Nursing is a very specialized job that needs detailed knowledge and training. As far as there is sickness, there will never be a dearth for nursing jobs. Getting a nursing job without the right kind of education is impossible. Students aspiring to become nurses can study various courses in nursing science followed by internship. There are many colleges that offer courses in nursing and most of them can be quite expensive. Thanks to the total commitment required to this field and the expensive education, not many students have opted for this field. This has created a big crevice in the bridge of need and supply due to which nursing jobs are the most in-demand, highly paid and most sought after profession now. To ease the burden of education and to encourage more people to take up this profession, federal government has introduced many financial plans like subsidized loans, loan forgiveness programs etc.
There are numerous nursing student loans that can be availed and with a little research you can find one that has low interest rates, flexible loan repayment options and even forgiveness programs for nurses.
Nursing student loans are helpful as
- You can use it to pay for the tuition, buying books, travel, room and boarding
- You don’t need to repay the loan till you have finished graduation
- And most importantly, many lenders will provide for reduction on principal amount upon successful graduation
But you also need to remember that when you avail these loans
- The interest will accrue when your payments are being postponed and will be added to the principal loan amount till such time the repayment begins.
- To avail any incentive, proof of graduation should be submitted
There are various sources that provide good offers on nursing student loans. For the best deals you can seek loans from
- Federal government
- State governments and
- Private student loan lenders
Nursing loans through Federal government
This undoubtedly will be the best low interest, risk free and safe option for availing nursing student loans. However they are not so easily available. There are many criteria that you need to meet to be eligible for this kind of loans.
The Federal government provides long term loans under various schemes and for different levels of education. Loans for undergraduates in nursing are sanctioned under the following schemes
- Stafford Loans
- Federal Consolidation loans
- Perkins Loans
Loan for graduate students in nursing include the above schemes as well as the PLUS loans for graduates and professionals.
Your first step while applying for loans should be to contact your nursing school to check out what program you will be eligible for under the federal student loan scheme. There are two types of federal student loans – the Direct Loan Program sanctioned by the Department of Education and the Federal Family Education Loan Program or the FFELP.
Filing FAFSA for Federal loans
To apply for any type of federal loan, you need to fill out the FAFSA or the Free Application for Federal Student Aid. This can be done either online or printed, filled and mailed to the Department of Education. These applications have deadlines and any application sent after the due date will not be accepted. If you fail to submit the FAFSA application on time, you will not only be losing out on the most practical and affordable source of nursing student loan but also be missing out on very good opportunities of loan repayment program or nursing loan forgiveness program. FAFSA is not just the first step but the most vital step in applying for nursing student loans.
Stafford Loan for Nursing Education
Stafford Loans for nurses is available at discounted interest rates through student loan lenders. These lenders have a partnership with the state government for allocating loans under the state-based student loan programs. These loans apart from having the standard Stafford loan guarantees also have other enticing features like incentives, special favors etc. The best way to apply for these would be through FFELP lenders; however you need to be careful who you go through these as you are bound to come across a jumble of federal loan lenders as well as private loan lenders.
One of the main criteria to apply for the state-based loan is you must be studying in one of the nursing schools in the state.
Nursing Student loan from Government
One of the federally funded loan programs is the Nursing Student Loan (NSL) program which has low interest and a long term repayment plan. All students studying for diploma, Associates, Bachelor and Master degree in nursing are eligible for the NSL. The NSL is a campus based program and the funds are allocated through the financial aid department of your nursing school. To apply for the NSL
- Check with your school authorities if they participate in the NSL program
- If they do, make sure you file the FAFSA without fail as the basis of NSL funds is the FAFSA application. If you forgot to apply the FAFSA in time, you can count yourself out of the NSL program
- Apart from FAFSA, separate application also needs to be submitted to the NSL program through the financial aid office of your nursing school
- Your application has to be submitted along with the Master Promissory Note that will be provided to you by your nursing school
- Under this program, preference is always given to students who require financial assistance
While these governmental loans are a blessing, not all are able to avail it. For one, Stafford loans and the state-based loans alone cannot cover the entire cost of education, let alone the other expenses. This is especially so at the graduation level. Also these loans have annual as well as lifetime limits and if they are met before your application is processed, you will be left high and dry. Furthermore the government nursing loans are aimed at helping disadvantages or financially needy students and if you do not suit any of these categories, you may have to seek financial help elsewhere.
Nursing Student Loans – Private Financial Aid
As the government financial aid and federal student loans do not meet all education and other expenses, private lenders loan out required amounts. You may seek help from these sources; however this should be your last option. The simple reason is federal loans are not only affordable and flexible but also meet most of the educational needs of a nursing student. Private loans are designed to look convenient and comprehensive, thanks to lesser paperwork and good advertising, but eventually cost high.
Financing your entire nursing education through private loans is one of the most irresponsible ways at dealing with finances.
Private loans are not all that bad, though. Since the federal financial aid can only help to a certain level, external sources of financial aid will almost always be required. The ideal way to utilize the private loans would be to avail as much federal or state financial help as you can and then seek out private lenders. While seeking private loans, research well to find the best one which has the lowest possible interest rate and a practical repayment plan. Also borrow only what you need to meet the educational expenses leftover by the federal loan.
For students with less than stellar credit history, prepare a back up plan like applying for the private loan along with a co-borrower with good credit and who is willing to stand by you. With a little planning and strict adherence to it, you should be able to rebuild your credit rating, for this make full payments and on time when you start repaying the loan.
Difference, Benefits and Eligibility of private loans
The first marked difference between federal loans and private loans is the absence of time-bound paperwork. Private loans do not require a FAFSA submission and can be availed anytime when required. The only prerequisites are a good credit history or a qualified co-signer. The second marked difference would be the interest rates. This varies from lender to lender and is generally based on the Prime indices or the LIBOR, with an additional credit margin.
Private loans are beneficial as the payments are not only deferred while you are still in school but you also get a grace period of six-months after graduation before you start your repayment plan. Some lenders also provide incentives like lowering the interest rate by 0.25% if you choose for automatic deduction of the loan payment through your bank account.
All nursing students are eligible for private loans and unlike the state based loans, students can avail loans from lenders of other states too provided
- You are enrolled in a certified nursing school for undergraduate degree program at least half-time
- You have a cosigner vouching for your guarantee
- Credit check of both, you and your cosigner passes
Private loans too can be applied online. First determine how much you will need to cover the expenses of education, tuition, travel, boarding etc and how of this is covered by your federal loan. Availing a private loan to fund your education and other expenses can be a very expensive affair. While applying for the loan, online or offline, you will need
- Social Security number
- Driver’s license
- Information about your cosigner
- 2 additional references
You do need to remember that once the loan is sanctioned, after completion of promissory note and other documents that the lender may request, the funds are sent to the account of your school. On receipt of sanction letter you must verify with your nursing school for specific disbursement dates towards each semester.
Sources of private funds
There are many banks and financial institutions that offer nursing student loans. You can also avail loans from private lenders.
You can also get in touch with your personal banking or financial institution or other student loan provider to see if they have any loans for students in health and nursing industry.
Loan repayment and tenure
Repayment terms typically vary between15 and 20 years.
Different lenders provide different repayment plans. You can choose to start repaying almost immediately by clearing off the interest alone or defer all payment till completion of graduation until you take up a job. However in this case the interest is capitalized, meaning the interest is added to the capital borrowed amount when you start your repayments.
Be wary when applying for private loans and read through the terms and conditions carefully. Processing fees and interest rates vary significantly. Hence check with a few lenders before applying for a loan. You will also need to remember that the legal age for signing contracts varies in different states. Most states maintain at 18 years while some like Alabama and Nebraska have it at 19 years and Puerto Rico and Mississippi have it at 21 years.
Graduate PLUS loans for students doing their graduation
This is a fixed-low-interest-rate nursing student loan issued by the U.S. Government. This non-need credit based loan is on the lines of private loans except that the interest is low and fixed and comes with federal guarantee. This loan is to facilitate students studying for their graduation cover all expenses including room and board, tuition, lab expenses, travel etc.
Key benefits are
- Fixed rate of interest at 8.5%
- Students can defer payments while still in school
- Most importantly no cosigner is required
- Tax on Interest is deductible for most graduation students
A very important aspect of this loan is it is not based on need like other federal and Stafford loans. Any student studying for graduation in the field of nursing can avail this loan irrespective of family and personal income level, personal assets and financial needs. The only criterion is to pass the credit check.
Grad PLUS loan can also be availed for online degrees, provided the school you are registering with is approved and takes part in the FFELP – Federal Family Education Loan Program.
Loan Programs for Nursing Faculty
If you have already finished your graduation and are a member of the nursing faculty in any instructorship program, you have good news. Nursing faculties are eligible for various nursing loans and other programs like loan repayment, designed specially as incentives.
Some of the professionals always in demand are the nursing instructors. Hence as nursing instructors you get a lot of benefits in terms of financial aid and incentive. Without the nursing instructors, new nursing recruits cannot be taken and without them the nursing profession cannot continue. Nursing schools need nursing instructors and to attract more people the federal government, the state based loan agents and everyone else is eager to offer loans in return to your career commitment.
As nursing faculty students you also have other benefits. You can apply for Disadvantaged Faculty Loan Repayment Program supported by U.S. Bureau of Health Professions if you meet any of the following criteria
- If you have enrolled for the graduate program and intend to earn the nurse teaching degree
- You also have outstanding loans from your previous nursing education and/or
- Need further financial aid for education
Under this program you can earn nearly $20,000 each year for 2 years.
Nursing Loan Forgiveness / Loan Repayment Program
With the nursing profession being one of the most sought after, nursing student loans just get better and better.
One of the most widely recognized programs in loan repayment is the one supported by U.S. Department of Health and Human Services. This Nursing Education Loan Repayment Program sponsored by the federal government has certain eligibility criteria, which you must ensure apply to your position too before proceeding with the application. Nursing students having outstanding loans and employed in high need medical facilities can avail up to 60% repayment facility under this program. However the selection is purely need based.
There are numerous state-run repayment programs and loan forgiveness plans like the Indian Health Service Loan Repayment Program for American Indians and Alaska natives and the Minnesota office of Rural Health and Primary Care. However these programs need specific commitment from the students like 2 years of nursing practice in an IHS approved facility or working in rural facility for a maximum of 4 years. Similarly RN and LPN students committing to nursing home work are eligible for loan forgiveness of up to $3,750.
Registered Nurses (RNs) eligible for loan repayment program should have
- A nursing degree from a participating accredited nursing school;
- Outstanding balance on the loan taken towards the degree received
- A full-time job at a nursing facility with critical shortage
- The RN license should be from the same state where you are working full-time
- Signed a contract stipulating compliance of 2 years service
There are other options and plans under federal student loan repayment schemes. These have specific requirements which can be advantageous to students. These are:
- Standard repayment plan – wherein the capital borrowed and the interest accrued should be paid each month for the entire term of the repayment signed.
- Graduated repayment – here the payments are smaller when you first begin paying back and at specific periods at later stage amounts are increased during the repayment term
- Extended Repayment – can be availed only under certain terms of eligibility. Students who have taken loans under Stafford, PLUS and Federal consolidation can get relief in payment terms by stretching it up to 25 years.
- Income Based Repayment or IBR – as the name suggests this repayment scheme varies according to income and family size making repayment plans affordable. Under this scheme, loan can be cleared by paying 10% of your income (even lesser percentage if your earnings are lesser).
Loan forgiveness programs
Nursing education is supported by many loan forgiveness programs like federal loan forgiveness, Stafford Loan Forgiveness apart from various state-based forgiveness programs. Nursing students who are unable to avail this opportunity can get their loans consolidated to help ease the burden of repayment. Consolidation can help in stretching the repayment terms anywhere from 10 years to 30 years. Thus the impact on the monthly budget can be controlled to a certain extent.
Depending on certain criteria, you can have your nursing student loan cancelled in full or at least part of it. This is called as “loan forgiveness” and to qualify for this you must
- Perform some kind of volunteer work
- Perform military service
- Teach or practice in specific communities
Some of the organizations that offer federal and Stafford loan forgiveness are AmeriCorps, Peace Corps and Volunteers in Service to America (VISTA).
Once you have availed the loan, it is very important you repay back according to the terms you initially agreed to avoid default. If you default on your student loans, it will ultimately affect your credit rating negatively and getting loans at a later stage may become very difficult.
The field of nursing is getting lucrative by each passing day and no efforts are being lost in encouraging new students to take up nursing courses. Attractive and easy loan options by the federal government and private lenders like banks are helping in lessening the financial burden of the student. However the students should remember that repayment of the loan cannot be completed at least up to 10 years (or more depending on the option chosen) and hence should plan and buy the loan with careful planning.
Educational loan from the federal government is definitely the best option but this is available only for select student category, is need based and even when sanctioned does not cover all the expenses of education. If need for availing private loan arises, this should be taken with utmost care and planning as otherwise repaying the principal and interest accrued may take a lifetime and spoil all your future plans. Most importantly before enrolling into any nursing college, ensure they participate in the federal and state-based government loan plans.