In the weeks since the Supreme Court shot down President Joe Biden's student loan forgiveness plan, borrowers across the country have been scrambling to figure out what is next before payments resume this fall for the first time in three and a half years.
This includes borrowers in Arkansas, where over 350,000 borrowers hold an average of over $34,000 each in debt.
And while mass student loan cancellation is no longer happening, borrowers in Arkansas still have multiple options to help earn some forgiveness.
Student loan forgiveness programs for Arkansans
Student loan borrowers in Arkansas have a couple of options for forgiveness across the state, plus the plethora of federal programs available. State options include:
State Teacher Education Program (STEP)
Out-Of-State Veterinary Medical Education Loan Repayment Program
1. State Teacher Education Program (STEP)
Arkansas' State Teacher Education Program - STEP for short - is a program offered by the Arkansas Division of Higher Education. Offering up to $6,000 per year in forgiveness towards your remaining student loan balance, STEP is available to teachers that:
Teach in a geographic and/or subject based teacher shortage area, as defined by the Arkansas Division of Higher Education (ADHE)
Have outstanding federal loans (private loans do not qualify)
Have been Arkansas residents for at least twelve months prior to the application deadline
Are citizens of the United States of America
Graduated from a teacher education program after April 2004
Program participants may reapply for two additional years, bringing their total forgiveness eligibility to three years and $18,000 in total.
Additionally, don't confuse this program with the Department of Education's Teacher Loan Forgiveness Program, which I will cover in more detail shortly.
2. Out-Of-State Veterinary Medical Education Loan Repayment Program
This next program is small in scope, but worth mentioning. ADHE has an Out-Of-State Veterinary Medical Education Loan Repayment Program designed for those that attended the Mississippi State University College of Veterinary Medicine and practice food supply veterinary medicine in Arkansas.
Eligible borrowers who meet these nuanced criteria may receive up to five years of loan assistance, though funding amounts are not posted online and may be funding specific each year.
Further eligibility requirements are similar to STEP, as you must be a United States citizen and resident of Arkansas. But you'll also need to practice food supply medicine and begin practicing it as it relates to veterinary medicine within 90 days after the completion of one of the following:
Your professional degree program
Your internship program
Both
Federal forgiveness options in Arkansas
Borrowers in The Land of Opportunity may also opt to participate in one of the United States Department of Education's federal programs, including:
Income-Driven Repayment
Public Service Loan Forgiveness
Perkins Loan Cancellation
Teacher Loan Forgiveness
1. Income-Driven Repayment (IDR)
Since REPAYE was launched back in 2015, there have been four different income-driven repayment plans for borrowers to choose from, including:
Income-Contingent Repayment
Each of these plans required borrowers to make monthly payments worth 10-20% of their monthly discretionary income for a period of 20-25 years, depending on the plan.
But starting in late summer 2023, there is a new income-driven repayment plan, the SAVE plan, which will lower borrower discretionary income requirements to 5% and open up the potential to lower terms depending on borrower outstanding balances.
Those on REPAYE will begin to be transitioned over to the new SAVE plan, and in time, the other three IDR plans will be phased out as well.
2. Public Service Loan Forgiveness (PSLF)
Additionally, those Arkansas borrowers working for federal, state, local, or tribal governments, or for a qualifying 501(c)(3) nonprofit organization may be eligible to pursue forgiveness through the Public Service Loan Forgiveness (PSLF) program.
PSLF is awesome for those that qualify. Here's how it works:
You'll join one of the IDR plans I mentioned a minute ago.
You'll make 120 qualifying (reduced) monthly payments, but these payments don't need to be consecutive.
Then, 100% of your qualifying federal debt will be forgiven.
It can be tricky to qualify for PSLF, though, so make sure you check out our full PSLF guide for a full list of eligibility requirements and information about how to apply!
3. Perkins Loan Cancellation
Perkins Loan Cancellation is another option for Arkansans with outstanding Federal Perkins Loans. Though this loan type was discontinued in September 2017, thousands of borrowers nationwide still owe money on them.
But those that work in public service type careers may be able to get 100% of these loans forgiven over five years, according to the following schedule:
15% cancellation after years 1 and 2
20% cancellation after years 3 and 4
30% cancellation after year 5
4. Teacher Loan Forgiveness
If, for some reason, you're an Arkansas teacher but don't qualify for the state's STEP program, the federal Teacher Loan Forgiveness program may be a good option for you. Offering either $5,000 or $17,500 in loan repayment assistance, those that qualify for the largest amount will teacher special education, mathematics, or science.
For teachers to participate in the Teacher Loan Forgiveness program, they'll need to:
Teach five consecutive and complete school years, at least one of which had to occur after the 1997/1998 school year
Have eligible Federal Direct or Stafford Loans
Be a fully licensed teacher (not working under any emergency waiver or similar program)
Teach at a low-income school
Other forgiveness programs available in AR
There are a few more programs that borrowers across Arkansas should be familiar with, but they are career based in nature. Additionally, they are offered nationally, but not through the United States Department of Education.
These programs include:
NHSC Loan Repayment Program
Students to Service
Nurse Corps Loan Repayment Program
1. NHSC Loan Repayment Programs
The NHSC Loan Repayment Program could be a good option for licensed primary care clinicians willing to work within a Health Professional Shortage Area (HPSA). There are actually three different programs here to consider, including:
NHSC LRP
NHSC Substance Use Disorder (SUD) Workforce LRP
NHSC Rural Community LRP
Each of them requires you to agree to at least a 2-year service commitment.
NHSC Loan Repayment Program
Licensed medical, mental health, dental, and behavioral health providers willing to work in federally designated HPSAs could be perfect fits for this program. Eligibility is fairly open and includes those with the following degrees/designations:
MD
DO
PA
NP
DDS
DMD
HSP
LCSW
PNS
MFT
LPC
CNM
A more all-encompassing list can be found through the NHSC LRAP's website. Other qualifying factors are pretty straightforward. For example, you'll need to:
Be a United States citizen
A provider for Medicare, Medicaid, and/or Children's Health Insurance Program (CHIP) patients
Fully trained and licensed to practice in Arkansas
You can earn up to $50,000 in forgiveness for two years of full-time service, and up to $25,000 in exchange for two years of part-time service.
Substance Use Disorder (SUD) Workforce LRP
Qualifying mental health and substance abuse providers may be able to earn up to $75,000 in assistance over an initial three-year service commitment. Eligibility for the NHSC SUD Workforce LRP award is reserved for qualifying providers willing to practice in underserved medical areas at qualified substance abuse sites.
Designed to help combat the opioid epidemic, many of the eligibility requirements are the same as the main program.
NHSC Rural Community LRP
Arkansas healthcare providers may also consider the Rural Community LRP.
In fact, if you work in an NHSC approved site and provide outpatient services, you may already qualify. The program is very similar to the others offered by the NHSC.
2. Students to Service
Students in their last year of medical, nursing, or dental school may also be eligible for one additional NHSC program: Students to Service.
The Students to Service program awards up to $120,000 over four years to those who agree to provide at least three years of full-time clinical practice at an NHSC approved site within an HPSA.
Your practice requirement is a full-time commitment, for 40 hours per week and at least 45 weeks per year.
Additionally, after your contract expires, you can apply for continuation contracts to earn even more loan forgiveness.
3. Nurse Corps Loan Repayment Program
Finally, registered nurses (RNs), advanced practice registered nurses (APRNs), and nurse faculty members (NFs) may be able to receive up to forgiveness equal to 60% of their total outstanding nursing education loans over a two-year period.
With the possibility to add on a third year and earn a remaining 25% nursing loan forgiveness, the program can be lucrative.
To qualify, you'll need to:
Agree to work for two years (full-time) in either an accredited school of nursing or a critical shortage facility
Be an RN, APRN, or NF
Have attended nursing school at an accredited school in a U.S. state or territory
Is student loan forgiveness taxed in Arkansas?
Generally, student loan forgiveness benefits are eligible to be taxed at the state level in Arkansas (and treated as taxable income), though this could change in the future. Before President Biden's mass student loan cancellation was shot down by the Supreme Court in June 2023, this was a hotter topic, as it would have impacted thousands more Arkansans in short order.
While not a deal breaker, a state forgiveness tax is something that you'll need to prepare for. Consider an individual that receives $25,000 in loan forgiveness through an income-driven repayment plan.
Given Arkansas' state income tax brackets expand up to 4.7%, in this example, you could be on the hook to cover a $1,175 tax bill the next time you file.
Conclusion
While borrowers in Arkansas won't be receiving $10,000 in student loan forgiveness from the federal government, there are still plenty of options to consider. Which of these programs have you heard of, and which of them would you consider using in the future?
Let me know in the comments below!
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