Which Nurses Will Benefit From Biden’s New Income-Driven Loan Repayment Plan?

Practical and vocational nurses, including licensed practical nurses (LPN), may benefit significantly from President Joe Biden’s new income-driven repayment (IDR) plan.

An analysis of College Scorecard data from the Urban Institute found that the new Saving on a Valuable Education (SAVE) plan will enable many practical nurses, vocational nurses, and nursing assistants to pay off a lower percentage of their federal student loan balances. Registered nurses (RNs), nursing administrators, nurse researchers, and clinical nurses will, on average, still pay off the entirety of their loans under the SAVE plan.

Borrowers can already take advantage of the new IDR plan’s lower monthly payments, even though the SAVE plan won’t be available until July 2024.

SAVE is a revamped version of the Revised Pay As You Earn (REPAYE) plan, established in 2015. The most significant difference between the two plans is that SAVE increases the income exemption to 225% of the poverty guideline. All income less than 225% of the poverty line won’t factor into a borrower’s monthly payment calculation — resulting in lower payments for participating borrowers. The REPAYE plan only exempted income up to 150% of the poverty line.

The change means that nursing positions with lower wages stand to benefit the most.

Under the SAVE plan, the U.S. Department of Education will grant student loan forgiveness for nurses’ remaining balance after 20 years of continual repayment. The Urban Institute found that the SAVE plan will significantly reduce the percentage of borrowers who fully repay their loans compared to previous IDR plans, essentially putting money back into their pockets.

This change will benefit practical nurses, vocational nurses, and nursing assistants compared to the Pay As You Earn (PAYE) plan. PAYE is one of four existing IDR plans and is similar in most ways to the REPAYE plan.

The typical RN graduate won’t see as much of a difference over the lifetime of their loan.

The Urban Institute calculated these figures using borrowers’ median debt and salary from various nursing programs across the country, including bachelor’s, associate’s, and credential program data. The analysis only includes full-time employees who have completed a degree.

It’s worth noting that these estimates anticipate a borrower will make continual payments over 20 years to earn student loan debt forgiveness for nurses.

Nurses, however, may qualify for debt relief sooner through Public Service Loan Forgiveness (PSLF). This program erases a nurse’s outstanding federal student loan debt if they work for a nonprofit or government entity for at least 10 years and continue to make payments on their loans while on IDR.

The SAVE plan could result in significantly more debt forgiveness for nurses.

Payments under the SAVE plan will drop even lower. The full plan, slated for launch on July 1, 2024, will also lower the percentage of discretionary income borrowers have to pay each month from 10% under REPAYE to between 5% and 10% under SAVE.