Student Loan Forgiveness for Mental Health Professionals: 4 Programs

• You can have your federal loans forgiven in 10 years if you’re an LPC working for a government or nonprofit organization. PSLF erases your remaining balance after 120 qualifying payments.

• Income-Driven Repayment plans lower payments for all LPCs, no matter where you work. Payments are capped based on your income, with forgiveness after 20–25 years.

• State and national programs, like NHSC and other repayment options, can help you reduce your debt faster with shorter commitments and substantial awards.

Licensed Professional Counselors (LPCs) and mental health professionals, including therapists and guidance counselors, have access to several student loan forgiveness programs. The right program for you depends on your job and the type of loans you have.

• If you work in public service: Programs like Public Service Loan Forgiveness (PSLF) can erase your remaining federal loan balance in as little as 10 years.

• If you don’t work in public service: Income-Driven Repayment (IDR) plans offer forgiveness after 20–25 years of payments.

• No matter where you work: Some state and profession-specific programs can reduce your loan balance faster, often with less red tape..

Related:

• Student Loan Forgiveness for Healthcare Workers

• Student Loan Forgiveness for School Counselors

Public Service Loan Forgiveness is one of the fastest ways for mental health professionals, including LPCs, therapists, and counselors, to erase their student loan debt.

But here’s the catch: not everyone qualifies.

Most therapists and counselors work in private practices or for-profit organizations, which don’t count for PSLF. If you’re one of the few working in public service—think VA hospitals, school districts, or community mental health centers—you could have your loans wiped out after 10 years.

Eligibility: To qualify for PSLF, you need to meet three key criteria:

1. Employer: Work full-time for a government organization (federal, state, local, or tribal) or a 501(c)(3) nonprofit.

2. Loan Type: Have federal Direct Loans. FFEL or Perkins Loans don’t qualify unless you consolidate them into a Direct Consolidation Loan.

3. Repayment Plan: Be enrolled in an income-driven repayment (IDR) plan like SAVE or IBR.

Qualifying Payments: Only payments made after October 1, 2007, while on a qualifying repayment plan (e.g., IDR plans) count toward the required 120 payments. Payments must also be made on time and for the full monthly amount billed. Use our PSLF Calculator to estimate your monthly payments until your loans are forgiven.

Forgiveness Process: After making 120 qualifying payments, you can apply for forgiveness by submitting the PSLF form through the PSLF Help Tool on StudentAid.gov. Your servicer will verify your employment and payment history before forgiving your remaining loan balance.

What to Watch Out For

• Annual Certification: Use the PSLF Help Tool to certify your employment every year. Missing this step can result in payments not being counted toward forgiveness.

• Loan Type Check: Only federal Direct Loans are eligible. If you have older loans, consolidate them into a Direct Consolidation Loan to stay on track.

• Common Pitfalls: Applications are often rejected due to incorrect repayment plans, missed certifications, or ineligible employers. Double-check your details to avoid surprises.

Pro Tip: Thanks to recent updates, including the one-time account adjustment, some borrowers are closer to forgiveness than they realize. Take a moment to review your loan history and count any past payments that might now qualify.

Related: PSLF Qualifying Employers

If PSLF isn’t an option because of your employer, income-driven repayment plans offer the next best path to student loan forgiveness. These plans are especially helpful for LPCs and mental health professionals with high debt-to-income ratios, particularly those in private practice.

That said, IDR plans aren’t without complications.

Ongoing litigation surrounding the SAVE Plan and the reopening of PAYE and ICR plans by the Department of Education has introduced uncertainty. Despite this, IBR remains stable because it’s established under federal law, making it a reliable forgiveness option outside of public service roles.

Related: IDR Plans for High-Earners

Here’s how IDR plans work, the key differences between them, and what to watch out for:

• Lower Payments: Payments are based on a percentage of your discretionary income, making them more affordable than standard repayment.

• Forgiveness Timeline: Depending on the plan and loan type, forgiveness happens after 20 or 25 years of payments. The exact timeline depends on your loan type. It’s 20 years for undergraduate loans under SAVE, PAYE, or IBR (new borrowers after 2014). And it’s 25 years for graduate loans or Parent PLUS loans (via ICR) and older IBR plans.

• Tax Implications: Forgiven balances are taxed as income, meaning you’ll need to prepare for a potential bill when forgiveness happens. For example, $100,000 forgiven could result in a $25,000 tax liability if your tax bracket is 25%.

Related: IBR Student Loan Forgiveness

What to Watch Out For

• Longer Commitment: Forgiveness takes twice as long as PSLF, requiring significant patience and consistency.

• Annual Recertification: You’ll need to recertify your income and family size every year. Missing this step can lead to unaffordable payments and interest capitalization.

• Tax Burden on Forgiveness: Plan ahead for taxes on forgiven debt. Setting aside savings or consulting a tax professional can help you avoid financial shock.

Next Steps

1. Check Your Loan Type: Confirm your loans are federal. Private loans don’t qualify for IDR plans.

2. Estimate Your Payments: Use the StudentAid.gov Loan Simulator to see how much you’d pay under different IDR options.

3. Enroll in a Plan: Contact your loan servicer to enroll in the IDR plan that works best for you.

4. Stay Current: Recertify your income and family size annually to keep payments manageable.

Pro Tip: Borrowers in private practice or for-profit roles can still benefit from IDR plans, but understanding the tax implications of forgiveness is critical. Consider consulting with a financial professional to create a long-term plan.

Related: When Will The IDR Account Adjustment Happen?

State-based loan forgiveness programs can help address workforce shortages by incentivizing LPCs and other mental health professionals to serve in underserved areas. While these programs aren’t as comprehensive as federal options, they can still provide meaningful relief.

State programs often operate on a first-come, first-served basis, and eligibility varies widely based on funding and local needs. Many require a service commitment, typically in rural or high-need areas.

Finding Opportunities

State programs can vary widely in terms of award amounts, eligible professions, and service requirements. To find programs in your state:

1. Check Your State’s Health Department: Many states list loan repayment opportunities for mental health professionals.

2. Explore HRSA’s State Loan Repayment Program: Over 30 states participate in this federal cost-sharing initiative.

3. Consult Professional Associations: Organizations like the American Counseling Association or state-level associations often provide updated program details.

Pro Tip: State programs are often subject to annual funding changes, so verify eligibility and availability with your state’s administrators each year.

Related: State Student Loan Forgiveness Programs

Loan repayment programs offer a unique advantage: they can be combined with forgiveness options like PSLF to help you pay down educational loans faster while still earning forgiveness credits.

These programs, funded at the national and state levels, are designed to incentivize mental health professionals, including licensed clinical social workers (LCSWs), health service psychologists, psychiatric nurse specialists, and other providers, to work in underserved areas or high-need roles.

National Loan Repayment Programs

The first is the National Health Service Corps (NHSC) Loan Repayment Program, which offers up to $50,000 for a two-year full-time service commitment in a Health Professional Shortage Area (HPSA). Part-time options provide up to $25,000.

Eligible professions include:

• Licensed Clinical Social Workers (LCSWs)

• Licensed Professional Counselors (LPCs)

• Health Service Psychologists

• Psychiatric Nurse Specialists

The second is the National Institutes of Health Loan Repayment Program, which provides up to $50,000 annually for mental health professionals conducting research. Psychologists and those with a doctoral degree working on qualifying projects are eligible.

State Loan Repayment Programs

Many states partner with the Health Resources and Services Administration (HRSA) to offer loan repayment programs for licensed mental health professionals.

• Example – West Virginia: The state’s Mental Health Loan Repayment Program offers $10,000 per year for licensed social workers, marriage and family therapists, and LPCs.

• Example – California: Behavioral health professionals, including LCSWs and health service psychologists, can receive repayment awards tied to a minimum two-year service obligation in shortage areas.

How Loan Repayment Programs Work with PSLF

One of the best-kept secrets about loan repayment programs is how they can be paired with PSLF. Here’s how:

1. Earning PSLF Credits: Payments made through loan repayment programs still count toward your 120 monthly payments under the PSLF program. This means you’re reducing your loan balance while progressing toward forgiveness.

2. Lump Sum Payments: Thanks to recent rule changes, you can make a lump sum payment at the start of the year to cover 12 months of your income-based repayment plan. This allows loan repayment funds to clear a large chunk of your student loan debt while ensuring you earn forgiveness credits simultaneously.

Example: If an LCSW in an underserved area receives $20,000 from an NHSC award, they could use it to make a lump sum payment covering their income-contingent repayment (ICR) plan for the year. This not only reduces their loan balance but also earns 12 PSLF credits in one move.

Next Steps

• Research Eligibility: Check the HRSA website for NHSC and SLRP programs in your state.

• Coordinate with PSLF: If you’re enrolled in PSLF, speak with your lender to ensure lump sum payments are properly credited.

• Apply Early: Many repayment programs are competitive and have limited funding, so applying as soon as possible improves your chances.

Figuring out the best way to handle your student loans doesn’t have to be complicated. Whether you’re aiming for PSLF, exploring loan repayment assistance programs, or juggling federal and private student loans, you have options to reduce your balance and lower your monthly payments.

Our student loan experts can help you cut through the noise and find a clear, practical solution that fits your goals. If you’re ready to stop stressing about interest rates and years of service requirements, book a call now.