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Discussion

Student Loan Repayment Programs...is it worth it?

Hi everyone,

I was hoping to get some feedback on a decision I'm trying to make.

I am going to go to a Cal State University to get my bachelor's in Nursing, I'll need about $30,000 in direct Stafford loans to get my degree in approx 2 years (ABSN programs).

My goal is to work for 1.5-2 yrs in a specific department/floor to specialize and then do travel nursing.

I know that there are lots of public service repayment programs for nurses that allow you to to sign up to work in an undeserved area for like a year to get some debt forgiven.

In a lot of these cases you are working in a clinic and I'm not sure what the pay would be but I'm guessing not as good as a large hospital (especially magnet which I have some connections to).

Is it worth taking a year to work in a clinic to forgive some loans or do you make so much less annually that you would actually be better off working at a Magnet hospital making more money and just pay off the loan yourself? That way I'm working toward my goal of specializing then travel nursing?

BTW I am planning on deducting my student loan interest (you can deduct up to $2500 annually if you make under ~65k which I will once I contribute to my 401K) from my taxes so it's basically a 0% interest rate on my loans.

Best regards,

Christine Crahan

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    That interest deduction only lowers your taxable income. You're still paying interest on those loans. This is something important to remember. You have to factor that in. You still have to repay your principal loan + interest. Your deduction is something that comes at the end of the year in your tax return, which is only a couple hundred dollars at most. It's nothing that significant.

    What you need to do is since your ABSN question assumes there's another bachelor's degree, figure out exactly how much you owe in loans, figure out an average interest rate for them (every year you have a different interest rate on your loans), then figure out what it'll cost you monthly on a 10 year repayment plan. Then you gotta factor pay in on your own. All we can say is every place you work pays different. Some pay more than magnet hospitals, some pay less. There is no universal standard. Make calls, search for pays on the internet. Do this for the next 10 years. Then also do it on a quoted interest rate for a consolidated loan.

    Then compare all that to the pay and what's forgiven with the other option, and don't forget that if it's not a federal program, you're going to be taxed on your forgiveness as income. Map that out over 10 years.

    Then when you have a side by side comparison over paying that loan off in 10 years with all 3 options, take the one that leaves you with more money.

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