The 2020 Student
Loan Handbook

From applying for and managing student loans to refinancing and repayment, learn the ins and outs of education loans for healthcare students.

Last Updated: 04/16/2020
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You applied for six different scholarships, but landed just one of them. Your employer offers tuition reimbursement, but it only covers one-quarter of your school expenses. This leaves a number of education bills you need to figure out fast.

Although scholarships and grants are the best form of school money since you don’t need to pay them back, student loans can help fill in the cost gaps in your college financial plan, if you follow the right steps. This guide not only helps you understand your options when it comes to taking out a student loan, but it also gives you insight into and advice on how to repay your student loans once you finish school. Read on to learn how to find the right lender, look into loan forgiveness, and finance your healthcare education responsibly.

Types of Student Loans

There are two types of student loans: federal and private. Federal loans are backed by the federal government and generally have lower interest rates while private loans are backed by banks, credit unions, and other private lenders. There are rules and regulations that students must follow in order to meet the terms of a loan. Let’s take a closer look.

The William D. Ford Federal Loan Program

The William D. Ford Federal Loan Program

Direct Subsidized Loans

Lender

U.S. Department of Education

Eligibility

Undergraduate student

Requirements

Financial need

Interest Rate

5.05% undergraduate

Fees

1.062% loan fee from each loan disbursement

Loan Amount

Determined by your school, the amount cannot exceed your financial need.

Direct Unsubsidized Loans

Lender

U.S. Department of Education

Eligibility

Undergraduate or graduate students

Requirements

Do not need to demonstrate financial need

Interest Rate

5.05% undergraduate; 6.6% graduate

Fees

1.062% loan fee from each loan disbursement

Loan Amount

Determined by your school and whether or not you are a dependent or independent student

Direct PLUS Loans

Lender

U.S. Department of Education

Eligibility

Parents of students, graduate students, professional students

Requirements

No adverse credit history

Interest Rate

7.08%

Fees

4.236% loan fee from each loan disbursement

Loan Amount

Varies; Determined by cost of attendance minus any other financial aid received

Direct Consolidation Loans

Lender

U.S. Department of Education

Eligibility

Students with two or more federal education loans

Requirements

Submit online application

Interest Rate

Varies

Fees

No fee

Loan Amount

Varies; Combines two or more existing loans.

The William D. Ford Federal Loan Program

Private Loans

Unlike a federal loan, private loans come from credit unions, banks, or another private lender. While a federal loan is usually a better choice for students, it can sometimes be worth your time to explore your private loan options. Let’s look at the major private lenders.

Sallie Mae

Sallie Mae is a publicly-traded company that is a major provider of private student loans in the U.S., owning about 1.4% of all student loans today. Sallie Mae’s undergraduate private student loans are best for those who want flexibility with repayment. For instance, Sallie Mae offers low interest rates to borrowers who make monthly payments of $25 or interest only payments while still in school.  Sallie Mae also offers a dedicated loan program for graduate students pursuing a health profession.

Credit Unions & Banks

When researching private loans, it can be helpful to look to local credit unions that focus on undergraduate or graduate students that reside in your state. Depending on the lender, students can qualify for fairly low, fixed APRs, sometimes as low as 4.86%, and variable APRs around 3.75%. Some credit unions may focus on a particular population, such as military service members and veterans. The Navy Federal Credit Union, for example, offers helpful interest rate reduction opportunities and added perks such as discounts on auto insurance. Private student loans, including those offered through banks, are highly dependent on the applicant’s credit history. Depending on your credit history, you may need a cosigner to secure a loan.

Private Lenders

There are many private lending options out there for you to consider. While they may not offer interest rates as friendly as federal loans, you can often borrow $40,000, $50,000, or even $100,000 if needed. Many lenders are willing to set up loans with undergraduate and graduate students, although you might need a cosigner to help bolster your application. Be sure to read the terms carefully, as some lenders can charge high fixed APR rates in the 29-35.99% range.

Things to Keep in Mind

  • Private loans may require a credit check
  • The loan might come with fees
  • You might need a cosigner
  • Your interest may not be tax deductible
  • No consolidation allowed
The William D. Ford Federal Loan Program

Federal vs. Private Loans

Federal Loans

What you need to know

Take advantage of your federal loan options before seeking private loans. Federal student loans almost always cost less and are easier to repay.

Benefits

Many federal student loans are subsidized and have fixed interest rates. Most students are eligible, and repayment terms are flexible.

Risks

The amount of money you can borrow is limited. Part of your wages and all of your tax refund could be taken by the government if you default on your loan.

Private Loans

What you need to know

Private loans are generally more costly than federal loans and offer little flexibility if you are having trouble making your payments.

Benefits

You can borrow larger amounts. If you shop around and can show ability to repay, you may be able to find low interest rates relative to certain federal loans.

Risks

Your interest rate and monthly payment could change with little warning and you have fewer options for when and how much you can repay. You typically need a cosigner to qualify and any late or missed payments will affect the credit ratings of both you and your co-signer.

How to Apply for a Federal Student Loan

Applying for a federal student loan doesn’t have to be a complicated process. Follow the steps and information on this list below to get started on your road to higher education.

Compile all the financial information you’ll need to apply

  • Your parents’ gross income for two years prior to the academic year you’ll attend school
  • Your parents’ tax returns from the same period
  • If you file taxes, your tax returns from the same period
  • Your parents’ Social Security number and dates of birth
  • Any untaxed income, such as child support, retirement savings plans, etc.
  • Assets and net worth of business or investments they or you might have
  • A list of up to 10 schools you’re applying for
  • Any grants or scholarships you’ve already received

(Optional) Complete your CSS profile

To find out if you’re eligible for institutional aid, you should apply on CollegeBoard’s CSS profile page. To do so:

  • Sign up for a CollegeBoard account
  • Go to CSSProfile.org and sign in with your CollegeBoard credentials
  • Select “Begin New Profile”
  • Select schools you wish to apply to

Fill out and submit the FASA®

This is a free form that you need to fill out to receive consideration for financial aid from the federal government. This is one of the most important steps in the process of applying for aid.

Review your Student Aid Report

This document will indicate your expected family contribution and supply you with a four-digit data release number. The schools that you listed on your FAFSA will use this information to determine your eligibility for both federal and non-federal financial aid.

Wait for your financial aid award letter

You will likely receive your financial aid award letter around the time you receive any college admissions decisions. In some cases, the letter may arrive as early as October or as late as April.

Determine amount to borrow

After you learn how much you will receive in financial aid; you must determine how much money to borrow. The best way to do this is to total your expected payments for tuition for the year, fees, and room and board expenses. Then, subtract your total aid from that number.

Accept the award letter

Once you determine what types of aid you will receive; you need to let your school’s financial aid office know that you accept the award.

Student Loan Success Tips

  • Select your loans
  • Access the application
  • Select a loan servicer
  • Choose a repayment plan
  • Read the terms and conditions
  • Submit

Federal Loan Forgiveness Programs for Healthcare Students

In some cases, you may be able to receive loan forgiveness, cancellation, or a discharge on your student loan. The Federal Government’s forgiveness programs are designed to meet a wide variety of financial needs, provided that students apply for these programs correctly and meet the eligibility requirements. There are even loan forgiveness programs specifically for healthcare professionals, so it’s important to research all your possible options before moving forward. Below we look at the different forgiveness programs available.

Repayment Plan Loan Forgiveness

Depending on the repayment plan you chose or were eligible for, there are forgiveness options that come standard with some of them.

REPAYE Plan:
Short for “revised pay as you earn,” REPAYE is a good option for students without graduate school debt. This is also beneficial for those who don’t qualify for other income-focused repayment plans. With this plan, you will usually pay 10% of your discretionary income toward the loan each month.

PAYE Plan:
This “pay as you earn” repayment plan typically requires borrowers to pay 10% of their discretionary income, but never more than the 10-year standard repayment plan amount. With this income-based plan, if your monthly payment doesn’t cover the loans interest, the federal government may pay the unpaid accrued interest on a subsidized Stafford loan for no more than three years. After 20 years of payments, the remaining loan balance is forgiven.

IBR Plan:
An abbreviation for “income-based repayment,” the IBR plan is one of the most popular repayment methods. The most significant benefit of this plan is that payments are calculated based on what you earn and not on what you owe. Additionally, the U.S. Department of Education may pay the interest your loan accrues for up to three consecutive years in some circumstances.

ICR Plan:
This “income-contingent repayment” plan may cost you more each month than other plans and caps at 20% of your discretionary income for 25 years. After that, your remaining loan balance is forgiven.

The Public Service Loan Forgiveness Program

Federal Perkins Loan Cancellation

Healthcare-Specific Loan Repayment Programs

National Health Service Corps Loan Repayment Program

National Health Service Corps Students to Service Loan Repayment Program

Faculty Loan Repayment Program

NURSE Corps Loan Repayment Program

Indian Health Services Educational Loan Repayment

National Institutes of Health Loan Repayment Programs

Health Professionals Loan Repayment Program

Military Loan Repayment Programs

Healthcare Loan Forgiveness & Repayment Programs by State

All 50 states and the District of Columbia have healthcare loan forgiveness programs. These state-specific programs, often designed to benefit underserved or rural areas, offer comparable loan repayment amounts and typically require healthcare professionals to commit to two or three years of full-time work in the state. Use this chart below for a quick overview of what each state has to offer.

Created with Raphaël 2.1.0 NH VT RI NJ DE MD DC MA CT HI AK FL ME NY PA VA WV OH IN IL WI NC TN AR MO GA SC KY AL LA MS IA MN OK TX NM KS NE SD ND WY MT CO UT AZ NV OR WA ID CA MI
StateProgramAmountEligibility
AlaskaSHARP II – Health Care Professions Loan Repayment and Incentive Program$35,000-47,000;
$20,000-27,000
Clinicians who provide direct patient care, Primary Care, or general s care, with education loan debt in their name only. Must also participate as a full- or half-time student, possess a relevant occupational license, and be a U.S. citizen.
ArizonaArizona State Loan Repayment programsFull-time,
$6,000-50,000;
Half-time,
$4,000-32,000
U.S. citizens working full-time in most medical fields. Eligibility questionnaire.
CaliforniaCalifornia State Loan Repayment ProgramFull-time,
$10,000-50,000;
Half-time,
$5,000-50,000
U.S. citizens working full-time in most medical fields.
ColoradoColorado Health Service CorpFull-time,
$20,000-90,000;
Part-time,
$10,000-90,000
U.S. citizens working full-time in most medical fields who can commit to three years of work in a shortage area.
DelawareDelaware State Loan Repayment Program Up to $100,000U.S. citizens working full-time in most medical fields who can commit to two years of work in a shortage area. Eligibility checklist.
GeorgiaPhysicians for Rural Areas Assistance ProgramUp to $10,000-25,000U.S. citizens working full-time in most medical fields who can commit to two years of work in a shortage area with a population of 50,000 or less.
HawaiiHawaii State Loan Repayment ProgramVariesU.S. citizens working full-time in most medical fields who can commit to two years of work in a shortage area.
IdahoIdaho Student Loan Repayment Program Up to 85% of unpaid education debtFollowing HRSA guidelines, must be a licensed nurse.
IowaRural Iowa Primary Loan Repayment Up to $200,000Student at Des Moines University College of Osteopathic Medicine or University of Iowa Carver College of Medicine, five years of service in an eligible area.
KansasKansas State Loan Repayment ProgramUp to $25,000 per yearMost primary care and dental care specialties, 45 weeks of full-time work per year in approved locations. Must be U.S. citizens with Kansas license.
KentuckyKentucky State Loan Repayment Program $20,000-80,000 per year,
depending on specialty
U.S. citizen trained and licensed in most primary and dental care areas. Must commit to 45 weeks of full-time work per year.
LouisianaLouisiana State Loan Repayment Program Physicians and dentists,
up to $30,000 per year;
All other professionals,
up to $15,000 per year
U.S. citizens in most primary and dental care areas with a license in Louisiana. Must commit to three years of full-time work.
MaineMaine Health Professions Loan Program ForgivenessUp to $100,000Maine residents studying in most medical or dental areas.
MassachusettsMassachusetts Loan Repayment Program for Health ProfessionalsUp to $25,000 per yearU.S. citizens, full- or part-time professionals in a community health center for two years.
MichiganMichigan State Loan Repayment Program Up to $200,000U.S. citizens, two years of full-time work at eligible locations with HPSA agreements. Most physician, dentist, nursing, and counseling professions accepted.
MinnesotaMinnesota Rural Physician Loan Forgiveness Program $13,000-18,000 per year,
depending on specialty area
U.S. citizens with eligible license. Typically a two- or three-year commitment, depending on profession, full-time.
MontanaMontana Rural Physician Incentive Program $10,000-$20,000
depending on 6-60 months time commitment
U.S. citizens with medical or dentistry degree, valid MT state license, and qualifying loans.
NebraskaNebraska Loan Repayment Program Up to $180,000-200,000
for doctors and dentists;
$90,000-100,000
for other professions
U.S. citizen or National in a qualifying medical or dental profession.
NevadaNevada Health Service Corps VariesMost medical, dental, and counseling professions with Nevada licensure and no restrictions on DEA certificate. Usually two-year commitment.
New HampshireNew Hampshire State Loan Repayment Program Up to $75,000
for 36 months for full-time physicians, dentists, and psychiatrists,
Up to $27,500
for part-time.
U.S. citizens with licensure in New Hampshire. Most medical professions are eligible.
New JerseyThe Primary Care Physician & Dentist Loan Redemption Program Up to $120,000Residents of New Jersey with state licensure, minimum two-year commitment in underserved area, most professions are eligible.
New YorkRegents Physician Loan Forgiveness Award ProgramUp to $10,000 per yearU.S. citizens or aliens admitted for permanent residence with New York licensure, two-year commitment.
OklahomaOklahoma Medical Loan Repayment Program Up to $50,000 per yearLicensure in Oklahoma as a primary care physician, four-year commitment.
OregonOregon Health Care Provider Incentive Program Up to $35,000 per yearLicensed physicians, physician assistants, and nurse practitioners, most specialties are eligible. Up to three-year commitment.
PennsylvaniaPennsylvania Primary Care Loan Repayment Program For physicians and dentists, up to $100,000 for full-time or up to $50,000 for part-time; All other practitioners, up to $60,000 for full-time or up to $30,000 for part-timeMost providers working in community health centers qualify.
Rhode IslandRhode Island Educational Loan Repayment Program for Primary Care Providers $10,000-20,000 per year,
depending on area
Licensed nurse practitioners, physician assistants, physicians, and dentists
TexasPhysician Education Loan Repayment Program $30,000-60,000 per year,
depending on area
U.S. citizens in most medical professions with Texas licensure.
VermontVermont Educational Loan Program for Primary Care Practitioners Up to $20,000 per yearMost medical professionals, one- or two-year commitment at an eligible location.
VirginiaVirginia Loan Repayment Programs Up to $140,000
for four-year commitment
Most medical and health professionals with licensure are eligible.
WashingtonHealth Professional Loan Repayment Program Up to $70,000
for two-year,
full-time commitment
Most medical and health professionals with licensure are eligible.
West VirginiaWest Virginia State Loan Repayment Program Up to $40,000
for two-year commitment;
$25,000
for each additional year beyond two;
maximum of four years or $90,000
Most medical and health professionals with licensure are eligible. At least two-year commitment at federally qualified health clinic.
WisconsinHealth Professions Loan Assistance Program & the Rural Physician Loan Assistance ProgramUp to $100,000
for physicians;
Up to $25,000
for other health professionals
Licensed physicians and medical professionals, at least one-year commitment.
WyomingWyoming State Loan Repayment Program Up to $40,000
for physicians, two-year commitment;
up to $20,000
for other health professionals, two-year commitment
Most medical and health professionals with licensure are eligible.
Washington D.C.DC Health Professional Loan Repayment Program Up to 44% of eligible debt,
or a maximum of $66,810.
Licensed physicians, dentists, nurses, hygienists, clinical social workers, counselors, and clinical psychologists are eligible. Two-year commitment.
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Other Conditions for Loan Cancellation

Managing Your Student Loan

Managing your student loans as you juggle other life challenges upon graduation can be stressful. With some preparation and careful consideration of your options, however, you can take some savings and repayment strategies to simplify the repayment process while maintaining a solid credit score. Begin by exploring these repayment options below.

Repayment Options for Federal Student Loans

By exploring your repayment options, you can find a program that works best for your financial situation. Below are some common repayment plans accompanied by some quick notes that summarize the plan and which loans are compatible.

Standard Repayment Plan

Graduated Repayment Plan

Extended Repayment Plan

Revised Pay as Your Earn Repayment (REPAYE) Plan

Pay As You Earn Repayment (PAYE) Plan

Income-Based Repayment (IBR) Plan

Income-Contingent Repayment (ICR) Plan

Making Payments

Of course, one of the most important components to understand in the student loan repayment process is the act of making payments. As shown above, the amount and timing of your payments depend on which repayment program you choose.

Monthly payments

Grace Periods

Financial Counseling

Refinancing Your Student Loan

To refinance your student loan means to swap out your current student loan plan with a new loan that offers you a lower interest rate. This is a strategic move to help you get out of debt more quickly and simplify your monthly payments. If you are unsure whether or not you want to refinance, browsing new loan offers does not impact your credit score. Websites such as Student Loan Hero by Lending Tree offer student loan term comparison calculators and refinancing calculators to help you more easily compare your options.

Refinancing is not always a breeze, as you may need to meet some new specific requirements to be eligible. For example, many top lenders require you to be a legal resident with an undergraduate or graduate degree while also being creditworthy. Unlike a more flexible federal loan, such as direct consolidation loans, you are locked into a new financed loan with the same repayment plan until the debt is paid off.

How to Consolidate Your Student Loan

If you have multiple student loans serviced by more than one provider, it can be useful to consolidate federal student loans with a direct consolidation loan. Alternatively, you may be able to combine federal and private loans by refinancing. Consider these six steps below to consolidate.

  • Select your loans
  • Access the application
  • Select a loan servicer
  • Choose a repayment plan
  • Read the terms and conditions
  • Submit

Avoiding Default

Failure to pay back your student loan can result in a default on your loan. When you miss one payment, even by a day, your loan is considered to be delinquent. To avoid loan default, students must do everything in their power to make their loan payments on time. After 90 days of no payment, loans will be delinquent. If you think that you are headed toward student loan default, you might be able to take some steps to avoid it. Your options may change whether you have federal or private loans.

Delinquency, Deferment, & Forbearance

Delinquency

Deferment

Forbearance

Student Loan Q&A

There’s a lot of information for healthcare students and professionals to consider when it comes to loans. From repayment plans and refinancing to state-specific details and personal financial situations, it can be overwhelming at first. We offer this Q&A section below to help answer some of your initial questions with the hope that you can proceed with a little more clarity.

Getting Started

How and where can I find out how much I owe?
You can check your federal student loan balance by logging into your account at My Federal Student Aid. For private loans, you can contact your school to obtain a list or obtain a credit report from Equifax, Experian, or TransUnion.

How do I figure out if my loans are federal or private?
If your loan is not listed on the National Student Loan Data System, it’s likely a private loan. You will need to log into the site with an FSA ID.

Lowering My Payments

How can I lower my payments?
According to Edvisors, you may be able to lower your student loan payments by choosing a different repayment plan, consolidating multiple loans into a single loan, refinancing to get a lower interest rate, claim student loan interest deductions, or signing up for auto-debit.

What are income-driven repayment plans?
These are repayment plans that set your monthly student loan repayment. They are intended to be affordable and based on your income and family size.

How much would I pay on an income-driven plan?
The amount you would pay per month is typically calculated by percentage of your discretionary income. Percentages differ among plans.

I can’t afford to make payments. What can I do?
If you can’t make your payments, it may be best to first contact your loan servicer to discuss your options. Additionally, you could look into repayment plans, consolidating loans, deferment or forbearance, or look into loan forgiveness options.

Student Loan Forgiveness

Which forgiveness programs am I eligible for?
There are about a dozen federal student loan forgiveness programs. Consider this list from Student Loan Hero, which includes details on each program and eligibility requirements.

How long does it take to get forgiveness?
In many cases you can receive forgiveness after 10 years of on-time monthly payments.

Can I get forgiveness for private student loans?
Private loans are usually not eligible for any kind of forgiveness program. There may be some useful strategies out there if you fall behind on your private loan payments.

Lowering My Interest Rate

How can I lower the interest rates on my student loans?
According to TheCollegeInvestor.com, each program has different terms, Ranging from five years to 25 years.

Can I refinance my federal student loans?
You can refinance federal student loans but not through the federal government. You must use a private lender.

Dealing with Default

How do I get my student loans out of default? 
According to ForgiveStudentDebt.org, you can get out of default if you consolidate your loan, rehabilitate your loan, cancel the loan, or pay it off.

How do I avoid wage garnishment?
One of the best ways to stop wage garnishment is to pay off your debt in one lump sum by borrowing money from friends or family. If that is not possible, you can try to negotiate with your creditor or challenge the garnishment in court if you feel it was wrongfully imposed on you. You may also be able to get a fresh start by filing for chapter 7 bankruptcy. In any case, you should receive professional advice from a trusted advisor or financial expert before making any decisions.

Student Loan Glossary

When navigating the student loan process, it certainly helps to understand some basic loan terms, many of which you’ll find scattered throughout loan materials and sprinkled into conversations with financial aid advisors. Use the glossary below to make sense of some basic loan terms.  

Accrued interest

The amount of interest earned on a debt, such as a bond or loan.

Annual percentage rate (APR): Expressed as a percentage, APR is the annual rate charged for borrowing money. It is the yearly cost of funds for the term of a loan.

Co-signer

This is interest that goes unpaid and is added to your student loan, ultimately increasing the total amount you repay for a loan.

Deferment

Student loan deferment allows the pair to cease payments for up to three years.

Dependent student

Dependent students rely on their parents/parent for financial assistance and must report parental income on their FAFSA®.

Disbursement

The payout of funds from a lender to a school or borrower.

Guarantee fee

This guarantees the loan against a default and is often 1%. It is collected from each disbursement on a Federal loan to cover the cost of insuring the loan.

Interest

Interest is calculated based on a percentage of the loan and goes to the lender for the privilege of using their money for the loan.

Promissory note

This is a legal document that documents you were promised to repay federal student loans and any accrued interest and fees to the lender or loan holder.

Subsidized loan

This is a federal loan based on financial need and research for undergraduate students.

Capitalization

This is interest that goes unpaid and is added to your student loan, ultimately increasing the total amount you repay for a loan.

Default

A loan goes into default when the student fails to make payments as outlined in the loan contract.

Delinquent

Student loans are often considered delinquent when the borrower does not make payment by the scheduled due date. lenders typically report to the delinquency to credit bureaus when a loan payment is 30-270 days past due.

Forbearance

Under forbearance, student loan payments may be reduced or postponed for up to three years. Interest continues to accrue during that period.

Grace period

Depending on the lender, students may be able to receive a six-month grace period after graduating before they must start making payments on a loan. Grace periods may be extended for active duty personnel in the armed forces for up to three years.

Origination fee

This is the money a student pays to offset the lender’s cost for issuing the loan, usually around 1.062%.

Principal

This balance is the total amount of debt you owe.

Unsubsidized loan

Undergraduate or graduate students can qualify for an unsubsidized loan regardless of their income or financial need.

Student Loan Resources

Here are some useful resources from around the internet to help you locate the best loan and repayment options for you. Some of these sources focus specifically on healthcare students’ needs while others speak to all learners in higher education.