Working in mental health can be a challenging, but rewarding, career. But sometimes the rewards of a fulfilling mental health career are not necessarily monetary. And, because many mental health career tracks require a graduate degree as well as an undergrad degree, you may be wondering about options to pay down student loans.
How To Plan For the Future With Student Loan Debt As A Mental Health Professionals
Student loan debt can be challenging to navigate. It can also be challenging to navigate career opportunities when you know that you have student loans to repay. The good news: You’re not alone. And there is no one right path to pay back student loan debt.
It can be helpful to talk to graduates and see how they paid off student loans. One big crossroads can be whether to take a higher paying job in the private sector or work in a nonprofit role that could give you an avenue toward loan forgiveness through a program like the Public Service Loan Forgiveness Program (PSLF). Another option to manage repayment is to use income-driven repayment plans, like Pay as You Earn (PAYE) and Revised Pay as You Earn (REPAYE)
There may also be programs unique to your career. For example, the Health Resources and Services Administration (HRSA), a government branch, offers loan repayment programs for mental health professionals who meet certain criteria, such as serving in a health professional shortage area. Speaking with your supervisor, your colleagues, and keeping abreast of news within professional organizations can help alert you to unique repayment opportunities.
Recommended: REPAYE vs PAYE: What’s the Difference?
What is a Student Loan Forgiveness Program?
A student loan forgiveness program operates the way it sounds: Student loans can be forgiven if certain criteria within the program are met. But each student loan forgiveness program has different criteria. It’s important to completely understand the scope of the forgiveness program. Reading this student loan forgiveness guide can help you understand where the national conversation is regarding loan forgiveness in the future as well as options available for forgiveness now.
When student loans are forgiven, usually after a set amount of payments, the balance is forgiven. But that balance may be taxed, depending on the program. For example, forgiveness received under PSLF is not considered taxable, according to the IRS. But under PAYE and REPAYE programs, any canceled student loan debt is considered taxable.
There may also be loan repayment assistance programs (LRAPs) for your profession or field. There may also be state-sponsored loan forgiveness programs.
Will Student Loans be Forgiven After Ten Years?
Loans are not automatically forgiven after ten years. But one potential avenue for mental health student loan forgiveness is the federal Public Service and Loan Forgiveness (PSLF) program. This program requires eligible candidates to work with a qualifying organization and make 120 qualifying monthly payments. It also requires that the loans you hold be federal Direct Loans (or that the federal loans you currently have are consolidated into a Direct Loan).
Qualifying for PSLF can be challenging and requires borrowers to certify their employment to be sure their payments count toward the program. In addition to making 120 payments while working at a qualifying employer, you have to be working for a qualifying employer when you submit the forgiveness application and when the loan is forgiven.
Consult with your loan servicer if you have any questions and be sure to read all of the details about the program.
Over the years, there has been legislation for student loan forgiveness, including the student loan forgiveness act. But despite bipartisan support for student loan forgiveness, nothing has happened on a national level. While there may be legislation in the future for forgiveness for federal or even private student loans, right now those seeking forgiveness can go through the federal programs already in place.
Typical Requirements for Student Loan Forgiveness
In general, forgiveness programs have criteria. These may include:
• A history of payments, with no payments skipped
• Working at a qualifying organization, in a qualifying capacity (ie, full-time instead of part-time)
• Correctly filling out paperwork for forgiveness
• Potentially paying taxes on the amount forgiven
Understanding the criteria, reading the fine print, and researching any points of confusion can be helpful in ensuring that your application is processed successfully. The eligibility and forgiveness requirements may vary depending on the forgiveness program, so be sure to fully understand the criteria for the loan forgiveness option you are pursuing.
Difference Between Loan Forgiveness, Loan Cancellation, and Loan Discharge
These three terms are sometimes used interchangeably. Quite simply, all three terms mean you’re no longer required to pay some or all of your loan. But there are no “easy” ways to get out of paying student loans.
Usually, forgiveness and cancellation mean that, due to either a forgiveness application or your current job, you no longer have to pay loans. Discharge refers to a situation beyond your control, such as total and permanent disability or the closure of your school. In very rare cases, student loans are discharged due to bankruptcy. You will likely have to apply for cancellation, forgiveness, or discharge and will likely need to continue making payments while the application is processed.
Student Loan Forgiveness Options For Mental Health Workers
Depending on your place of employment, you may have other options for forgiveness through specific mental health worker programs. There also may be scholarships and grants available in your field of study. Also something to consider: Some private employers offer student loan repayment as part of their packages. This can be worth asking potential employers as you look for jobs. There are also other federal programs to know about:
PPACA and HERA Student Loan Programs for Counselors
As part of the Patient Protection and Affordable Care Act, legislation expanded opportunities for student loan forgiveness for healthcare professionals, including mental health counselors. While many of these forgiveness programs are state-run, this act did ensure that any forgiven funds would not be considered taxable income for people seeking forgiveness through programs supporting health care professionals working in underserved areas.
Under the Higher Education Reconciliation Act (HERA) certain federal loans, including Stafford Loans, and Direct Loans (both Subsidized and Unsubsidized Direct Loans) are eligible for a graduated repayment plan. Under this plan, your federal loan repayments start low and gradually increase every two years. This can be an option if you expect your income to increase over the years.
National Health Services Corps Loan Repayment Program
The National Health Services Corps offers loan repayment programs through your state. Each state has different eligibility requirements, including eligible disciplines. These state-run programs also may differ in terms of service commitments but usually, the commitments start at two years for an eligible position. These will generally be at centers funded by the Health Resources and Services Administration.
Mental Health Loan Forgiveness Alternatives
The criteria and requirements for some forgiveness programs can be challenging to fit. But that doesn’t mean there’s no way to pay down loans. Understanding all your options can help you navigate the best potential avenue for you.
Refinance Your Mental Health Student Loan
Refinancing your student loans could help save you money in the long term, and may potentially give you more flexibility in your budget. When you refinance, you take all your loans and consolidate them into one loan. For qualifying borrowers, this loan may have a lower interest rate, which could reduce the amount of money you owe in interest over the life of the loan. It also may have a different payment term, so that you are paying the loan off over a longer (or shorter) period of time. Keep in mind that while a longer loan term may result in lower monthly payments, but might also mean paying more in interest. This type of customization can be helpful in taking control of your finances.
You can check your loan refinance rate without affecting your credit score and choose terms that work for you.
Scholarships and Grants
There may be scholarships and grants, either from your institution or your place of work. This can help pay down student loan debt. It’s also worth remembering that some private-sector employers may offer student loan repayment as a perk. Talking with colleagues, supervisors, and the financial aid office at your school may help you find programs that may be specific to your field or your school.
Pay Off Student loan Debt
In some cases, it may make sense to prioritize paying down student loan debt. This may include considering a personal loan to cover student loan debt, if the interest rate is lower than refinancing options. Other ways to pay off student loan debt include taking on part-time work, decreasing living expenses or otherwise try to carve out opportunities to pay more than the monthly student loan payment.
The Takeaway
Working as a mental health professional can be rewarding, but might require students to borrow student loans to pay for their education. There are options for paying back student loans. Some mental health professionals may qualify for certain types of loan forgiveness, such as Public Service Loan Forgiveness, if they have federal student loans and depending on their profession and employer. Refinancing some or all of your student loans can be another option to help give some monthly leeway in your budget while allowing you to potentially save money on interest over time.
But one thing is a cliche in the mental health field — and in the world of paying back student loans: No one is alone. Talking to colleagues about their student loan pathway, joining professional organizations, and keeping an ear to the ground regarding grants, scholarships, and employers paying back student loans can all be beneficial in finding a payback plan that works for you — and your career goals.
FAQ on Mental Health Forgiveness
How do counselors and mental health professionals plan for the future with student loan debt?
Understanding options for paying back loans can be helpful for mental health professionals. Sometimes, this includes looking into all repayment opportunities, including the opportunity to refinance and save money on interest over time. Sometimes, mental health professionals and counselors may expand their job search into private sector work which may pay more to comfortably cover loan payments.
Do healthcare workers qualify for loan forgiveness?
In some cases, healthcare workers qualify for eligible forgiveness programs. This depends on the state the healthcare worker resides, as well as their place of employment.
What are some student loan forgiveness options for mental health workers?
Mental health workers who work in underserved areas may be able to apply for forgiveness programs run at their state level for healthcare professionals. Eligibility depends on criteria including place of employment. Student loan forgiveness options may also include the federal Public Service Loan Forgiveness program (PSLF) as well as some income-based repayment options.
Photo credit: iStock/Vertigo3d
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SoFi Student Loan Refinance
If you are looking to refinance federal student loans, please be aware that the White House has announced up to $20,000 of student loan forgiveness for Pell Grant recipients and $10,000 for qualifying borrowers whose student loans are federally held. Additionally, the federal student loan payment pause and interest holiday has been extended beyond December 31, 2022. Please carefully consider these changes before refinancing federally held loans with SoFi, since the amount or portion of your federal student debt that you refinance will no longer qualify for the federal loan payment suspension, interest waiver, or any other current or future benefits applicable to federal loans. If you qualify for federal student loan forgiveness and still wish to refinance, leave unrefinanced the amount you expect to be forgiven to receive your federal benefit.
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Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income-Driven Repayment plans, including Income-Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.
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