A Nurse’s Guide to Student Loan RefinancingMay 14, 2020
Updated May 4, 2023
As the COVID-19 pandemic has highlighted, nurses play a critical role in our healthcare system, caring for patients, coordinating treatments, and keeping detailed records.
The demand for skilled nurses is only going to grow. According to the U.S. Bureau of Labor Statistics, the job outlook for registered nurses is projected to increase by 9% by 2030. And, nurses can command high salaries. As of 2021, the median salary for registered nurses was $77,600 per year, which is higher than the median wage for all occupations, which is just $58,260.
While you likely had to take out student loans to pay for your nursing education, your higher-than-average income makes you a strong candidate for student loan refinancing. Consolidating your debt can allow you to save money and pay off your loans sooner so that you can focus on your other financial goals.
Why You Should Refinance Student Loans After Nursing School
Becoming a registered nurse typically requires only a bachelor’s degree. But if you want to become an Advanced Practice Nurse, nurse administrator, or nurse educator, you’ll need a master’s degree.
Graduate student loans tend to have higher interest rates than other types of education loans, causing more interest to accrue and your loan balances to grow over time. For example, the interest rate on federal Grad PLUS Loans disbursed between July 1, 2022, and July 1, 2023, is 7.54%.
If you have high-interest debt, refinancing can help you tackle your loans and lower your interest rate. With a solid income as a nurse and a good credit history — or a cosigner willing to apply for a loan with you — you can qualify for a lower rate and save money over the life of your repayment term.
How to Refinance Nursing School Loans
You can refinance your nursing school loans in just five steps:
1. See If You Meet the Lender’s Eligibility Requirements
Refinancing lenders all have their own borrower criteria, so it’s a good idea to review their requirements ahead of time to ensure you’re eligible for a loan. At Education Loan Finance, you must meet the following conditions:
- You must have at least $10,000 in student loans
- You must earn at least $35,000 per year
- Your credit score must be 680 or higher
- Your credit history must be at least 36 months old
- You must a bachelor’s degree or higher from an approved college or university
- You must be a U.S. citizen or permanent resident
- You must be the age of majority — 18 years old, in most states — or older
- You must have a debt-to-income ratio low enough that you can afford your monthly loan payments
2. Consider Asking a Cosigner for Help
When you apply for a refinancing loan, the lender will perform a credit check. If you don’t have an extensive credit history, or if your credit score is too low, you may not be able to qualify for a loan on your own, or you may not qualify for a competitive interest rate.
However, there is a workaround — you can add a cosigner to your loan application. A cosigner is a parent, relative, or friend with good credit who signs the loan application and assumes responsibility for the loan if you fall behind on the payments. Having a cosigner increases your odds of the lender approving you for a loan and qualifying for a lower rate.
3. Get a Rate Quote
To find out what kind of loan terms you can get, use ELFI’s Find My Rate tool. By entering basic information about yourself, you’ll get an estimated rate in just a few minutes without affecting your credit score.*
You can see how different factors, like loan terms and choosing a variable or fixed interest rate, can affect your monthly payment and total repayment amount.
4. Gather Documentation
Once you find a loan that works for your budget, you can move forward with the loan documentation. To speed up the process, make sure you have the following documents on hand:
- Recent pay stub or proof of employment
- W-2 forms
- Tax returns (if self-employed)
- Government-issued ID, such as a driver’s license
- Loan account information, such as loan servicer name and account number
- Current loan billing statement or payoff letter
5. Submit Your Loan Application
To complete the application, you’ll have to enter personal information about yourself, including your address, birthdate, and Social Security number. You’ll also have to include information about your employer and income.
Once you submit the application, ELFI’s team will review the form and contact you with either an approval or denial. Until the loan is approved and disbursed, continue making payments to avoid late fees and penalties.
6 Other Options for Managing Your Loans
While student loan refinancing can be a smart way to pay down your loan balance and save money, it may not be right for you. If you decide against refinancing your education debt, there are alternative strategies for managing your loans.
1. Nurse Corps Loan Repayment Program
Under the Nurse Corps Loan Repayment Program, the Health Resources and Services Administration (HRSA) will pay up to 85% of your unpaid nursing education debt. In exchange, you must commit to working for at least two years in a critical shortage facility or serve as nurse faculty in an eligible school of nursing. For more information about HRSA, visit the HRSA website, or click here to learn more about student loan forgiveness for nurses.
2. Public Service Loan Forgiveness (PSLF)
If you work for the government or a non-profit organization, such as some hospitals, you may be eligible for medical school loan forgiveness through PSLF. Under PSLF, the government will forgive your federal loans after you work for an eligible employer for ten years while making 120 qualifying monthly payments.
To find out if your employment and loans are eligible for loan forgiveness, use the PSLF Help Tool.
3. State Student Loan Repayment Assistance Programs
To recruit nurses to work in areas with shortages of healthcare workers, some states offer student loan repayment assistance programs in return for work commitments.
In Florida, nurses can receive up to $4,000 for every year they work at a designated employment site or facility. Eligible nurses can participate in the program for up to four years, and get up to $16,000 in loan repayment assistance.
To find out if your state offers a similar program, visit your state’s department of health or education websites.
4. Income-Driven Repayment Plans
If you took out federal student loans to pay for your undergraduate or graduate degrees and can’t afford your current monthly payments, you might be eligible for an income-driven repayment (IDR) plan. With an IDR plan, your loan servicer will extend your repayment term and base your payment on your family size and discretionary income.
Federal loan borrowers can apply for an IDR plan online.
5. Use Your Sign-On Bonus to Make Extra Payments
Depending on your location, you may be eligible for a sign-on bonus. In some areas, nurses are in high demand, and understaffed hospitals and healthcare companies offer sign-on bonuses to attract talented nurses to work for them. You could qualify for a bonus of $10,000 or more on top of your regular salary.
According to AdventHealth, a major hospital network, sign-on bonuses for nurses aren’t usually issued as upfront payments. Instead, they’re broken up into installments over a service period, such as four payments over two years. But if you use those payments to make extra payments on your student loans, you can save money on interest and pay off your debt early.
You can find nursing jobs that offer sign-on bonuses on Indeed.
6. The Student Loan Forgiveness for Frontline Health Workers Act
On May 5, 2020, Rep. Carolyn Maloney, a Democrat in New York, introduced the Student Loan Forgiveness for Frontline Health Workers Act. If passed, this bill would discharge all federal and private loans belonging to healthcare workers who interacted with COVID-19 patients, including doctors, nurses, and technicians.
The bill’s future is unclear, but it does signal that there is growing pressure on lawmakers to help healthcare workers — especially those on the frontlines of the pandemic — pay down their student loan debt.
Repaying Your Student Loans
As a nurse, your career is taxing enough; don’t let your student loans weigh you down. Student loan refinancing can give you significant relief from your debt. You can save money, pay off your debt, and even lower your monthly payment.
To find out how much you can save, use the student loan refinance calculator.*