Pursuing a career as a social worker is an excellent option. The field of social work is growing with a projected 13% growth in employment between 2019 and 2029, according to the Bureau of Labor Statistics (BLS). This is much faster than the average for all occupations in the United States.
The BLS also reports that the median annual wage for social workers was $51,760 in May 2020. This is higher than the national median annual wage of $41,950 for all workers.
Some social workers only need a bachelor’s degree in social work. However, clinical social workers are required to complete a master’s degree and two years of post-master’s experience in a supervised clinical setting.
Borrowers with a master’s degree in social work average around $60,000 in student loan debt. So, it can be challenging to pay off social work student loans on a limited salary.
Hefty student loan debt leads to serious decisions about how to pay off your loans. Making the right choices can lessen stress and even mean the possibility of saving thousands of dollars. Fortunately, student loan forgiveness for social workers is a viable option.
If you’re a social worker struggling to make your student loan payments, there is good news for you. You might be eligible for student loan forgiveness and assistance through several programs.
Let’s explore the available options to see if you qualify for loan forgiveness.
Public Service Loan Forgiveness
Public Service Loan Forgiveness (PSLF) is a federal student loan forgiveness program. For any social worker who has federal student loans, you’re eligible for the Public Service Loan Forgiveness program:
- After 10 years of full-time employment with a government or nonprofit organization.
- After making 120 qualifying monthly payments under a qualifying repayment plan.
Once you make your 120th qualifying payment, apply for PSLF using the PSLF Application for Forgiveness, and are approved, the balance of your student loan debt will be forgiven by the government.
How do you know if you qualify for PSLF?
According to the U.S. Department of Education, you must be employed full-time for one of the following types of organizations:
- Government organizations at any level (federal, state, local, or tribal)
- Nonprofit organizations that are tax-exempt under Section 501(c)(3) of the Internal Revenue Code
- Other types of nonprofit 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
What is a qualifying repayment program?
Qualifying repayment plans include all income-driven repayment (IDR) plans. This includes Pay As You Earn, Revised Pay As You Earn, Income-Based Repayment, Income-Contingent Repayment or the Standard 10-year plan.
Do all 120 payments have to be consecutive? No, they don’t. The Department of Education states, “If you have a period of employment with a non-qualifying employer, you will not lose credit for prior qualifying payments you made.”
Only Direct loans qualify for the PSLF program. However, other federal loans can qualify if you consolidate them into a Direct Consolidation Loan. But there’s a downside. Any payments made prior to consolidating won’t count towards your 120 loan payment count.
For those working toward PSLF, submit the Employment Certification for Public Service Loan Forgiveness form annually. Plan to submit it anytime you change employers, as well.
National Health Services Corp Loan Repayment Program
Beyond Public Service Loan Forgiveness, social workers have other options that can help pay off student loan debt. Another student loan debt forgiveness option is the National Health Service Corps (NHSC) Loan Repayment Program.
Award recipients receive up to $50,000 toward their student loans for at least a two-year, full-time commitment. There’s also an option to receive up to $25,000 for at least a two-year, half-time commitment. As a recipient of this award, you must commit to serving clinical practice time at an approved Health Professional Shortage Area (HPSA).
The NHSC Loan Repayment Program excludes social workers who are not Licensed Clinical Social Workers (LCSW). Since this is an awarded program, there’s a limit to the number of licensed clinical social workers who’ll receive funds. Priority goes to individuals the NHSC feels are more likely to stay in an underserved area after their commitment is up.
If you’re eligible, funds are awarded at the beginning of your commitment. This allows you to apply the money toward your student loan debt immediately.
For more details and requirements, please refer to the Health & Services Administration website.
Indian Health Service Loan Repayment Program
The Indian Health Service (IHS) Loan Repayment Program is another federal loan repayment program. Designed to bring health service professionals to serve in American Indian and Alaska Native communities, IHS provides funds to pay off student loan debt for licensed social workers.
The loan repayment program awards up to $40,000 for an initial two-year agreement. If your student loan debt isn’t paid off by the end of your obligation, you can extend your commitment. You’ll receive one year of loan repayment for each extra year of service until your qualifying loans are fully paid.
Perkins Loans cancellation and discharge
The Perkins Loan program officially ended in September 2017. However, if you took out Perkins Loans before the program expired, you could still qualify for Perkins Loan cancellation and discharge as a social worker.
If you do qualify, you could have up to 100% of your Perkins Loan debt canceled. In order to apply, you must contact your school’s financial aid department or your designated loan servicer.
What is the difference between loan forgiveness, cancellation and discharge? All three terms end with the same result: you are no longer responsible for paying off all or part of your student loan debt.
However, the specific circumstances of each one is very different:
- Loan forgiveness and cancellation deal specifically with your loan debt being cleared due to your career choice.
- Loan discharge is student loan debt wiped away due to circumstances (e.g. health issues or disability, school closing).
In the end, the result is the same, but it’s important to know the difference.
State-based student loan forgiveness programs
Along with national forgiveness programs, some individual states offer student loan debt forgiveness programs for qualified social workers or offer a program known as State Loan Repayment Program (SLRP), in partnership with the federal government.
The money awarded isn’t as significant as larger student loan forgiveness programs. But one of these student loan repayment programs could be helpful for social workers who have a smaller amount of student loan debt.
Alaska Sharp Program
Alaska offers a wonderful loan forgiveness program for clinical social workers. Funded through a partnership between several state and federal government agencies, licensed clinical social workers can receive between $20,000 and $27,000 a year, for up to three years, for service in underserved areas.
According to the Alaska Department of Health & Social Services, “SHARP particularly focuses on increasing the access to healthcare for higher-needs populations by working to increase the recruitment and retention of selected health care practitioners.”
California State Loan Repayment Program
Part of the SLRP, the California State Loan Repayment Program offers licensed clinical social workers up to $50,000 per year in student loan repayment for a two-year, full-time commitment or a four-year, part-time commitment in an underserved area.
Also, you have the option to extend your involvement beyond your initial agreement after completing the initial commitment. Full-time extension awards are:
- Extension years 1 & 2: $20,000 a year
- Extension years 3 & 4: $10,000 a year
Extensions are also available for half-time service at lower awards.
Minnesota State Loan Repayment Program
The Minnesota Department of Health offers $20,000 a year to licensed independent clinical social workers for a two-year, full-time commitment serving in nonprofit private or public sites within Minnesota’s underserved areas. Licensed social workers committing to two years of half-time service can receive up to a $10,000 annual award.
North Carolina State Loan Repayment Program
Social workers in North Carolina can receive up to $50,000 a year in student loan forgiveness for a two-year service agreement to work in a qualified primary care setting. You must be an LCSW to qualify.
Visit the North Carolina Department of Health & Human Services website for more details on this program.
NYS Licensed Social Worker Loan Forgiveness Program
Social worker residents of New York (for at least a year) have access to state funds through New York’s Licensed Social Worker Loan Forgiveness Program. A maximum award of up to $26,000 in student loan forgiveness is available through New York’s program, depending on how long you commit to the program (up to 4 years maximum).
Michigan State Loan Repayment Program
According to the Michigan Department of Health & Human Services, “The Michigan State Loan Repayment Program (MSLRP) helps employers recruit and retain primary medical, dental, and mental health care providers by providing loan repayment to those entering into service obligations.”
Michigan offers up to $200,000 (over an eight-year period) of student loan forgiveness for clinical social workers with a master’s degree. The minimum commitment is two years serving in HPSAs.
Is student loan forgiveness right for you?
Perhaps you’ve looked at the available student loan forgiveness options and have decided they aren’t right for you or your situation.
Maybe you want to pursue student loan forgiveness, but don’t qualify for PSLF or any of the other student loan forgiveness programs mentioned above. What’s more, not every social worker wants to work in underserved areas, or you could only be working part-time as a social worker, which would make you ineligible for many of these loan forgiveness programs.
Besides student loan forgiveness, social workers have other options for paying off student loan debt. There are choices available whether you have federal loans or private loan debt.
Income-driven repayment programs
There is another loan forgiveness option you may not have thought about yet. If you make payments on an eligible income-driven repayment programs for 20 to 25 years, any remaining student loan debt will be forgiven. The four income-driven repayment programs are:
- Pay As You Earn (PAYE)
- Revised Pay As You Earn (REPAYE)
- Income-Based Repayment (IBR)
- Income-Contingent Repayment (ICR)
There are certain tax implications for this type of program. So, you’ll need to do your research in order to see if this plan is right for you.
Student loan refinancing
If you don’t want to pursue student loan forgiveness, refinancing your student loans is a great way to lower your interest rate and get better repayment terms than your original student loans.
If you’re thinking about refinancing, keep in mind that your student loans will become private student loans once you refinance. Federal student loans offer protections that will no longer be available if you refinance. This could include loss of the following protections:
- Loan deferment
- Loan forbearance
- Income-driven repayment programs
Before choosing to refinance, make sure you’re comfortable keeping up with student loan payments now as well as in the future. While it’s hard to plan for events like job loss or financial hardship due to health issues, private loan lenders are less likely to offer help than the federal government if those situations occur.
Refinancing your loans, however, and lowering your interest rate may cut thousands of dollars in interest off your student loan debt.
The kind of repayment terms and interest rate you qualify for with refinancing depend largely on several factors, including, but not limited to:
- Credit history
- Current salary
- Debt-to-income ratio (the ratio of recurring monthly debt, like student loans, credit cards, rent or mortgage to your gross monthly income)
If you have less than stellar credit or have a limited credit history, you may need a cosigner with excellent credit in order to qualify for student loan refinancing.
Generally, a cosigner is someone you have a close relationship with, like a parent, sibling, close friend or mentor. If you do need a cosigner, make sure you pay your refinanced loan payments on time and in full. Otherwise, your cosigner is financially responsible if you default on your student loans.
Because there are so many student loan forgiveness and repayment options available to social workers, it’s wise to seek help in choosing the right path for you.
Our consultants at Student Loan Planner® have helped over 5,300 clients, saving them each thousands of dollars in the process. Your decision is too important to not have all the facts. Book your student loan consult today and start finding relief from your student loan debt.
Do you work in the social worker field? Did you know of any of these student loan forgiveness options?