are areas all across the nation in need of mental health professionals and counselors. To fill this need, programs have been established that offer student loan forgiveness or repayment as an incentive to serve in the community with a shortage.
3. National Health Service Corp Loan Repayment Program
The National Health Service Corp (NHC) Loan Repayment Program offers student loan debt relief if you agree to work in a Health Professional Shortage Area (HPSA) for a minimum of two years.
It’s available to mental and behavioral professionals who work in a qualifying discipline. The qualifying disciplines for mental health include:
- Health Service Psychologist
- Licensed Clinical Social Worker
- Licensed Professional Counselor
- Marriage and Family Therapist
- Mental and Behavioral Health
- Psychiatric/ Mental Health
- Psychiatric Nurse Specialist
The amount you can have forgiven depends on the level of need at your worksite. You can receive up to $50,000 of student loan forgiveness for working full time. If you choose the half-time option, you can receive a max of $25,000 of student loan forgiveness. To find out more and complete an application, go to the Health Resources and Services Administration (HRSA) website.
4. Mental Health Loan Assumption Program
If you live in the state of California, you have the opportunity to apply for the Mental Health Loan Assumption Program (MHLAP). This program is open to a wide range of mental health professionals, including:
- Registered or Licensed Marriage and Family Therapists
- Registered or Licensed Clinical Social Workers
- Licensed Professional Clinical Counselors
- Licensed Professional Clinical Counselor Interns
You must be registered or licensed in the state of California before you apply. On this plan, you can receive up to $10,000 of student loan forgiveness for one year of service. Locations vary and are based on need. You can find the direct contact by area in the MHLAP County Director Contact list.
(Note: at the time of this update, we have been unable to verify if this program is still accepting applicants)
5. State Loan Repayment Program
Even if you don’t live in California, your state may have a loan forgiveness program for mental health therapists or counselors. More than 30 states receive cost-sharing grants from the HRSA to operate a State Loan Repayment Program (SLRP). Eligible disciplines vary state by state based on need and funding but may include any of the following for mental health:
- Health service psychologists
- Licensed clinical social workers
- Licensed professional counselors
- Marriage and family therapists
Your minimum commitment of service is two years, with some states offering extensions to the contract for additional student loan forgiveness. To find out more about your SLRP, reach out directly to your state’s contact representative.
The job growth expectancy for counselors and mental health therapists is 23%. This combined with HRSA admitting licensed counselors and therapists into some of the major student loan forgiveness programs is good news.
As you progress through your career, your plans and income may change. You’ll want to plan for the future when considering which student loan relief option you choose.
How do counselors and mental health professionals plan for the future with student loan debt?
When looking at your student loan relief options, you’ll also want to consider your future plans and run the numbers. PSLF is a good option for counselors and therapists, which is why it’s listed here first. That said, a lot can happen in 10 years.
Let’s say you signed up for PSLF in 2018 and earn $50,000 per year as a marriage and family therapist. You currently have a $70,000 student loan balance with an average 5% interest rate. Your monthly payment would be $265 a month on the REPAYE or PAYE plan. If you were enrolled in the IBR payment plan it jumps to $397 a month.
If you get married down the line, your payments on IDR might be affected, depending on your spouse’s income and how you choose to file your taxes. Your choices over those 10 years of PSLF payments will change how much you pay toward your student loans.
While PSLF is versatile for large sums of student loan debt, it’s a long time of filing paperwork and making payments. The NHSC and HRSA offer much shorter terms of service for loan forgiveness than PSLF. If you have the opportunity to complete this type of loan forgiveness and doing so will remove the majority of your loans, one of those programs would be the better option.
Find a student loan relief plan for your life
Anyone working in mental health shouldn’t have to struggle to pay their student loan debt.
Counselors and mental health therapists are taking on others trauma all day long. Student loan debt adds to this emotional weight. The team at Student Loan Planner can help you find a student loan relief plan to make sure you can keep helping others.