Student Loan Forgiveness for Mental Health Professionals: 4 Programs

• If you work full-time for the local, state, federal government or a nonprofit, your student debt can be forgiven after making 120 on-time payments.

• If you work in private practice, income-driven repayment plans like SAVE and IBR may lead to loan forgiveness after 20 to 25 years of payments.

• You can also explore federal and state-backed student loan repayment programs that repay up to $160,000 in exchange for a short-term service obligation, often in a rural or mental health services shortage area.

Student loan forgiveness programs are available for all types of mental health professionals, including:

• Mental health counselors, therapists, and counseling professionals

• Mental health workers and behavioral healthcare providers

• Clinical social workers and practitioners

• Professionals serving rural and high-need areas

• Public and private practice providers

Here are the top options available to you:

• Public Service Loan Forgiveness: The PSLF Program Forgives your remaining loan balance after 120 qualifying payments while working full-time for a qualifying employer (e.g., public service or nonprofit organizations).

• Income-Driven Repayment Forgiveness: Each IDR Plan — SAVE, IBR, PAYE, and ICR — provides loan forgiveness after 20 to 25 years of qualifying payments, regardless of your employer.

• National Health Service Corps Loan Repayment Program: The NHSC offers loan repayment in exchange for serving at an NHSC-approved site in a designated Health Professional Shortage Area.

• State-Based Loan Repayment Programs: Several states offer their own loan repayment programs for mental health professionals working in Mental Health Professional Shortage Areas. These programs can provide significant financial relief, with award amounts and eligibility criteria varying by state.

Note: PSLF and IDR programs currently face delays due to litigation surrounding the SAVE Plan.

Related:

• Biden Student Loan Forgiveness Programs

• How to Apply for Student Loan Forgiveness

After identifying the forgiveness program you qualify for, the next step is to apply and gather the necessary documentation to support your application.

Below is a closer look at the application process for each of the major student loan forgiveness programs available to mental health professionals.

Public Service Loan Forgiveness

PSLF offers loan forgiveness for mental health professionals working in public service roles. Here’s how to apply:

• Step 1: Confirm your eligibility. To qualify, you must work full-time (30 hours or more) for a government or nonprofit organization and make 120 qualifying monthly payments under a qualifying repayment plan, such as an income-driven repayment plan.

• Step 2: Submit the Employment Certification Form. You should submit this form annually or whenever you switch employers. This helps track your progress toward the required 120 payments.

• Step 3: Make your payments. Payments must be made under a qualifying repayment plan. These plans include each of the IDR Plans and the 10-Year Standard Repayment Plan.

• Step 4: Apply for forgiveness. Once you’ve made 120 qualifying payments, you can submit the application for forgiveness through your loan servicer.

Key Documentation to Keep:

• Employment Certification Forms (submitted annually)

• Payment history for each loan

• Copies of communication with your loan servicer

Related: How to Apply for PSLF

Income-Driven Plans

IDR plans provide loan forgiveness after 20 to 25 years of payments, even if you aren’t employed in public service. Here’s how you can apply for income-based student loan forgiveness:

• Step 1: Enroll in an income-driven repayment plan. The most common plans include SAVE, IBR, and PAYE. These plans calculate your payments based on your income and family size.

• Step 2: Make consistent payments. You’ll need to make regular payments over the course of 20 to 25 years, depending on your plan.

• Step 3: Apply for forgiveness. After completing the required payment period, your remaining loan balance will be forgiven.

Key Documentation to Keep:

• Annual income recertification forms

• Payment history

• Documentation of any forbearance or deferment periods

Mental health professionals working in underserved areas may be eligible for loan repayment assistance through federal or state-based programs. Both options aim to address healthcare shortages by providing financial relief to professionals in high-need areas.

But these programs differ in how they are administered and in their specific eligibility requirements.

NHSC Programs

The NHSC Loan Repayment Programs are federally funded and administered by the Health Resources and Services Administration (HRSA).

These programs offer loan repayment to mental and behavioral health clinicians, licensed clinical social workers, licensed professional counselors, and others working in Health Professional Shortage Areas.

The NHSC programs provide awards such as:

• Up to $50,000 for a two-year full-time service commitment

• Up to $25,000 for a two-year half-time service commitment

Key Programs:

• NHSC Loan Repayment Program

• NHSC Substance Use Disorder Workforce Loan Repayment Program

• NHSC Rural Community Loan Repayment Program

How to Apply:

1. Confirm eligibility by ensuring your site is NHSC-approved and located in an HPSA.

2. Gather necessary documentation, including proof of employment and licensure.

3. Apply before the NHSC’s specific deadlines and complete a two-year service obligation.

State Programs

State-based student loan repayment programs are managed by individual states and target their specific healthcare needs.

These programs vary in eligibility criteria, award amounts, service commitments, and the mental health disciplines they cover.

For example:

• Texas Mental Health Professionals Loan Repayment Program: Awards between $10,000 and $160,000 depending on specialty.

• New Jersey Behavioral Healthcare Provider Loan Redemption Program: Offers up to $50,000 for every two years of service, with a maximum of $150,000 over six years.

How to Apply:

1. Check your state’s specific eligibility criteria, which may include working in an MHPSA, serving Medicaid recipients, or working in correctional facilities.

2. Ensure your practice site is located in an eligible area.

3. Commit to a full-time service period, typically three years, depending on the state program.

Program Differences

• Administration: NHSC programs are federally managed, while state programs are run by individual states.

• Funding: NHSC programs are federally funded, whereas state programs rely on state appropriations.

• Eligibility: State programs often have more specific requirements related to the types of mental health professionals they prioritize and the populations they serve.

• Award amounts: These can vary widely between NHSC and state programs, as well as between different states.

If you’re a mental health professional working in public service and pursuing PSLF or enrolled in SAVE, recent litigation and administrative decisions have likely affected your path to forgiveness.

PSLF Status

For borrowers working toward Public Service Loan Forgiveness, there’s a key complication: if you’re enrolled in the SAVE plan, you won’t be earning credit toward the 120 qualifying payments while the current forbearance is in place.

This pause, which extends until March 2025, means any payments made during this time won’t count toward PSLF, potentially delaying your progress.

What you can do:

• Monitor your status: Keep track of updates from the Department of Education, as timelines for resuming payments or accruing PSLF credit could change.

• Consider switching to another plan: You may consider switching to Income-Based Repayment to keep earning credit. But switching plans could increase your monthly payment and comes with other limitations, such as needing to prove partial financial hardship.

Related: SAVE Plan Forbearance

IDR Timelines

If you’re waiting on forgiveness through IDR plans after making 20-25 years of payments, ongoing litigation has paused credit accrual. This impacts those in the SAVE plan, delaying progress toward long-term forgiveness.

What you can do:

• Evaluate your options: Consider whether switching to another plan, like IBR or ICR, makes sense for your situation. Note that IBR requires you to demonstrate partial financial hardship, and ICR is only available for Parent PLUS Loan borrowers.

• Financial readiness: Before switching, make sure you can afford the higher payments under IBR or ICR.

Account Adjustments

The One-Time Account Adjustment is moving forward and will continue to provide retroactive forgiveness credit for borrowers in PSLF or IDR plans.

The Education Department expects to finish applying the adjustment to borrowers’ accounts before the 2024 presidential election. But it might take until 2025 before borrowers learn how much forgiveness credit they’ll receive from the adjustment.

Plan Changes

If you’re considering switching from SAVE to another repayment plan to keep accruing credit toward forgiveness, here’s what to consider:

• Higher payments: Switching to IBR or ICR will likely increase your monthly payment.

• Eligibility: Make sure you meet the criteria for IBR (partial financial hardship) or ICR (open to Parent PLUS borrowers only).

• Processing delays: Loan servicers are experiencing delays in processing plan changes, so factor that into your decision.

Most mental health professionals with federal student loans qualify for PSLF and IDR forgiveness, but reaching forgiveness can still be a challenge.

If you leave public service before making the 120 qualifying payments under PSLF, or if high monthly payments under an IDR plan mean you’ll pay off your loan before qualifying, there are alternatives to consider.

Refinancing Basics

If you expect to fully repay your loan before qualifying for forgiveness and want a lower interest rate, refinancing with a private lender could be an option. Refinancing can help reduce the total interest paid over the life of the loan, especially if you have a strong credit score and income.

But refinancing makes you ineligible for federal protections like IDR and PSLF. This option may make sense if:

• Your monthly payments are high, and you won’t benefit from forgiveness.

• You want a shorter repayment timeline with a lower interest rate.

Refinancing is only available for private loans.

Borrowers who want to keep federal benefits such as deferment, forbearance, or income-driven repayment options cannot retain them after refinancing.

Repayment Options

If your payments under an IDR plan are too high or you expect to pay off your balance before qualifying for forgiveness, switching to a non-income-driven plan could offer lower monthly payments.

Two options include:

• Graduated Repayment Plan: This plan starts with lower payments that gradually increase over time, helping you manage payments in the early years of your career.

• Extended Repayment Plan: This option allows you to stretch your payments over a longer period (up to 25 years), reducing your monthly payments.

These plans can lower your monthly payments, but they do not offer forgiveness after 20-25 years, as IDR plans do.

Emergency Options

When you’ve exhausted other options and can’t make your payments, you may have two last-resort choices:

• Bankruptcy: Discharging student loans through bankruptcy is possible, especially for private loans, but it’s challenging. The process is complex and requires proving financial hardship.

• Settlement: Private loan holders may agree to reduce your overall balance. This option is more common with private loans, though rare for federal loans. Terms depend on the lender and your financial situation.

Both options have significant impacts on your financial future. Consulting with a qualified professional is recommended. Learn more in our guide to student loan bankruptcy and how to settle student loan debt.

Managing student loan forgiveness as a mental health professional can feel overwhelming, but there are several options to help reduce or eliminate your debt.

Whether you’re aiming for Public Service Loan Forgiveness, an Income-Driven Repayment plan, or exploring service-based repayment programs, it’s essential to choose the right path for securing financial relief.

If you’re unsure which option fits your situation or need guidance on maximizing your benefits, our student loan experts are here to help. We specialize in assisting professionals like you in making informed decisions and creating a clear plan for handling student loan debt.

Book a consultation today to receive personalized advice and ensure you’re on the right track for loan forgiveness.