I Want To Provide Student Loan Repayment Assistance To My Employees

How to Build a Student Loan Repayment Assistance Program for Registered Nurses

Nursing is the fastest-growing job field in the nation.  An essential role in the healthcare industry, the occupation provides excellent opportunities for employment and growth.  There are multiple pathways of education for nursing candidates.  In order to become a registered nurse (RN), a bachelor’s degree or associate degree is typically required.  Some candidates earn their diploma from certified nursing programs that are either offered in an on-campus format, online, or some combination of the two.

There are also graduate level options available such as a Master’s Degree in Nursing (MSN), a Doctor of Philosophy in Nursing (Ph.D.), or a Doctor of Nursing Practice (DNP).  After successfully completing the program of study – which includes courses in anatomy, nutrition, and chemistry – candidates must them pass the National Council Licensure Examination (NCLEX-RN) to obtain their license to practice.

The cost of a nursing education

The cost of education to become an RN varies according to the pathway taken by the candidate.  To become an ADN, the average cost for the two-year program is $31,000 according to Nurse Journal.  Because of the relatively low cost of this route, many candidates choose the associate degree route; however, their job prospects upon graduating are limited.

The costs associated with becoming a nurse practitioner are far greater.  According to The College Investor, a four-year bachelor’s degree program can cost anywhere from $40,000 to $200,000 depending on the school.  Although nurse practitioners can earn a good living, their student loan payments can approach nearly 25% of their income.  It is not uncommon for nurse practitioners to join the 40% of student borrowers who default on their student loan payments.

Understanding the full picture of nursing student loan debt

As an employer, it is important to understand the unique challenges that nurse employees face in paying back their student loans.  This will enable you to build a comprehensive benefits program that addresses the specific needs of the employee.  It is worth re-emphasizing that there is no one single answer to the issue of student loan debt.  In order to make a lasting positive impact on the lives of its employees, employers are encouraged to take a multi-faceted approach to the issue.

Step One: Qualifying for PSLF

The first step in designing an effective benefits program is to determine whether the employee qualifies for Public Service Loan Forgiveness (PSLF).  The PSLF Program forgives the student loan balance after 120 monthly payments are made while working full-time (a minimum of 30 hours per week) for a qualifying employer.  Qualifying employers include governmental organizations, not-for-profit organizations that are tax-exempt under section 501(c)(3) of the IRS Code, and other not-for-profit organizations that provide qualifying public service as their primary function.

Additionally, the types of loans that qualify for PSLF are limited to:

  • Direct Subsidized/Unsubsidized
  • Direct Consolidated Loans
  • Direct PLUS
  • Direct Stafford Subsidized/Unsubsidized

Private loans, loans in default, and other types of federal loans not listed above do not qualify for PSLF.  However, if the employee has federal loans that do not qualify for PSLF, they are strongly encouraged to convert them into Direct Loans through the Direct Loan Consolidation program so that they can qualify for PSLF.

Step Two: Reducing Monthly Payments

The next step in the process is to reduce the monthly payments using a PSLF Qualified Repayment Plan.  In order for a payment to count towards the 120 monthly payments needed for PSLF, they need to be made under one of the qualified income-driven repayment programs provided by the federal government.  There are several programs to choose from, including an Income-Based Repayment (IBR) program, an Income-Contingent Repayment (ICR) program, a Pay As You Earn (PAYE) program, and a Revised Pay As You Earn (REPAYE) program.

Step Three: Refinancing private loans

The good thing about these programs is that they calculate payment requirements based on income rather than the total amount owed.  The whole point of the program is to set manageable payments that are feasible for the employee.  In some cases, the payments can be as low as $0.00 per month, and even those “payments” count towards the 120 payments needed for forgiveness.  After reducing monthly payments, the employee is encouraged to review their private loans to see if the terms of those loans can be improved.  Refinancing those loans can be beneficial.

Beyond those income-driven repayment plans, there are also special programs designed to help those entering the nursing field pay back their student loans.  Many of these programs, like the U.S. Department of Health and Human Services Repayment Program or the NURSE Corps Loan Prepayment Program, require a two to three-year time commitment to a healthcare facility located in a critical or underserved area.

Structuring your benefits program

Now that the loans themselves have been reviewed, consolidated, and the monthly payments reduced, you’re ready to design your LoanBenefits Student Loan Assistance Program.  Employers should structure their program based on the desired outcome of the program: recruitment, retention, and engagement.

Structuring for recruitment

If the employer is a PSLF qualifying employer, limiting the scope of the program to cover only full-time nursing employees may be an effective recruitment-focused structure since only full-time nurses are eligible for forgiveness.  Because employment rates are relatively low on a national level, it may be beneficial to implement a program to incentivize relocation of nursing candidates from a different market, from a specific competitor within the same market, or from a specific nursing school.

Structuring for retention

If the employer is concerned with retaining nursing employees, a tenure eligibility structure can be beneficial.  The employee will become eligible to receive the benefit once they have been with the healthcare company for a certain amount of time.  Additionally, the employer can incrementally increase the contribution amount each year that the employee remains with the company, thereby ensuring a consistent level of engagement with the program over time.

Structuring for engagement

In order to engage the current workforce, employers can implement a performance-based eligibility structure.  The LoanBenefits Student Loan Assistance Program can be structured around the key performance indicators (KPIs) within the nursing field.  Measuring the quality of nursing care can be tricky, but there are some fundamental indicators to consider.  In many cases, healthcare companies monitor the improvement of the patient experience.  For example, employers can use the following indicators to measure performance for the purposes of eligibility: rates of healthcare-associated infections, the incidence of falls, medication errors, patient surveys, direct observation of practice, the incidence of complaints, and other performance metrics used in the normal course of business.

The financial impact on participating nurse employees

According to the Bureau of Labor Statistics, the average annual salary for an RN in 2017 was approximately $70,000, or $33.65 per hour.  Simultaneously, a 2016 survey cited by the American Association of Colleges of Nursing (AACN) reports that the average graduate-level nursing student expects to emerge from their program of study with up to $55,000 worth of loan debt.

Let’s consider the following scenario.  A nursing graduate enters the workforce with $55,000 worth of student loan debt.  They work for a non-profit qualified employer under the PSLF Program guidelines.  Their monthly payments are calculated at $632.94.  With an interest rate of 6.8% and a LoanBenefit contribution amount of just $100 per month, they would pay off their loan balance in just under 100 payments, or in about 8 years.  A total contribution amount of $9,800 allows the employee to pay off their student loan debt nearly 2 years earlier than expected.

The final puzzle piece: educational resources

In building a complete and comprehensive benefits package, LoanGifting encourages employers to implement a system of ongoing support to guide the employee throughout their loan repayment program.  If the employee qualifies for PSLF, the status of their repayment plan should be reviewed at least once a year.  Not only does this enable employees who participate in the benefits program to feel more empowered with their personal finances, but it also engages them more effectively with the program itself.  As we have seen, a more engaged employee is one who is more likely to stick around.

I’m a 32-year-old writer based out of San Antonio, Texas, with my own mountain of student loan debt to conquer.  When I’m not working, I’m either out for a run on the trails or chilling at home with my rescue dog, Vincent (for Van Gogh, my favorite painter).  I like to eat (a lot), read (I’m a real horror junkie, with Stephen King topping my list of favorite writers), watch movies (Titanic – yes, Titanic – is the be-all and end-all for me), drink wine (red only, please), travel (Italy has my heart and always will), collect crystals, meditate, and read tarot cards.  Perpetually single, but a softie deep down, I try to stay true to my hippie heart and find the good in every person and situation.  I remain curious and open to learning new things (except for math which, I am convinced, will always be my downfall).  If I can answer any questions about my work here on student loan debt and repayment assistance programs, feel free to shoot me an email.  I don’t bite (usually).  [email protected]

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