Managing Student Loans

The U.S. Department of Health and Human Services is cognizant of the ever increasing critical shortage of nurses, which is further compounded by the cost student loan debt that those who qualify as RN’s face upon graduation. In an effort to alleviate some of these problems the Nursing Education Loan Repayment Program is expanding to include more nurses each year, and helps to pay some of the associated qualifying costs by helping with loan repayment.

However not all applicants will be able to benefit from the program as it is very oversubscribed. To address this The Bureau of Clinician Recruitment Service which administers the program has strict rules pertaining to how the available funds are awarded. In 2009 approximately one in eight of qualified applicants were accepted into the program.

Nurses who do qualify for the program must agree to serve full time for two years within a critical shortage facility. In return the program awards them by repaying 30% of their qualifying student debt for each of the two years. In addition those accepted may apply to serve for a third year and if accepted will have 25% of their original debt balance repaid. Thus the aggregate amount repaid can equate to up to 85% of the balance of the original debt.

Applicants are granted access to the program on the basis of the greatest financial need. They must have outstanding qualifying educational loans that are equivalent to 40% or more of their base nursing salary. Qualifying educational loans are those that were used to obtain an undergraduate and/or graduate nursing education, and were used for tuition costs, reasonable living costs and other qualifying educational costs.

In addition to financial necessity applicants must agree to work within a critical shortage facility and must state where they intend to apply on their application. Critical shortage facilities are non profit facilities which fall into one of these categories: Disproportional share hospitals; federal hospitals; federally designated health centers;  federally designated health center look-alike; home health agency; Indian health service health center; Native Hawaii health center; nursing home; rural clinic; skilled nursing facility; and critical access hospitals.

Those who meet the qualifying criterion and are accepted into the program are obliged to sign a two year contract to serve two years at the facility applied to. Those who fail to complete the two years service will be subject to strict penalties.

The program has demonstrated its success as many who have been accepted it into continue to work within critical shortage facilities. Those interested must be sure to adhere to the application deadline and have all their paperwork in order relating to student loans. Awards are not granted on a first come first served basis but strictly on financial need so one should calculate in advance if the outstanding loans are more than 40% of the advertised salary in order to be sure of actually being eligible for the nursing education loan repayment program.