5 Things Nurses Can Do After Receiving Student Debt Relief

Gayle Morris, MSN
Updated October 10, 2023
    The 2022 student debt relief program can add dollars to your budget. Determine if you are eligible and how to use the added income each month.
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    • You can now apply for student loan forgiveness. Student loan forgiveness will affect at least 43 million borrowers; 20 million students will have the full balance of their student loans canceled.
    • The program includes lower monthly payments for current borrowers who do not qualify and all future borrowers and credits toward loan forgiveness for public service.
    • Borrowers should consider using the added cash in the budget to pay off debt and save for retirement.

    Did you know student loan debt has doubled since 2008 and most of that debt is owed to the federal government? Overall, student loans in default or delinquency have also been rising. On August 24, 2022, the White House announced student loan debt relief that is estimated to affect at least 43 million borrowers. As of October 2022, borrowers can now apply for loan forgiveness.

    Nursing school loans can add a financial burden to families; some nurses opt to refinance which can reduce some of the burden. Explore who is eligible for loan relief, how to claim it, and how to use the money for your future.

    What Is the Student Debt Relief Plan?

    The White House announced a student debt relief plan that is estimated to cost between $605 billion and $1 trillion. Eligibility depends on your income level, the types of loans you received, and when you took out the student loans.

    The plan forgives up to $20,000 for students who received a Pell Grant and currently make less than $125,000 if they are single and less than $250,000 if they are married. Students who have non-Pell Grant loans can have up to $10,000 in debt forgiven.

    Student loan repayments were paused beginning March 2020 and are set to resume on December 31, 2022. Students who are not sure of the type of loan they have can check their account at studentaid.gov. Select the section titled “My Aid” on the main page of the account.

    Debt that is under the umbrella of the William D. Ford Federal Direct Loan Program is eligible. This can include all Parent Plus, grad loans, direct subsidized and unsubsidized federal student loans, and direct Stafford Loans.

    The three-part plan is aimed at providing relief to working families, including nurses, recovering from the financial strains of the pandemic.

    Student Debt Relief

    Student loan forgiveness is the first and most expensive part of the debt relief plan. According to the White House, around 20 million people will have the full remaining balance of their student loans canceled.

    The Department of Education estimates that 21% of the borrowers who are eligible are 25 and younger; 44% are 26-39 years old and 5% are senior citizens. The administration hopes to target borrowers who have the highest economic need with the goal of narrowing the racial wealth gap.

    According to the White House, Black students are twice as likely to have received Pell Grants. Nurses should know about President Biden’s loan forgiveness plan that White House experts estimate nearly 90% of the debt canceled will be for people earning less than $75,000 each year. No high-income individuals or households are eligible for this benefit.

    Lower Monthly Payments

    The debt loan forgiveness applies only to student loans taken before July 2022. However, the plan also offers a lower monthly benefit to students whose debt does not qualify and for all future loans.

    The proposal is a new income-driven repayment plan that caps monthly payments at 5% of the borrower’s discretionary funds, which is half the rate they now pay. This could lower the average annual payment by more than $1,000 for current and future borrowers.

    The White House estimates that a BSN-prepared nurse making $77,000 each year, married with two children, will pay $61 per month to repay their loans instead of the current $295. This can save the family $2,800 each year.

    Credits Toward Student Loan Forgiveness

    Built into the program is a proposed rule that improves the Public Service Loan Forgiveness Program (PSLF). The proposal includes a credit toward loan forgiveness for individuals who work at a nonprofit, in the military, or federal, state, tribal, or local government. The complexities of the current eligibility restrictions have meant many have not received credit for their service.

    Other changes to the credit system include allowing more payments to qualify for the PSLF and allowing certain deferments and forbearances to count toward PSLF. This could include military service, National Guard duty, and service in the Peace Corps or AmeriCorps.

    Cost of School Reduction

    In addition to the changes proposed for debt relief and a lower payment structure, the program proposes to reduce the cost of a college education. The current administration increased the maximum Pell Grant and provided $40 billion in emergency student financial aid.

    The administration is also seeking to double the Pell Grant maximum and make community college free to attend. The White House press release said steps have been taken to make colleges and universities more accountable for keeping prices reasonable.

    How to Claim Student Debt Relief

    The U.S. Department of Education announced there would be an application process for the new student debt relief. Students can sign up for email notification for the “Federal Student Loan Borrower Updates.”

    Be wary of any information or “help” that does not come directly from the Department of Education. They are making the application process simple and easy. As with any new program, there are sure to be student loan forgiveness scams ready and willing to take your money.

    The beta version of the federal student loan debt relief application is live. Those who fill out the beta form will not need to re-submit their information once the official application is live. The open period for application would end on December 31, 2023.

    Apply Here

    After applying, the U.S. Department of Education (ED) will review your application, confirm eligibility, and secure your relief with your loan servicer. Unless contacted directly, you don’t have to take any further action after this.

    The ED will contact you by email if additional information is needed to process your application.

    The ED will update you when your application is approved, and your debt relief is processed. Your loan provider will then provide you with updates on any outstanding balance and updated monthly payments if you still have a balance owed.

    Eligible borrowers must meet the income requirements. The Department of Education has income information on 8 million borrowers who have applied and enrolled in income deferred repayment plans. Student loan forgiveness for borrowers in this plan may be automatic since the Department of Education has their income eligibility information.

    Top 5 Ways Nurses Can Spend or Invest After Receiving Student Debt Relief Cash

    BSN-prepared nurses may find an additional $235-$295 in their budget every month. While you may be tempted to roll the money back into your general monthly budget, consider these five ways you can use the money to grow your wealth or invest in your future.

    1. 1

      Splurge Once

      It may have been several years since you have taken a vacation or done something special for yourself or your family. Consider saving $250 each month for several months and splurging on a short vacation, refreshing your home decor, or anything else you and the family would find enjoyable.

    2. 2

      Pay Off Debt

      Many people carry more than student debt. Nearly 14 million Americans have over $10,000 in credit card debt. The interest rate on these cards adds up fast, which means you’re in debt far longer than you need to be. Use the extra monthly cash to pay off your credit card debt so you aren’t paying interest on things you purchased years ago.

      Susan Schwartz, RN, MSN, MSHA, says that any money that she doesn’t have to use to pay back student loans will go toward paying her home. It will also be used to cover other debt that she’s accrued over the course of schooling and loan repayment.

      “I have plenty of things that need to be caught up and I would love to have the extra to pay some of them off now instead of in the future,” she says.

    3. 3

      Invest for Your Retirement

      Retirement years can sneak up on you faster than you might imagine. The more you save in the early years, the less you have to save as you get older. According to the Federal Reserve Board in 2019, the average 35-year-old had $28,000 in savings, a 55-year-old had $58,000 and a 65-year-old had $60,000. This just isn’t enough to retire.

      By adding the extra $250 per month to your retirement investments at 7% interest, you could add $130,237 to your retirement funds.

      Gatty Chavarría, RN, says she’s already planning to invest the money in her retirement plan. She encourages others to use the money back wisely. “Debt relief money can be used in a variety of ways to improve the financial situation of nurses,” she says. “It can be used to pay off outstanding debts, to make necessary repairs or improvements to one’s home, or to make a major purchase. Another great option is to invest in education or to start a small business.”

    4. 4

      Save for Your Child’s Education

      Many parents and guardians are concerned about how they can help their children pay for their college education. By saving $250 per month at 7% interest for 15 years you could have $79,000 to contribute to your children’s college education.

    5. 5

      Invest in Your Future

      Consider investing in yourself and your future. Have you dreamed of becoming an entrepreneur? How much do you need to open your own business? You’ll need help from financial consultants and small business experts to understand how much you need and how to get started.

      Thankfully, most of those resources are free. Sit down with a mentor from the Small Business Association (SBA) or interview the owner and founder of the type of business you’d like to open. Of course, speak to a business owner with whom you will not be competing, such as out of your geographical area.

      If there are significant start-up costs, your banker can help you determine how much you should have in savings and how much you may need to borrow. The SBA can also help you figure out what documents are needed for a loan.

    Meet Our Contributors

    Portrait of Susan Schwartz, RN, MSN, MSHA

    Susan Schwartz, RN, MSN, MSHA

    Susan Schwartz has been an avid writer for about 17 years. She freelances and edits manuscripts for other authors. She is a member of the Horror Writers Association, the Nonfiction Authors Association, and the Virginia Writers Club where she serves as 1st vice-president of the state organization. Her nonfiction book, “Haunted Charlottesville,” was released in May 2019.

    Portrait of Gatty Chavarría, RN

    Gatty Chavarría, RN

    Gatty Chavarría is a registered nurse. She loves talking to others about Medicare and helping them understand their options. Her goal is to make sure that everyone has access to the best possible healthcare, regardless of their income or background.


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