Physical therapists take on a staggering amount of debt to complete their education. More than half of PT grads leave school owing more than $70,000 in student loans according to WebPT. Over one-third owe more than $100,000. For one in ten grads, their debt load exceeds $150,000.
Wouldn’t it be nice if some of that debt could just go away?
Well, for PTs who make smart choices about where to practice, they may just qualify for a federal program offering student loan forgiveness for physical therapists.
Federal Student Loan Forgiveness Options for Physical Therapists
VA’s Education Debt Reduction Program (EDRP)
The U.S. Department of Veteran’s Affairs (VA) Education Debt Reduction Program grants student loan repayment up to $200,000 for qualified healthcare professionals. This incentive is only available to applicants filling specific, difficult-to-recruit patient care positions in a Veterans Health facility. The award amounts to up to $40,000 per year with a maximum reimbursement amount of $200,000 over five years.
Eligible loans include federal and private loans taken out to pay for your health profession degree. This includes money spent on tuition, fees, books, supplies, equipment and materials, and laboratory costs. It does not include your undergraduate loans.
Indian Health Service Student Loan Repayment Program
Physical therapists willing to work for two years at an Indian health program facility can apply for the IHS Loan Repayment Program. In exchange for a two-year commitment to working full time with American Indian or Alaska native communities, this program repays up to $40,000 in eligible health profession education loans. You can also apply to extend for an additional year in exchange for up to an additional $20,000 in loan repayment.
To apply for the program, you need to send in a copy of your university transcripts, a copy of your license to practice, employment verification, and loan documentation. American Indians or Alaska Natives who are members of federally recognized tribes receive priority consideration.
Qualified student loans include government or private loans taken out to cover your health professional education and related costs. This includes the cost of living, books, supplies, lab expenses, and tuition. It doesn’t include your undergraduate loans. If you consolidated all your loans together, only the amount that you can prove stems from your health profession education qualifies for repayment.
Payments received through the LRP are taxable. The LRP covers 20% of your tax liability, but you are responsible for the rest. It’s also worth noting that you cannot participate in the IHS LRP and another forgiveness program at the same time.
IHS Supplemental Loan Repayment Program (SLRP)
Indian Health Services also runs the IHS Supplemental Loan Repayment Program. Individual medical facilities and offices use this program to recruit and retain qualified health professionals. The award amount and contract obligation are specific to the job. Call the IHS LRP branch office at 301-443-3396 to learn about opportunities related to your field.
HRSA Faculty Loan Repayment Program (FLRP)
Interested in teaching aspiring physical therapists? The Health Resources and Service Administration sponsors a Faculty Loan Repayment Program that provides up to $40,000 in student loan assistance in exchange for a two-year service commitment to teach at an accredited, eligible health professions school.
To be eligible, you must:
- Be a U.S. Citizen, U.S. National, or Lawful Permanent Resident
- Be from an environmentally or economically disadvantaged background
- Have a degree in an eligible health profession—this includes physical therapy
- Have a full-time or part-time employment commitment from an eligible school
- Be free from any contractual obligation or existing service obligation with another loan repayment program by the time of the application submission deadline
Unfortunately, the FLRP won’t forgive all your student loans. Only the follow types of loans are eligible:
Government and commercial loans borrowed to pay for your physical therapy degree. This includes loans taken out to cover tuition, fees, reasonable educational expenses, and reasonable living expenses. It does not include loans borrowed for your undergraduate degree.
Consolidated educational loans as long as documentation is provided at the time of your application. Consolidated loans aren’t eligible if they include Parent PLUS loans, other types of debt, or your undergraduate loans.
Forgiven loan amounts are viewed as taxable income, but the FLRP assists with the tax liability by withholding 39% of the total loan repayment award and paying it directly to the IRS on your behalf. This way, you won’t be left with a big tax bill to pay come April.
The FLRP is a highly competitive program. In 2018, 164 eligible candidates applied but only 23 received an award. If you’re interested in the 2019 program, act fast. The next application deadline for this program is June 27, 2019.
Public Service Loan Forgiveness Program
Do you work for a government organization or a non-profit? If so, you’re likely eligible for the Public Service Loan Forgiveness Program. This program forgives up to 100% of your federal student debt if you work in a qualifying public service job. It doesn’t matter what you do; it just matters who you work for.
Physical therapists working full-time for the federal, state, or local government or a non-profit 501(c)(3) can participate. Select private non-profits delivering public services are eligible employers too, including military service, public health services, and public services for individuals with disabilities and the elderly.
Under PSLF, only direct subsidized/unsubsidized, direct consolidated loans, Direct PLUS loans, and Direct Stafford Subsidized/Unsubsidized loans are forgiven. Unlike other forms of student loan forgiveness for physical therapists, PSLF forgives your qualifying federal graduate and undergraduate student loans.
Qualifying for PSLF is simple in theory, but many have failed trying. You need to make 120 qualified payments on your loans, and they do not have to be consecutive. But your payments must meet strict requirements:
- Made after October 1, 2007
- Made on time—no more than 15 days after the due date
- Made in full—lump sum or advance payments do not count
- Made while you were employed full-time with a qualified employer
- Made under a qualifying repayment plan
For payments to count, you need to enroll in a qualified income-driven repayment program. This includes IBR (Income-Based Repayment), ICR (Income-Contingent Repayment), PAYE (Pay as You Earn), and REPAYE (Revised Pay As You Earn).
Once you’ve completed the correct number of payments, you can apply for the program. If approved, you’ll have all your eligible federal student loans forgiven. Best of all, the amount forgiven is not taxable, so you won’t face a hefty tax bill.
Potential Future Option—National Health Service Corps (NHSC) Loan Repayment
The National Health Service Corps incentivizes qualified medical professionals to work in a high-need area by offering student debt forgiveness. As of 2019, physical therapists are not yet eligible for the National Health Service Corp. Hopefully, that won’t be the case for long. Three U.S. Senators have introduced a bill that would expand the NHSC to include physical therapists. Learn more about the fight to include PTs in the NHSC program here.
If that bill or similar legislation passes, PTs would be eligible for the program and the accompanying loan forgiveness. Here’s what that would look like:
Accepted applicants would work in an NHSC-approved Health Professional Shortage Area (HPSA) site for a minimum of two years. The amount of money they receive toward paying off student loans depends on the level of need of the community they work in:
- HPSA Score of 14-26: Up to $50,000 for full-time workers; Up to $25,000 for halftime workers
- HPSA Score of 0-13: Up to $30,000 for full-time workers; Up to $15,000 for halftime workers
Employees who complete their two-year contract and still have qualifying loans can apply for a one-year continuation service contract, but the extension isn’t guaranteed.
Loans forgiven under the National Health Service Corps program are not viewed as taxable income, which means no unexpected tax bill for you.
What If I’m Not Eligible for Student Loan Forgiveness for Physical Therapists?
Not everyone working as a physical therapist will qualify for one of the forgiveness programs outlined above. Maybe you don’t want to move, or you work in or are planning to open a private practice. Whatever the case, you still have other options, namely private refinancing.
Refinancing your student loans won’t forgive them, but it can help you save a lot of money. At the very least, it can help make your monthly payments more manageable or get your cosigner off the hook. If you have a high credit score and steady income from your job as a PT, you’ll have no trouble securing the lowest interest rates and getting the terms you want.
To figure out if refinancing is right for you, compare the best student loan refinance rates and see how much you could save
Compare the Best Student Loan Refinance Rates
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Student Debt Relief Loan Refinancing Advertiser Disclosure
College Ave: College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
College Ave Refi Education loans are not currently available to residents of Maine.
1 – The 0.25% auto-pay interest rate reduction applies as long as the borrower or cosigner, if applicable, enrolls in auto-pay and authorizes our loan servicer to automatically deduct your monthly payments from a valid bank account via Automated Clearing House (“ACH”). The rate reduction applies for as long as the monthly payment amount is successfully deducted from the designated bank account and is suspended during periods of forbearance and certain deferments. Variable rates may increase after consummation.
2 – $5,000 is the minimum requirement to refinance. The maximum loan amount is $300,000 for those with medical, dental, pharmacy or veterinary doctorate degrees, and $150,000 for all other undergraduate or graduate degrees. Information advertised valid as of 04/26/2019. Variable interest rates may increase after consummation.
3 – This informational repayment example uses typical loan terms for a refi borrower with a Full Principal & Interest Repayment and a 10-year repayment term, has a $40,000 loan and a 5.5% Annual Percentage Rate (“APR”): 120 monthly payments of $434.11 while in the repayment period, for a total amount of payments of $52,092.61. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.
ELFI: Subject to credit approval. Terms and conditions apply. To qualify for refinancing or student loans consolidation through ELFI, you must have at least $15,000 in student loan debt and must have earned a bachelor’s degree or higher from an approved post-secondary institution.
LendKey: Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
CommonBond: Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown. All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate.
Splash Financial: Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval.com
Earnest: To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest’s fixed-rate loan rates range from 3.89% APR (with autopay) to 7.89% APR (with autopay). Variable rate loan rates range from 2.50% APR (with autopay) to 7.27% APR (with autopay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms of 10 years or less. For loan terms of 10 to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 0.26% and 5.03% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of April 23, 2019 and are subject to change based on market conditions and borrower eligibility.
Auto Pay Discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 04/23/19. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice.
Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 303 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, e-mail us at firstname.lastname@example.org, or call 888-601-2801 for more information on our student loan refinance product.