Student loans: They seem like a great idea at the time, but after graduation, when payments become due and interest starts pounding our checkbooks, reality hits.
Sadly, many nursing students take on debt in hopes of achieving their dreams of becoming a licensed nurse. But when the debt begins breaking down your finances, can you get nursing school loan forgiveness?
Here’s a great question:
I took out a loan for nursing school, and I didn’t end up graduating. Is there a way I can get loan forgiveness due to my circumstances? I don’t currently have a job, and I simply cannot afford my loans anymore.
Nursing School Loan Forgiveness
Thanks for your question Shelly.
Debt is always a bad move, and we try to promote other great ways of paying for nursing school or getting nursing scholarships so that students can avoid the burden that debt brings. Nevertheless, for some people, loans are the only way they can finance their education.
Also, let me just add that many wonderful nurses currently in the workforce today used student loans to get where they are. So while we promote a very “anti-debt” position, we also recognize that sometimes debt is a necessary evil to achieve a goal.
With that being said, when debt is taken on, we also hold to the position that you should pay it off as soon as possible to minimize interest charges.
Okay, so now that I’ve talked about that, can you reasonably get loan forgiveness for nursing school loans?
There has been some legislation presented that would allow some people to reduce payments or even get loan forgiveness in some situations. Since legislation is often changed, it is unclear if this program will be permanent in the future.
Some of this relief is provided by the HRSA and the Public Service Loan Forgiveness (PSLF). Here is what an excerpt says about the PSLF program as of 2012:
Who can get PSLF? This program is for people with federal student loans who work in a wide range of “public service” jobs, including jobs in government and nonprofit 501(c)(3) organizations.
What are eligible jobs? In most cases, eligibility is based on whether you work for an eligible employer. Your job is eligible if you: •are employed by any nonprofit, tax-exempt 501(c)(3) organization; •are employed by the federal government, a state government, local government, or tribal government (this includes the military and public schools and colleges); or •serve in a full-time AmeriCorps or Peace Corps position.
These programs may only allow a limited number of applications each year, and since legislation often changes, it is unclear if this will be permanent. Also, the restrictions usually include that you’ve waited a certain number of years, and that you’re currently working as a nurse. Since you aren’t, you may not qualify. It’s always best to seek professional advice from a lawyer or tax professional when seeking things like this for the most accurate advice for your specific situation.
In addition, some creditors will allow forgiveness if a loan has remain unpaid for a number of years, or in special circumstances. In this case, it would be best to consult with the loan officer directly to speak about this.
Is Nursing School Loan Forgiveness Bad?
Even though loan forgiveness can sometimes seem like a great solution, there are some drawbacks to doing this.
First, many times when loan forgiveness is given, the person receiving the debt forgiveness must include this portion in income for the taxable year. This means you’d still be taxed on any benefits you received. For example: If you received $20,000 in debt forgiveness for the year, you’d possibly have to include $20,000 as taxable income to your taxes. (NOTE: Taxes change yearly so it is always best to seek advice from a professional regarding this situation).
Second, any time a loan is forgiven, it may go to your credit report as a forgiven loan or unpaid loan. In other words, it may scream to creditors “Hey, this person never paid me back, watch out!”
Your credit history is a big deal, as this will be checked when you apply for mortgages, car loans, and sometimes even when you apply for a job.
To summarize this article: Yes, nursing school loan forgiveness can occur, and there may even be some legislation to help. However, even though this option may be available, it still may not be an ideal solution for you.
It’s always best to speak with a lawyer or tax professional to find out if you can truly benefit from this program, as there are often restrictions and hidden consequences such as taxable income or poor credit ratings.