Written By Bethany McCamish
Counselors and mental health professionals provide essential care and treatment for people. The range of treatment is vast, from marriage and family therapy to substance abuse counseling.
Regardless of the treatment specialty, most counselor and mental health therapist positions require higher education — at least a bachelor's degree and typically at least a master's degree. And for many graduates, this means taking on a significant student loan burden, even with the help of financial aid.
Thankfully, there are multiple programs that offer student loan forgiveness 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.
Editor's note: The Biden administration created the PSLF waiver to help more counselors and other public servants receive PSLF forgiveness. While this program expired October 31, 2022, the IDR Waiver gives most of the same benefits.
Federal loan forgiveness for mental health therapists and counselors
The federal government offers student loan forgiveness for counselors and mental health therapists. There are two main programs to consider if you have federal student loans.
1. Public Service Loan Forgiveness program
Perhaps the most talked about plan is the Public Service Loan Forgiveness (PSLF) program. PSLF provides complete student loan forgiveness on your remaining student loan balance after 10 years of service and 120 qualifying payments. Also, any amount that’s forgiven is tax-free.
Counselors and mental health therapists often work for nonprofit facilities or schools. That makes 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 student loan repayment program. This means you must enroll in an income-driven repayment (IDR) plan, such as:
- Income-Based Repayment (IBR)
- Income-Contingent Repayment (ICR)
- Pay As You Earn (PAYE)
- Saving on a Valuable Education (SAVE, which replaced REPAYE)
Editor's note: The Biden administration has put in place the SAVE plan that qualifies for PSLF. Given that counselors often earn five figures of income, this plan will likely be superior to most other income driven repayment options for counselors specifically.
Only Direct federal loans can be forgiven under PSLF. So if you have Perkins Loans, you’ll need to complete a few steps to have them considered for PSLF forgiveness.
However, 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. But specific eligibility requirements apply. So make sure to read the fine print when pursuing this program. Private student loans don't qualify for federal benefits.
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2. Income-driven repayment plan
If your place of work isn’t eligible for PSLF, you can consider an IDR plan. To earn forgiveness through income-driven repayment, borrowers must 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 education loans will be forgiven. In the meantime, your loan servicer will calculate your student loan payments as a percentage of your discretionary income, typically ranging from 10% to 20%, depending on the specific plan you're enrolled in.
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 may have to pay taxes on the amount that’s forgiven; that can be a hefty bill for some. Second, you’ll pay at least double the time you would for PSLF, meaning you'll pay more money out of pocket to repay your loans.
Before deciding on a federal loan forgiveness program, review the loan forgiveness programs at the state and national level specific to counselors and other mental health professionals.
National and state student loan relief for counselors and mental health therapists
Numerous regions across the country are in need of more mental health professionals and counselors. To fill this gap, 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 Corps (NHSC) Loan Repayment Program offers student loan debt relief to eligible healthcare professionals who agree to at least a two-year service obligation in a Health Professional Shortage Area (HPSA). So if you're willing to work in underserved areas, find an NHSC-approved site near you.
It's available to mental and behavioral health providers 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 part-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 Repayment Program
If you live in the state of West Virginia, you have the opportunity to apply for the Mental Health Loan Repayment Program (MHLRP). This program is open to a wide range of mental health professionals, including:
- Doctoral Clinical Psychologist
- Master's Level Licensed Psychologist
- Independent Clinical Social Worker
- Certified Social Worker
- Professional Counselor
- Marriage and Family Therapist
Participants must have a valid license in the state of West Virginia before applying. To qualify, you must have at least $10,000 in student debt. The award amount per year will vary based on your debt level but will be at least $10,000 in loan repayment assistance. The award can be renewed up to three times. You can download the MHLRP application here.
5. State Loan Repayment Program
No matter where you live, 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
- Clinical Social Workers
- 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 from 2022 to 2032 for counselors and mental health therapists is 18%. 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, consider your future plans and run the numbers. PSLF is often a good option for counselors and therapists, which is why it's listed here first. However, a lot can happen in 10 years.
Let’s say you signed up for PSLF in 2024 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 $134 a month on the SAVE plan. And if you were enrolled in the IBR payment plan, your monthly payment would jump to $397.
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 due to a low-income field. 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. Book a consultation with a student loan counselor.
Not sure what to do with your student loans?
Take our 11 question quiz to get a personalized recommendation for 2024 on whether you should pursue PSLF, Biden’s New IDR plan, or refinancing (including the one lender we think could give you the best rate).
The Indian Health Services also offers a loan repayment program.
https://www.ihs.gov/loanrepayment/lrpbasics/
It’s open to more disciplines than the NHSC loan repayment program.
Thanks for sharing!
I have a balance of about $23,000 and have been paying on this loan since 2003. I work in a Title 1 school as well and teachers have had their loans forgiven. I was wondering what type of program I might qualify for?
I have my loan on auto pay and have no delinquencies too.
The only way would be consolidating the loan if it’s FFEL. It’s unlikely going to be Direct. You could try applying for PSLF and then TEPSLF but I doubt you’d be successful bc that loan is pretty old.
What is considered “full time” for a therapist to get loan forgiveness? We do not usual go by the standard 30 hours a week schedule.
At least 30 hours a week or your employers definition of full time whichever is greater. You must be W2 and get benefits. Remember there is no employment test if you’re not pursuing PSLF.
What forgiveness program would school counselors qualify for?
Public Service Loan Forgiveness is the easiest to qualify for
Hello Travis – appreciate this great article as I start to think about going back to school to becoming a licensed therapist. If I had my own practice and was a family and marriage counselor and/or substance abuse, which would I qualify for? Based on the HRSA, it seems I could be potentially granted up to $100K if I work in that for 3 years? What is the averge amount thats given and how is that decided?
I’m not familiar enough w the stats to say that. Most ppl can get forgiveness through an IDR or PSLF type plan which more people pursue.
Can I qualify for PSLF with my Parent Plus Loans? They are under my mom’s name so I’m thinking it’s based on her employment not mine. Are there any options for these?
Parent Plus Loans can qualify for PSLF. You’re right – it’s based on your mom’s employment, not yours. We have this article that talks about how to pay it off with PSLF https://www.studentloanplanner.com/pay-off-parent-plus-loans/ but she may also benefit from doing a double consolidation because it gives her access to repayment plans based on a lower percentage of her income. You can read about that here: https://www.studentloanplanner.com/parent-plus-double-consolidation/