Kentucky is well regarded as one of America’s most beautiful states. It is nestled by the Ohio River to the North, and it is home to natural features including beautiful farmland, rolling hills and impressive natural water features. Part of what makes Kentucky so interesting is its blend of Midwestern culture and southern hospitality.
Unfortunately, Kentuckians have not been immune to our nation’s student debt crisis. In fact, according to Education Data, the average student loan borrower in Kentucky owes nearly $33,000, as of July 2022. And while this figure may change due to broad based student loan forgiveness, there will still be many indebted borrowers across the Bluegrass State.
Luckily, borrowers across KY are not alone in their still loan repayment. Kentucky borrowers are eligible for some state and federal student loan forgiveness programs.
This post will focus on those programs.
Student loan forgiveness in Kentucky
Student loan borrowers in Kentucky have access to the full gambit of the Department of Education's and other agencies' federal and state forgiveness programs, including:
Public Service Loan Forgiveness
Teacher Loan Forgiveness
Perkins Loan Cancellation
NHSC Loan Repayment
Income-Driven Repayment
Kentucky Student Loan Repayment Program (SLRP)
1. Public Service Loan Forgiveness (PSLF)
Eligible Kentucky borrowers with outstanding Federal Direct Loans may benefit from using the PSLF program. Public Service Loan Forgiveness forgives all eligible outstanding federal debt after the borrower makes 120 qualifying payments on a federal income-driven repayment program.
Qualifying IDR plans include Income-Based Repayment, Income-Contingent Repayment, Pay as You Earn, and Revised Pay as You Earn. In addition to loan and repayment eligibility criteria, you will also need to meet the following criteria:
Serve in a qualifying job role - Qualifying jobs includes work in public service, work for 501(c)(3) nonprofits and employment by any local, state, or federal government agency, excluding Congress.
Work full-time - You'll need to work for a minimum of 30 hours per week in your qualifying role.
Each year you are enrolled in the program, you'll also need to complete an employment certification.
2. Teacher Loan Forgiveness (TLF)
Teacher Loan Forgiveness is an option for Kentucky educators that meet the following criteria:
Are full-time teachers for a minimum of five consecutive academic school years
Are employed at title one schools or schools that serve low income students
Have at least a bachelor’s degree
Are fully certified as a teacher
Work a classroom job
The amount of forgiveness that the TLF program can provide you depends on the subject that you teach. Those that teach mathematics or science at the secondary level may receive up to $17,500. Special education teachers at both the elementary and secondary levels also qualify.
Teachers of all other subjects may be eligible for up to $5,000 of forgiveness.
3. Perkins Loan Cancellation
Those with outstanding federal Perkins Loans may be able to have them cancelled over a period of five years. Perkins Loan Forgiveness was started as a way to reward those who work in eligible employment and volunteer roles.
The program may be used bye those that work in the following types of careers:
Law enforcement
Firefighters
Public defenders or attorneys
Faculty members at tribal colleges and universities
Librarians at title one schools
Speech pathologist at title one schools
And others too
Some volunteer organizations also carry partial eligibility. For example, working as a Vista or Peace Corps volunteer could lead to up to 70% of your Perkins Loans being forgiven.
Other than working in an eligible career and having outstanding Perkins Loans, the forgiveness program is pretty simple to understand. You will receive 15% forgiveness after your first and second year, 20% forgiveness after your third and fourth year, and the final 30% forgiveness after your 5th year.
4. NHSC loan repayment
Kentuckians may also be eligible for repayment assistance through the National Health Service Corps. The NHSC actually has three programs for health care providers, carrying two or three-year service commitments in exchange for 50,000 to $100,000 of student loan forgiveness.
Eligible providers include physicians, physician assistants, nurse practitioners, certified nurse midwives, dentists, dental hygienists, psychologists, licensed clinical social workers, therapists, and counselors.
You’ll need to work within in HPSA area of Kentucky. Just make sure that you do your homework to determine whether pursuing NHSC Loan Repayment or the Kentucky State Loan Repayment Program is more advantageous for you. More on the KY SLRP in a moment.
5. Income-Driven Repayment
You may also opt to participate in one of the government's income-driven repayment plans. These plans, which carry extended repayment terms of 20 to 25 years, reduce your monthly payments based on a formula that takes into account your household income, size, and location.
Over the 20 to 25 years, you may pay off your balance, at which point you are debt-free, or you may not. But once the term is up, the remaining balance is forgiven. And while it will not be the case until 2026 at the earliest, forgiveness received under an IDR plan may be treated as taxable income.
6. Kentucky State Loan Repayment Program (SLRP)
Kentucky's only state-sponsored forgiveness program, the State Loan Repayment Program (SLRP) is a program specifically for primary care healthcare professionals. In exchange for two years of full-time employment at a federally designated Health Professional Shortage Area (HPSA), qualifying professionals may receive up to $100,000 in student loan forgiveness.
The program is open to:
Physicians
Physician Assistants
Nurse Practitioners
Certified Nurse Midwives
Registered Nurses
Dentists and Dental Hygienists
Pharmacists
Alcohol/Substance Abuse Counselors
SLRP eligible sites
To retain eligibility for Kentucky's State Loan Repayment Program, you'll need to practice in a qualifying site. Among these sites are FQHCs and RHCs, but there are others too, including correctional facilities, CMS sites, and more.
Many Americans associate HPSAs with only rural settings, but healthcare provider shortages can occur just about anywhere.
Thus, other eligible practice sites may include schools, state facilities or clinics, jails or prisons, and more sites.
Forgiveness amounts
The amount of forgiveness you are eligible for depends on what type of provider you are.
Physicians, dentists, and pharmacists qualify to receive up to the maximum of $100,000. Physician Assistants, Nurse Practitioners, Nurse Midwives, and mental health providers may earn up to $60,000 in loan repayment assistance. Finally, registered nurses, dental hygienists, and substance abuse counselors are eligible for $40,000 in forgiveness.
Applying for the Kentucky State Loan Repayment Program
Your provider application requires about seven pages of work, but you'll also need to have your provider site apply if they have not participated in the program before.
Unlike many other applications out there, you'll need to provide the state with references, affirm that all of your eligibility criteria, and respond to an essay question about working with underserved populations across the state.
Each year, you'll want to have your application in by September 1st.
In our opinion, you're going to want to leave plenty of time to complete this application, as it is more detailed than similar programs in other states. Make sure that you leave time to talk to your potential references and ask them if it is okay to include their contact information.
You'll also want to pay special attention to the obligations of the program. And while the application is not a final commitment to participate, you will owe your forgiven balance back if you are accepted and break your commitment to the state of Kentucky.
Which KY forgiveness program is best?
With these six options available to Kentucky residents, you're probably wondering which of these programs is best for you. And well, the answer depends on a number of variables, like:
What you do for a living
How much money you make
1. What you do for a living
The largest catalyst to determining what forgiveness program is best for you is what you do for a living. For example, those working for the government or qualifying nonprofit will likely want to pursue PSLF as a first option, as it can forgive 100% of your qualifying debt.
Likewise, qualifying healthcare workers will likely want to take a close look at the KY SLRP.
2. How much money you make
Finally, your income will also play a role in determining your best forgiveness option. If, for instance, your household income, far exceeds 150% of the poverty line in Kentucky, then the income-driven repayment plans may not be a good option for you, since your payments are unlikely to materially decrease.
And while this is just one example, you can see how your income can play a large role in what forgiveness program makes the most sense for you.
All this said, I encourage Kentucky borrowers to pursue PSLF if they qualify, the KY SLRP if a healthcare worker, and income-driven repayment if it cuts your monthly payments by at least 30%.
Get our student loan calculator
Those pursuing student loan forgiveness in KY will want to download our free student loan calculator. This tool will help you to compare your projected monthly payments, forgiveness balances, and debt-free year on the following forgiveness and alternate repayment plans:
Standard Repayment
Income-Based Repayment
Pay as You Earn
Revised Pay as You Earn
Public Service Loan Forgiveness
Federal Consolidation
Private Refinancing
The calculator is comprehensive and the perfect tool for those in Kentucky. Using it has many potential benefits, including:
The ability to save you thousands (potentially tens of thousands) of dollars by choosing a better student loan strategy
Helping you to decide whether refinancing may be a good idea for you
Furthering your knowledge of alternate student loan strategies
Consider private refinancing
No matter how many programs there are, student debt forgiveness won't be a feasible options for some Kentuckians - and that's okay. If, for whatever reason, you decide not to pursue federal or state repayment assistance, you'll likely want to consider refinancing your loans, especially if you already have private student debt.
Refinancing oftentimes helps you find lower interest rates, alter your repayment term, and save money and/or get out of debt sooner.
Americans oftentimes wonder how to start the refinancing process. If you are going to rate shop, remember to do so within a narrow window so that your credit score is only impacted once.
You may also consider starting with a marketplace like Splash Financial or LendKey. Both companies have networks of participating lenders that they'll search for your lowest rate. The best part of using Splash is that you can rate check in less than 3 minutes without impacting your credit score!
Student loan forgiveness in other states
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