All social workers are eligible for student loan forgiveness regardless of whether they work in the private sector, government, or nonprofit agencies.
The U.S. Department of Education offers three major loan forgiveness programs:
- The Public Service Loan Forgiveness program
- Lender Forgiveness Under the Income-Driven Payment Plans
- Perkins Loan Forgiveness program
The federal government offers loan forgiveness for federal loans as well as private loans.
Student Loan Repayment Program for the Student of National Health Service Corps
Indian Health Service Loan Repayment Program
Some borrowers who live in New York, for example, maybe eligible for state-based programs that allow them to forgive their private student loans.
Below is a quick overview of each program and the general eligibility requirements.
Let me ask you a second question, which is often asked by borrowers.
What is the average student debt for social workers?
Social workers with an MSW have an average student loan debt of more than $60,000. According to the Bureau of Labor Statistics, the median social worker salary is $50,000. If you have student loan debt that is greater than your annual income, how can you repay it? Can you live on your own, purchase a car, travel, get married, raise children, or save for retirement?
You might consider moving in with your parents. You could take per-diem work in an agency or private practice. You can start your own supportive counseling company. To get a lower interest rate, refinance student loan debt with private lenders. This is not something I recommend for federal student loan borrowers. You lose PSLF or IBR benefits.
You basically grind, grind and grind for as long as you can to repay your loans as fast as possible.
Perhaps you are able to have your living expenses offset by your parents.
What if your parents are unable to live with you? What should you do about your loans?
Consider loan forgiveness options available for social workers.
Public Service Loan Forgiveness Program, (PSLF).
For borrowers working for qualified public-service employers, the PSLF program provides federal student loan forgiveness for 10 years (120 monthly payments).
You need to meet five requirements to be eligible.
- Direct Loans are required
- First, You should work full-time
- Second, You must work full-time in government or non-profit organizations
- Third, You need to make payments in accordance with a qualified repayment plan
- Fourth, You must make 120 monthly payments (in other words, 10 years of full-time work is not enough; you need to make 120 monthly payments).
Any of the income-driven repayment programs are a qualifying repayment plan.
- Revised Pay as You Earn
- Earn as much as you earn
- Repayment plan based on income
- Income-Contingent Repayment Plan
Income-Driven Repayment Plan Loan Exemption
The federal government offers loan forgiveness for up to 20-25 years of regular payments, in addition to the PSLF Program.
These are the qualifications for this program:
- Federal student loans are available. You can make up to 240-300 monthly qualifying payments through one of the income-driven repayment programs.
- The difference in the number of your payments is dependent on whether you have federal student loans debt from a bachelor’s or graduate degree.
- Federal student loan debt borrowers must make 300 payments to be eligible for loan forgiveness.
- Your loan balance will continue to grow during this period. And unlike the PSLF program forgiveness isn’t exempt from tax.
Taxes will be charged on any forgiven loan balance.
Perkins Loans Cancellation & Discharge
Social workers who work in low-income communities may be eligible to cancel Perkins Loans. Federal student loans that were made under the Perkins Loan Program are not eligible for forgiveness by Perkins Loan Program. The majority of borrowers only owe a few thousand dollars in Perkins Loans. Perkins Loans Cancellation does not offer federal student loan borrowers any student loan forgiveness. However, Perkins Loans may be canceled if the balance is not paid.
To cancel a loan, contact the school from which you borrowed it.
Loan Forgiveness is available for social workers in rural areas
Student Loan Repayment Program for the National Health Service Corps
The NHSC Program allows licensed clinical social workers to receive $50,000. This money can be used to repay student loans.
You must work for two years at a site that is community-based in an area of high-need Health Professional Shortage Area to be eligible for student loan repayment.
FYI: The NHSC Program focuses on LCSWs with disadvantaged backgrounds or those who are most likely to stay employed in an area of healthcare shortage.
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Programs for the forgiveness of loans from the state
California. California social workers can earn up to $15,000 if they work for 24 months in an eligible environment. Eligible settings are public or publicly funded mental health facilities, or areas that have a shortage of mental health professionals. This award can be received up to three times. To learn more, visit the Health Professions Education Foundation website.
Michigan. Michigan provides up to $200 million in tax-exempt money for federal and private student loan debt repayments. You should hold a master’s degree in social work. Additionally, you must agree to provide full-time primary care in Health Professional Shortage Areas. For more information, visit the Michigan Department of Health & Human Services webpage.
New York. Residents of New York can receive up to $26 000 in student loan forgiveness. If you are a New York resident and have at least one year of experience in a critical area of human services, such as home care or mental healthcare, then you may be eligible. The program is available for both federal and private student loans. For more information, visit the New York State Higher Education Services Corporation webpage.