Student Loan Forgiveness and Other Options for Social Workers

 May 28, 2021
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If you majored in social work and are preparing for graduation, student loans are likely weighing heavily on you.

Graduates with a bachelor’s degree in social work leave school with an average of $29,323 in student debt, according to the Council on Social Work Education, while those with a master’s degree in social work have an average debt of $46,591. With a median annual salary of $51,760, according to the Bureau of Labor Statistics, many social workers may struggle to afford their loans.

However, there are organizations, like the National Association of Social Workers (known as NASW) that advocate for student loan forgiveness for social workers. Check out your options below — specifically:

Student loan forgiveness for social workers

If you have trouble keeping up with your payments, look into repayment programs designed specifically for social workers. From assistance funds to loan forgiveness, here are some options to make your debt more manageable:

Public Service Loan Forgiveness

If you have federal student loans, Public Service Loan Forgiveness (PSLF) can eliminate your loans after 10 years of service. PSLF offers student loan forgiveness for social workers, teachers and other public service employees.

You must make 120 qualifying monthly payments while working full time for an eligible employer. After submitting an application, the government then forgives the remaining balance on your loans. Unlike some other forgiveness programs, the discharged amount under PSLF is not taxable, which can offer huge savings.

To qualify, you must work for the government or a not-for-profit institution for at least 30 hours a week, and make all of your payments on time. You must also be on an eligible repayment plan and have eligible loans in order for your payments to count toward forgiveness. Use the government’s online Public Service Loan Forgiveness Help Tool to see if you qualify.

Perkins loan cancellation and discharge

The Perkins loan program came to an end in September 2017. But if you took out Perkins loans in the past, you might still be eligible for Perkins loan cancellation and discharge. Social workers who choose a career working with a child or family services agency, for instance, can get up to 100% of their loans discharged. You must be providing aid to children in low-income communities.

Unlike PSLF, which provides forgiveness after you make all qualifying payments, the government will discharge a portion of your Perkins loans each year for five years. To find out if you qualify, contact the school you graduated from and speak with the financial aid office.

National Health Service Corps Loan Repayment Program

NASW advocates for expanded loan forgiveness specifically for social workers, and an additional program that’s available to practitioners is the National Health Service Corps Loan Repayment Program. Licensed clinical social workers can get up to $50,000 to pay off their student loans through this program. To be eligible, you’ll need to serve for two years at an approved site in a high-need area.

The repayment assistance isn’t taxable as income and it’s issued at the start of the program, which helps you pay off loans right away and focus on your career. For more information, visit the U.S. Health Resources & Services Administration website.

Indian Health Service Loan Repayment Program

Working for the Indian Health Service could help erase your student debt. Eligible health care workers can receive $40,000 of assistance in exchange for an initial two-year service commitment, but you could extend your service annually until your debt is paid off.

Applicants don’t need to identify as American Indian or Alaska Native to gain acceptance, though preference is given to those groups. Visit the IHS online for additional details.

State-specific loan relief programs for social workers

Depending on where you live and work, you may be eligible for student loan payment assistance or a stipend to repay your education debt.

Check out some government-sponsored options for student loan forgiveness for social workers in the following states:

Alaska’s SHARP Program

Behavioral health professionals who provide direct patient care are among those eligible for this student loan forgiveness program for social workers. In exchange for working in an underserved area, you can receive either loan repayment assistance or direct payment.

Visit the Alaska Department of Health and Social Services for more information.

California’s Licensed Mental Health Services Provider Education Program

California-based social workers may be able to receive up to $15,000 after working for up to 24 months in an eligible setting. These include publicly funded or public mental health facilities, as well as areas with shortages of mental health professionals. You can receive this award up to three times.

To qualify, you’ll need to work in certain roles, including associate clinical social worker or registered or licensed social worker. To find out more, visit the Health Professions Education Foundation (HPEF) website.

Use our repayment assistance tool to search for additional programs you may be eligible for.

Kentucky State Loan Repayment Program (KSLRP)

If you’re a licensed clinical social worker or counselor willing to work in the rural South, Kentucky has an available loan repayment program. If accepted, you would be assigned to work full time for two years at a direct-care site in the commonwealth.

Student loan repayment assistance is tax-free with KSLRP, but the award is unique to this program. For every dollar funded by KSLRP, you would need to find a 1-to-1 match from a sponsor, such as the employer or a philanthropic organization. The maximum award for mental health specialists is $40,000.

For more, check out the KSLRP website.

Michigan State Loan Repayment Program

To encourage health care providers and master’s-level social workers to work in areas with shortages, Michigan offers up to $200,000 tax-free to repay student loans for up to eight years. To be eligible, you must have a master’s in social work and agree to work for at least two consecutive years at an eligible nonprofit practice site.

For more information or to apply, visit the Michigan Department of Health & Human Services website.

New York State Loan Forgiveness Program

If you live in New York, you could get up to $26,000 of your student loans forgiven — up to $6,500 per year you complete qualified service. To be eligible, you must be a resident of New York state for at least one year. You must also be a licensed social worker with at least one year of experience in a “critical human service area,” such as home care or mental health. Both federal and private student loans qualify for the program.

For more information or to apply for loan forgiveness for social workers, visit the New York State Higher Education Services Corporation website.

North Carolina Loan Repayment Program

If you’re a licensed clinical social worker and are willing to provide primary and psychiatric services to patients in rural or underserved areas, the state of North Carolina offers repayment assistance as an incentive.

You can get up to $50,000 of your loans forgiven in return for a two-year agreement to work in facilities such as community health centers, rural health centers and county health departments. Additional awards may be available for those who remain for an additional year. Both private and federal loans are eligible, and the forgiven amount is not taxable as income.

To apply, visit the North Carolina Department of Health & Human Services website.

Oregon Partnership State Loan Repayment Program (OPSLRP)

Licensed mental and behavioral health professionals of all stripes are welcome to apply for OPSLRP. Providers could choose to work full time for two years or part time for four years to reap the rewards of repayment assistance.

Full-timers can receive up to $35,000 of debt relief per year, and part-timers can net up to $17,500. Both limit loan forgiveness to 50% of the provider’s loan balance.

To learn about practice sites and applying, check out the Oregon Office of Rural Health online.

Alternative repayment plans for social workers

If you don’t qualify for forgiveness programs or repayment assistance, consider these alternatives for social workers:

Income-driven repayment plans

If you have federal student loans, you can sign up for an income-driven repayment (IDR) plan. If your income is low enough, you may even receive a monthly payment of $0, which still counts as a qualifying payment for PSLF.

Under an IDR plan, the government extends your repayment term to 20 to 25 years and caps your payments at a percentage of your discretionary income. There are four kinds of IDR plans:

  1. Income-based repayment (IBR): Your payments are 10% or 15% of your discretionary income, depending on when you took out loans.
  2. Income-contingent repayment (ICR): You pay either 20% of your income or what your monthly bill would be under a 12-year loan term, whichever is less.
  3. Pay As You Earn (PAYE): The government sets your payments at 10% of your discretionary income, but your payment never exceeds what it would be under the 10-year standard repayment plan.
  4. Revised Pay As You Earn (REPAYE): Under this plan, you pay 10% of your discretionary income. All federal loan borrowers with eligible loans can sign up for this plan, regardless of income.

As a social worker, an IDR plan can significantly reduce your monthly bill, freeing up cash each month to pay for other essentials.

Interest-only plans

If you have private student loans instead of federal ones, you won’t eligible for income-driven repayment plans or Public Service Loan Forgiveness. But if you’re struggling to make your payments each month, some private lenders offer alternatives.

Your lender might offer interest-only payments for a certain period, for instance. Rather than making regular payments towards the principal, you pay only the accrued interest each month.

That approach can reduce your monthly payment, though it will take much longer to pay off your loan. Consider it as a short-term option for periods when you’re truly struggling until you increase your income.

5 Private Student Loan Options That Let You Pause Payments

Student loan refinancing

If you have a high monthly payment, consider refinancing your student loans to a lower interest rate. You’ll work with a private lender to take out a new loan for the total amount of student debt you want to refinance. The new loan can have different terms than your old ones, such as a different interest rate, length of repayment or minimum monthly bill.

If you can’t keep up with your payments, extending your repayment term when you refinance can reduce them. You may end up paying more in interest over the length of your loan, but decreasing your monthly obligation could help you better afford essentials early on in your career. As your income increases, you can accelerate your payments to cut down on interest charges.

Potential downsides to refinancing

It’s crucial to know that refinancing federal loans turns them into private loans, making them ineligible for benefits like income-driven repayment and PSLF. Only refinance federal loans if you know you won’t take advantage of those programs. Refinancing private loans is a simpler equation, as the loans are already private.

Because social workers tend to make less money — especially early on — you might also be considered ineligible for refinancing on your own. Lenders typically require borrowers to have good or excellent credit and solid income. Your chances of approval might increase if you have a cosigner, such as a relative or friend with more established credit and a higher income.

Handling student loan debt on a social worker’s salary can be challenging, but there are ways to reduce the burden on your budget — and focus instead on the important work you do.

Andrew Pentis and Sarah Li Cain contributed to this report.