Whether you are just starting your nursing journey by looking into nursing schools or are a seasoned nurse ready to take the important step of buying a home, this comprehensive guide to loans for nurses covers everything you need to know about this intimidating yet widespread financial decision: taking out a loan.
Not yet a nurse? Learn about loans for nursing students. Already graduated and don’t know how to pay off your student debt? Learn about the many nursing loan repayment programs out there, as well as the possibility of qualifying for loan forgiveness. Already past that stage and ready to purchase your first home? Find the ideal mortgage for you.
Nursing Student Loans
The US Department of Education offers direct subsidized and unsubsidized loans to eligible nursing students to help cover the cost of education at a four-year college or university, community college, or trade, career, or technical school. Whereas Direct Subsidized Loans are available to undergraduate students with financial need, Direct Unsubsidized Loans are available to both undergraduate and graduate students regardless of financial need. Students may also obtain private loans from private sources, such as banks or financial institutions.
There are many advantages to obtaining direct student loans from the federal government:
- Low fixed interest rates
- Flexible repayment plans based on the graduate’s income
- Cancelation, discharge, and forgiveness of loans in certain cases
- Postponement options, such as deferment and forbearance of loan payments in certain cases
With both types of Direct Loans—subsidized and unsubsidized—each school determines the amount students can borrow. For subsidized loans, this amount may not exceed a student’s financial need. For unsubsidized loans, the amount a student can borrow is based on their cost of attendance and other financial aid they receive.
The primary difference between these loans is that students with Direct Unsubsidized Loans are responsible for paying the interest on the loans during all periods. On the other hand, the US Department of Education pays the interest on Direct Subsidized Loans during the following periods:
- While students are in school at least half-time
- For the first six months after students leave school (referred to as a grace period)
- During a period of deferment (a postponement of loan payments)
If students with Direct Unsubsidized Loans choose not to pay the interest on their loans while in school, during grace periods, and deferment or forbearance periods, their interest will accumulate and be added to the principal amount of the loan.
Learn more about Federal Student Aid here.
Also, read up on How Much Student Loan Debt Is Normal for Nurses and How to Use Gig Nursing to Pay Off Student Loans.
How Can I Receive a Direct Loan to Go to Nursing School?
Aspiring nurses who need or choose to obtain a Direct Loan to help cover the cost of nursing school must follow the following steps:
1. Determine Eligibility
Eligible students must be enrolled (or planning to enroll) at least half-time at a school that participates in the Direct Loan Program. They must also meet general eligibility requirements for federal student aid programs. Learn more about these requirements here.
2. Complete the FAFSA® Form
Direct Loan applicants must fill out the Free Application for Federal Student Aid (FAFSA®) form every school year. Students may complete the form online here.
3. Decide Which Type of Financial Aid to Accept
Once a student has been admitted to a school—and if the student filled out a FAFSA form—the school will send the student financial aid offers. It is then up to the student to decide which type of financial aid to accept. It is in students’ best interests to accept free money first, such as scholarships and grants, then money from work-study programs, and finally money from student loans. Students should consider borrowing money last because these funds must be repaid with interest.
4. Sign a Loan Agreement and Receive Entrance Counseling
All students must sign a loan agreement called a Master Promissory Note (MPN) before receiving a Direct Loan. Additionally, first-time recipients must receive entrance counseling. Students should always check with their schools’ financial aid office first, but both the MPN and the entrance counseling can be completed here.
Nursing School Loan Forgiveness through the PSLF Program
Once nurses complete their education, some may be eligible for federal student loan forgiveness under the Public Service Loan Forgiveness (PSLF) Program, depending on the type of loan they received and their employer.
Loan Forgiveness for Nurses: Qualifying Loans
If you received any loan under the William D. Ford Federal Direct Loan (Direct Loan) Program to pay for nursing school, the PSLF Program could forgive the remaining balance after you have made at least 120 qualifying monthly payments under a qualifying repayment plan while working for a qualifying employer full-time.
Furthermore, nurses who received other federal loans, such as the Federal Family Education Loan (FFEL) and the Federal Perkins Loan, may be eligible for loan forgiveness if they consolidate their loans into the Direct Loan Program. Bear in mind that only the payments made after consolidating your loans count toward the required 120 payments.
Unfortunately, student loans from private lenders do not qualify for the PSLF program.
Loan Forgiveness for Nurses: Qualifying Employers
Nurses working for the government, including a US federal, state, local, or tribal government or the US military, or nurses working for a not-for-profit organization may be eligible for loan forgiveness under the PSLF program. Other qualifying employment includes serving as a full-time AmeriCorps or Peace Corps volunteer.
The following are types of employment that do not qualify for the PSLF program:
- Labor unions
- Partisan political organizations
- For-profit organizations, including for-profit government contractors
Is the PSLF Program Right for You?
Another important consideration is that not everyone benefits from the PSLF Program. This is because qualifying repayment plans are based on your income. Therefore, if you are earning a high income, you might repay your loan by or even before your 120th payment. In other words, this program may not be beneficial for you.
Learn more about nursing school loan forgiveness and the PSLF Program here.
Student Loan Forgiveness for Nurses during and after the COVID-19 Pandemic
Although some efforts were made by the federal government during the COVID-19 pandemic to address student loans, according to a November 2020 survey, 66 percent of healthcare workers surveyed expressed having faced increased anxiety, depression, or stress due to their educational debt during the pandemic. Furthermore, 48 percent said they were unable to afford their student loan payments even with COVID-19 federal relief efforts.
Here are some of the federal relief efforts spurred by the COVID-19 pandemic aimed at assisting graduates with their educational debts:
- Suspending student loan interest
- Expanding loan forgiveness for permanently disabled persons
- Canceling debt for those defrauded by for-profit colleges
- Reforming the public service loan forgiveness (PSLF) program
Why Did the PSLF Program Need Reforming?
We already learned that in order to qualify for the PSLF Program, nursing graduates must have worked for ten years to make the required 120 payments. However, by no means is this a guarantee of loan forgiveness. Historically, over 99 percent of qualifying applicants are denied loan forgiveness. After severe criticism of insufficient assistance with student loans during the COVID-19 pandemic, the Department of Education announced an overhaul to PSLF in October 2021. An additional 100,000 borrowers now qualify for loan forgiveness. Despite these changes, 43 million Americans continue to be burdened by their student debt.
The Forgiveness Act
First introduced to Congress in May 2020, the Forgiveness Act aims to eliminate debt for frontline healthcare workers in the following ways:
- It would direct the US Department of Education to eliminate healthcare workers’ outstanding balance on federal loans.
- For private loans, the US Department of Treasury would institute a program for repaying borrowers’ remaining principal and interest.
- The US Department of Health and Human Services would coordinate the previous two initiatives, establishing eligibility criteria and administering the application process.
Unfortunately, despite bipartisan support, this bill has not yet moved forward.
Nursing Loan Repayment Programs
Other options available to nurses are loan repayment programs. The Health Resources & Services Administration (HRSA) offers many programs that can help to repay part of nursing school loan debt.
Nurse Corps Loan Repayment Program
Through the Nurse Corps Loan Repayment Program, nurses can pay up to 85 percent of unpaid nursing education debt. This program is available for the following types of nurses as long as they have received their education from an accredited nursing school in a US state or territory:
- Registered nurses (RNs)
- Advanced practice registered nurses (APRNs)
- Nurse faculty (NF)
Nurses who are approved for this program must work for two years in either of the following locations:
- A Critical Shortage Facility (CSF): This facility may be public or private, but it must serve a Health Professional Shortage Area (HPSA), which is an area without sufficient primary care or mental health professionals.
- An eligible nursing school as nurse faculty: Nursing schools are eligible if they are accredited by a national nursing accrediting agency or a state agency recognized by the Secretary of the US Department of Education.
Over the course of two years, 60 percent of nurses’ total outstanding, qualifying nursing education loans are repaid through this program. An additional 25 percent of the student loan may be repaid if nurses qualify for a third year. It is important to note that the program gives funding preference to those with the most financial need. Finally, potential applicants should bear in mind that these funds are not exempt from federal income and employment taxes.
National Health Service Corps (NHSC) Loan Repayment Programs
Four additional loan repayment programs are available through the National Health Service Corps (NHSC).
1. NHSC Loan Repayment Program (NHSC LRP)
Loan repayment assistance through the NHSC Loan Repayment Program is available for licensed primary care clinicians meeting the following criteria:
- United States citizen (US-born or naturalized)
- Provider (or eligible to be a provider) in the Medicaid, Medicare, and State Children’s Health Insurance Program
- Fully trained and licensed to work in the NHSC-eligible primary care medical, mental/behavioral health, or dental discipline and state in which they are applying to serve
- Professional in an eligible healthcare discipline with qualifying educational debt for the schooling that led to the healthcare degree
- Working at an NHSC-approved site
This program is available for nurses in the following disciplines:
- Adult
- Family
- Pediatric
- Women's Health
- Geriatrics
- Mental Health & Psychiatry
- Certified nurse midwives (CNM)
- Psychiatric nurse specialists (PNS)
To obtain loan repayment, qualifying nurses must serve at least two years at an NHSC-approved site in a Health Professional Shortage Area. Therefore, this program is ideal for nurses who wish to not only repay their student loans but also help increase access to primary care services for communities in need.
Through their work at NHSC-approved sites, nurses receive funds to repay their outstanding, qualifying educational loans. These funds are exempt from federal income and employment taxes. The following are the maximum funds that nurses may qualify for over an initial two-year term:
- Full-time service: $50,000
- Half-time service: $25,000
It is important to note that nurses serving in private practices aren't eligible for half-time service.
After the initial two-year contract, nurses may be eligible to renew one-year contracts to pay for remaining educational loans.
2. NHSC Substance Use Disorder Workforce Loan Repayment Program (NHSC SUD Workforce LRP)
The Health Resources & Services Administration created the NHSC Substance Use Disorder Workforce Loan Repayment Program (SUD Workforce LRP) in an effort to address the country’s opioid crisis.
Through this program, healthcare professionals are recruited to increase access to substance use disorder (SUD) treatment and prevent overdose deaths in underserved areas. In exchange for a three-year commitment to provide SUD treatment services at NHSC-approved sites, eligible nurses may obtain up to $75,000 in student loan repayment.
Clinicians may choose to serve full-time or part-time, although the part-time option is not available for clinicians serving in private practices.
Interested clinicians must meet the following criteria:
- United States citizen (US-born or naturalized)
- Provider (or eligible to be a provider) in the Medicaid, Medicare, and State Children’s Health Insurance Program
- Fully trained and licensed to work in the NHSC-eligible primary care medical, mental/behavioral health, or dental discipline and state in which they are applying to serve
- Professional in an eligible healthcare discipline with qualified educational debt for schooling that led to their healthcare degree
- Working at an NHSC -approved SUD treatment facility with an HPSA score that would ordinarily be too low to qualify for NHSC funding and using either the NHSC-approved site’s Mental Health or Primary Care HPSA score
The following are the nursing professionals eligible for this loan repayment program:
- Registered nurses
- Nurse practitioners
- Certified nurse midwives
- Psychiatric nurse specialists
See also: Ultimate Guide to Behavioral Health Nursing
3. NHSC Rural Community Loan Repayment Program (NHSC Rural Community LRP)
Another program geared toward combating the nation’s opioid epidemic is the NHSC Rural Community Loan Repayment Program (LRP). In conjunction with the Rural Communities Opioid Response Program (RCORP) from the Federal Office of Rural Health Policy (FORHP), the NHSC Rural Community LRP provides loan repayment awards to offer evidence-based substance use treatment, assist in recovery, and prevent overdose deaths throughout the country.
Eligible nurses must make a three-year commitment to provide SUD and opioid use disorder treatment services at rural NHSC-approved SUD treatment facilities. In exchange, they may receive up to $100,000 for full-time service or $50,000 for part-time service to repay qualifying educational loans. As is the case with other NHSC loan repayment programs, nurses serving in private practices are not eligible to practice half-time.
In order to qualify for this program, clinicians must meet the following criteria:
- United States citizen (US-born or naturalized)
- Provider (or eligible to be a provider) in the Medicaid, Medicare, and State Children’s Health Insurance Program
- Fully trained and licensed to work in the NHSC-eligible mental/behavioral health or primary care medical discipline and state in which they are applying to serve
- Professional in an eligible healthcare discipline with qualified educational debt for schooling that led to their healthcare degree
- Working, or having accepted a position, at a rural NHSC-approved SUD treatment facility and using either the rural NHSC-approved facility’s Mental Health or Primary Care HPSA score
4. NHSC Students to Service Loan Repayment Program (NHSC S2S LRP)
Students in their last years of nursing school may qualify for loan repayment assistance from the NHSC Students to Service Loan Repayment Program (NHSC S2S LRP).
In return for loan repayment, students must serve a minimum of three years at an NHSC-approved site in a designated HPSA.
The following are the nursing programs that are eligible for the NHSC S2S LRP:
- Nurse practitioner
- Adult
- Family
- Pediatrics
- Women’s Health
- Psychiatry
- Geriatrics
- Certified nurse midwife
- Women’s Health
Furthermore, these nurses must meet the following criteria:
- United States citizen or national
- Pursuing a nurse practitioner or certified nurse midwife degree in a US state, the District of Columbia, or a US territory at a school or program of nurse practitioner education accredited by the Accreditation Commission for Education in Nursing or the Commission on Collegiate Nursing Education or a school or program of nurse-midwifery education accredited by the American College of Nurse-Midwives, Division of Accreditation
- Enrolled as a full-time student in the last year of nursing school with a graduation date during the application year on or before August 31 (Any classes that are not required or unrelated courses to the qualifying degree program will not count towards the hours required for full-time status)
- Eligible for federal employment
See a comparison chart of NHSC and Nurse Corps Loan Repayment Programs here.
Substance Use Disorder Treatment and Recovery Loan Repayment Program (STAR LRP)
Another loan repayment program aimed at covering SUD treatment healthcare needs across the country is the Substance Use Disorder Treatment and Recovery Loan Repayment Program (STAR LRP).
This program supports treatment teams and complements other SUD loan repayment programs, thereby expanding the eligible disciplines and treatment facilities.
Clinicians who receive this award must work full-time in a STAR LRP-approved facility for six years in exchange for up to $250,000 in loan repayment.
Eligible nurses must meet the following criteria:
- United States citizen, national, or permanent resident
- Full-time employee at a STAR LRP-approved facility
- Fully licensed SUD professional in one of the following nursing roles:
- Certified nursing assistant (CNA)
- Licensed practical nurse (LPN)
- Registered nurse
- Nurse practitioner
- Certified nurse midwife
- Certified registered nurse anesthetist (CRNA)
- Clinical nurse specialist (CNS)
- Psychiatric nurse specialist
- Clinical support staff
Faculty Loan Repayment Program
The Faculty Loan Repayment Program (FLRP) is another option for nurse faculty from economically and environmentally disadvantaged backgrounds to repay their student loans.
This program from the Health Resources & Services Administration offers up to $40,000 in loan repayment over two years in exchange for serving at eligible academic institutions in the healthcare field. Eligible nurses include registered nurses and advanced practice registered nurses.
Nurses may be eligible for the Faculty Loan Repayment Program if they meet the following criteria:
- Coming from an environmentally or economically disadvantaged background
- Having a degree or certificate in an eligible health profession
- Working as a faculty member at an approved health professions school with a contract for at least two years
Furthermore, eligible schools for nurse faculty must be located in a US state or territory and have RN or APRN programs.
Is There a Nursing Home Loan Program?
Although not specifically geared toward them, many home loans and accessible housing options are available for nurses. Here are some options nurses have to acquire or remodel a home.
Federal Housing Administration (FHA)
What the Federal Housing Administration actually does is insure home loans so that lenders can offer borrowers better deals. These better deals include the following advantages:
- Low down payments (as low as 3.5%)
- Low closing costs
- Easy credit qualifying
Learn more about this option here.
USDA Single Family Housing Programs
The US Department of Agriculture’s (USDA’s) Single Family Housing Programs make it possible for families and individuals in rural areas to buy, build, or repair affordable homes.
Through these programs, qualifying individuals and families can purchase or build new single-family homes with no money down, repair their existing homes, or refinance their current mortgages under certain qualifying circumstances. Eligibility for these loans, loan guarantees, and grants is based on income and is subject to the average median income for each area.
Single Family Housing Direct Loans for Homebuyers
This housing loan allows families in eligible rural areas to purchase or build a home with no money down. It is for families with low or very-low income and is typically paid over a thirty-three-year term with payment assistance available. Interested individuals may apply directly with Rural Development here.
Learn more about this program here.
Single Family Housing Guaranteed Loan Program for Homebuyers
This loan program allows families with moderate household income to purchase or build a home in eligible rural areas with no money down and repay the loan over a thirty-year period at a fixed rate. Refinancing options are available. Interested individuals may apply through an approved lender.
Learn more about this program here.
Home Repair Loans and Grants for Homeowners
These loans are available for homeowners with very low incomes in eligible rural areas. Homeowners may use this loan to repair, improve, or modernize their homes. Interested individuals may apply directly with Rural Development here. Additionally, grants are available for individuals aged 62 and over.
Learn more about this program here.
VA-Backed Veterans Home Loans
Do you serve in the military as a nurse? If you are a current service member, a Veteran, or a Veteran’s survivor, VA direct and VA-backed Veterans home loans can help you buy, build, improve, or refinance a home. Applicants must still have the required credit and income for the loan amount they want to borrow. However, a Veterans home loan often offers better terms than a traditional loan from a private bank, mortgage company, or credit union. For instance, almost 90 percent of VA-backed loans are made with no down payment.
Learn more about VA-backed Veterans home loans here.
HomeReady® Mortgage
HomeReady® mortgage is an affordable loan created by Fannie Mae for responsible, creditworthy buyers experiencing challenges with paying student loans, saving for a large down payment, or relying on income from non-traditional sources, such as parents or other family members.
This mortgage option offers the following advantages:
- It offers a 3 percent down payment option for both first-time and repeat homebuyers.
- It allows co-borrower flexibility—all borrowers do not have to reside in the property.
- It accepts additional income sources, such as rental payments.
Learn more about HomeReady® mortgage here.
3% Down Payment Mortgage for First-Time Homebuyers
Another home loan option nurses have is the 3% Down Payment Mortgage for First-Time Homebuyers. Nurses may qualify for this mortgage option if they are good at managing their credit and meet the following additional requirements:
- At least one person on the loan must be a first-time homebuyer, meaning that they haven't owned any residential property in the previous three years, or if they are buying the home with another person, at least one of the borrowers hasn't owned a home in the previous three years.
- The home being financed must be a one-unit property and not a manufactured home.
- The home is destined to be the borrower’s primary residence.
- The mortgage must have a fixed rate.
For those meeting these requirements, a mortgage lender can provide the specifics, assess the borrower’s financial situation, and determine their eligibility.
HFA Preferred
HFA Preferred is a conventional loan available to both eligible first-time or repeat homebuyers with low to moderate incomes. Nurses may even be able to combine this mortgage with down payment assistance programs. To be considered for this mortgage option, applicants work directly with their local housing finance agency (HFA) or an approved lender within their network.
Here are the advantages of an HFA Preferred mortgage:
- Down payment as low as 3 percent
- Possible down payment assistance
- No first-time homebuyer requirement
- Monthly mortgage insurance usually lower than that of government-insured mortgages
- Cancellable mortgage insurance (As opposed to government-insured loans, you may be able to cancel your mortgage insurance once your home equity reaches 20 percent, which translates into lower monthly payments.)
HomeStyle Energy
HomeStyle Energy is an exciting option to buy or refinance an energy-efficient home. This mortgage option allows individuals to combine the costs of energy-saving home improvements to their mortgage.
HomeStyle Energy allows a homebuyer to use up to 15 percent of the value of their property—as appraised after energy-saving upgrades are completed—for new energy improvements. Likewise, homeowners who wish to make energy-saving improvements to their homes or who have already made those types of updates may qualify for a limited cash-out refinance for up to 15 percent of the home’s value. In other words, homeowners would refinance their current home loans into new mortgages to access the equity in their homes. The equity amount would then be used to pay for new energy updates or other energy-improvement-related debt.
Learn more about HomeStyle Energy here.
HomeStyle Renovation
Similar to HomeStyle Energy, HomeStyle Renovation allows individuals to buy or refinance a home while financing improvements for up to 75 percent of the property’s value “as completed”—the value of the home after the improvements have been made.
Learn more about this home loan option here.
MH Advantage™ for Manufactured Homes
An affordable housing option is buying a new manufactured home with MH Advantage™. This mortgage loan offers thirty-year fixed-rate financing with down payments as low as 3 percent, lower interest rates than those offered by most traditional manufactured home loans, and cancellable mortgage insurance.
Learn more about MH Advantage™ here.
Shared Equity Programs
Shared equity programs are often run by governmental or non-profit organizations to provide first-time or low- to moderate-income homebuyers access to housing at prices significantly lower than others on the market.
The term “Shared Equity” comes from the typical requirement that the homeowner and program sponsor “share” in the home's appreciation in value when the owner sells the property. Homebuyers must also agree to sell the property only to other income-qualified buyers. That said, homebuyers are not obligated to sell their houses and may even pass them on to their descendants.
The following are common types of shared equity programs:
- Community Land Trust (CLT): Through this program, homebuyers can buy only the house and lease the land it is built on at an affordable rate.
- Deed Restricted and Below Market Rate Homeownership Programs: Homebuyers are able to buy homes below the market price through direct subsidies from a local government or discounted pricing thanks to inclusionary housing programs.
- Limited Equity Cooperatives: Individuals may buy shares in housing cooperatives instead of buying a home singlehandedly. These shares may be resold at an affordable rate.
Learn more about Shared Equity Programs here.
Final Thoughts on Loans for Nurses
There is no question that taking on a loan—regardless of the type—is a scary undertaking. However, as with everything else in life, knowledge is power. Once you know all your options for taking out student loans, repaying student loans, and choosing the best housing loan, you will be able to move forward confidently with these important financial decisions.
Need to supplement your nursing income to help pay off debts? Pick up high-paying per diem nursing shifts today!
