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  • Writer's pictureNathan Zarcaro

5 Paths to Physical Therapy Loan Forgiveness in 2024

Updated: Dec 20, 2023


Physical therapists have one of the most important jobs out there. Helping others to rehabilitate injuries and regain quality of life can be incredibly rewarding, and PTs tend to be compensated well for their work.


The avergae physicial therapist earned $95,620 in 2021, according to US News. Unfortunately, though, the typical PT also has over $142,000 in student loan debt.


Luckily, PTs do have some options to earn student loan forgiveness. Here are 5 forgiveness programs and other repayment options for physical therapists to consider.




Physical therapy student loan forgiveness


Physical therapists may decide among the following programs::


  1. Public Service Loan Forgiveness

  2. Income Driven Repayment

  3. HRSA Faculty Loan Repayment

  4. VA Education Debt Reduction Program (EDRP)

  5. Indian Health Service Loan Repayment Program



1. Public Service Loan Forgiveness


Public Service Loan Forgiveness - PSLF - may be the most lucrative student loan forgiveness program out there.


It may forgive 100% of your remaining, qualifying federal student loan debt after ten years on a qualifying income-driven repayment plan if you meet these requirements:


  • Work for a qualifying employer: PSLF participants generally must work for a qualifying 501(c)(3) not for profit or the federal government in order to be eligible.

  • Make 120 qualifying payments: On one of the four IDR plans below

  • Have qualifying student loans: Borrowers must have qualifying federal loan types to qualify. Generally, they must be a part of the Federal Direct Loan Program to qualify, though non-Direct Loans can oftentimes be made eligible via a Direct Consolidation Loan.


Qualifying physical therapists must also submit a PSLF Employment Certification Form annually.


Finally, any forgiveness granted through the program is federally tax-free.



2. Income-Driven Repayment


Under an IDR program, borrowers will pay a percentage of their discretionary income (typically 5-20%) each month for 10 to 25 years. Once the term of the plan expires the remainder of your student loan debt is forgiven.


This can create what is known as the tax bomb as your forgiven balance may be treated by the federal government as taxable income in the year the forgiveness is granted.


Your discretionary income is the difference between your adjusted gross income and either 150% or 225% of the federal poverty line (depending on which IDR plan you use) for your household size and location.


Here is a list of all active income-driven repayment plans to consider:


  • Income-Based Repayment (IBR): Depending on the disbursement date of your loans, you'll pay either 10% or 15% of your discretionary income for 20 or 25 years in total.

  • Income-Contingent Repayment (ICR): The least favorable of all IDR options, physical therapists will pay the lesser of 20% of your discretionary income for 25 years, or your fixed payment on a 12 year term.


  • Pay as You Earn (PAYE): Qualifying PTs will pay 10% of their monthly discretionary income for 240 months over 20 years.


  • Saving on a Valuable Education (SAVE): The replacement for the retired REPAYE program, borrowers will pay 5-10% of their discretionary income per month for 10 years to earn forgiveness. Whether you'll pay 5% or 10% depends on the types of loans you have.



3. HRSA Faculty Loan Repayment (FLRP)


The Faculty Loan Repayment Program is available to PTs willing to serve and teach at an eligible health professions school across the country.


Applicants to the FLRP must:


  • Come from a disadvantaged environmental or economic background

  • Be a fully licensed physical therapist with an eligible degree

  • Have at least a two year contract as a faculty member at an approved institution


In exchange for two years of service, you'll receive up to $40,000 in student loan forgiveness, plus additional funding to offset any tax burden you may incur as a result of the forgiveness.



4. VA Education Debt Reduction Program (EDRP)


The VA Education Debt Reduction Program (EDRP) is a reimbursement program available to those who work in difficult to recruit job positions within direct patient care.


PTs qualifying for the EDRP may receive up to $200,000 in loan forgiveness over a five year period - $40,000 per year.


To be eligible, you'll need to:


  • Earn a degree from an accredited college or institution

  • Have Incurred student loan debt pursuing education in the field you now work in

  • Maintain a satisfactory job performance



5. Indian Health Service Loan Repayment Program


Physical therapists may also use the Indian Health Service Loan Repayment Program (IHS LRAP) to earn up to $25,000 per year in forgiveness. With a total potential forgiveness amount of $50,000, PTs will need to complete a two year service commitment within a health facility that serves predominantly Alaska Native or American Indian communities.


The really cool part about the program is that PTs with more than $50,000 in debt may extend their contracts on a year by year basis until all of their student loan debt is repaid.


Deadlines for monthly award cycles occur on the 15th of every month.



Applying for physical therapist student loan forgiveness


Though every student loan forgiveness program is different, many of the application processes require you to complete similar steps. When applying to any of the programs listed above, you'll likely need to verify your eligibility.


Attesting may be enough to proceed to the application phase, but most programs will ask for the following at some point in the process:


  • A series of recent loan statements

  • Proof of income and employment

  • Financial/investment statements (for programs based on economic background)


Now, certain programs may not ask for all of this documentation, but it is a good idea to have all of it on hand anyway. Either way, you'll soon be able to complete your application, which may ask for supplemental information like:


  • An essay or statement

  • Career/employer information

  • Other details about your life or background


After verifying your eligibility and completing your application, you'll sit back and wait to hear if you've been accepted to participate.



Other student loan strategies for physical therapists


If student loan forgiveness isn't an option for you, there are other options to help you in your repayment. You may consider refinancing or consolidation.



1. Refinancing


Outstanding student loan debt that doesn't qualify for any forgiveness program may be refinanced to the lower interest rate to save money. The refinancing process may require you to pick a new lender and or new term, but could save you up to $100 or more per month.


Much like buying a home, the interest rate you receive will depend upon your credit, your income whether you have stable employment, and other economic factors.


We recommend that you rate check with multiple lenders while searching for refinancing deals to ensure that you end up with a competitively low interest rate.


Just be careful that you don't refinance any federal loans that would have qualified for forgiveness, since the process can't be undone. Typically, physical therapists with Federal Direct Loans will want to exhaust all other options before considering refinancing.



2. Consolidation


We've already talked about the student loan consolidation process a bit. PTs may consolidate their federal loans via a Direct Consolidation Loan in order to qualify for income-driven repayment or otherwise simplify their loan situation.


Federal consolidation by itself won't save you any money, but using it to qualify for some sort of other program will.



Conclusion


While physical therapists tend to incur well over $100,000 in student loan debt in college and graduate school, they have at least five unique student loan forgiveness programs to consider, in addition to any other state or local programs they may qualify for?


Are you a physical therapist seeking student loan forgiveness? Tell us more about your situation in the comments below or schedule your own consult with our partners over at Student Loan Planner!



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About Nathan Zarcaro

Nathan Zarcaro is the founder of The Student Debt Destroyer and is passionate about personal finance related causes.  A 2018 graduate of Providence College's Liberal Arts Honors Program, Nathan studied Finance, and has worked for industry leaders in both finance and healthcare.  In his free time, Nathan enjoys playing golf and traveling with his wife Brigid.

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