Working Nurses have access to all sorts of amazing benefits programs, like the NHSC NURSE Corps Loan Repayment Program, the NHSC NURSE Corps Scholarship Program, and the Perkins Loan Cancellation Program, and Doctors and Dentists get access to an amazing benefit via the NHSC’s Students to Service Loan Repayment Program, but now there’s also a benefit available to some of the most important people in the entire healthcare industry: Healthcare School Faculty!
The HRSA’s Faculty Loan Repayment Program was created to encourage more working healthcare professionals to become Healthcare Faculty Members, which is actually even more beneficial to the general population than providing benefits to Healthcare Workers, since our Nurses, Doctors, Dentists and everyone else in the healthcare field is really only as useful as they’ve been trained to be!
Sometimes abbreviated the HRSA FLRP, this benefits program is quite powerful, and definitely one to consider pursuing, as it offers up to $40,000 in repayment assistance for Healthcare Professionals who are willing to serve in eligible faculty roles in their area of specialization for a period of 2 years.
Available FLRP Benefits
This program does offer some exceptional benefits, including:
- $40,000 in Loan Repayment assistance for qualifying educational loans, provided in a lump-sum payment
- Tax withholding is built into the benefit, so that you won’t end up having to pay the IRS any out of pocket money, which is good, but which means that 39% of your $40,000 won’t actually be paid out toward your loan (so you’re really only getting $24,400 in loan repayment benefits)
- Mentorship, which the HRSA claims is a big deal, and which may be true, considering that joining the FLRP program will allow you to enter the prestigious field of healthcare academia, making new connections and increasing your network of professional contacts
Don’t miss the fine print on the second bullet-point above though, because it’s a big deal. While the program promises $40,000 in repayment benefits, you’re only going to see your loans reduced by $24,400, since HRSA is going to withhold $15,600 of your $40,000 benefits and pay that directly to the IRS (to make sure you don’t end up having to pay any taxes out of pocket).
Now, with that said, because of the program’s eligibility requirements, everyone should pay close attention because even with having some of your money withheld, it’s pretty nice to get $24,400 in forgiveness benefits just for two years of qualifying work, especially if you were going to become a faculty member at a healthcare school anyway!
HRSA’s Faculty Loan Repayment Program Requirements
There are several requirements that you must satisfy in order to be eligible for FLRP benefits, including:
- You must be a U.S. citizen, U.S. National, or a Lawful Permanent Resident
- You must come from a “disadvantaged background”, which is evaluated based on environmental and/or economic factors
- You must hold an eligible health professions degree or certificate
- You must agree to a service commitment as a full-time faculty member at an approved health professions institution for at least two years
Now, let’s go over a couple of those details mentioned above more closely, so everyone’s perfectly aware of who exactly qualifies for these benefits.
What is a “Disadvantaged Background”?
When HRSA says that you have to come from a Disadvantaged Background to qualify for this program’s benefits, what they mean is that you must be able to provide a certification letter from your health professions school that identifies you “as coming from an economically or environmentally disadvantaged background”.
And that appears to be up to the schools to define, but HRSA states that you do have the option of submitting additional documentation that proves you qualify based on the economic or environmental conditions as follows:
Economically Disadvantaged people come from a family who’s annual income is below the low-income thresholds set according to family size and published by the U.S. Bureau of the Census, annually adjusted for changes in the Consumer Price Index, and used in health professions and nursing programs.
Environmentally Disadvantaged people come from an environment that inhibits people from obtaining the knowledge, skills and abilities requires to successfully enroll in and graduate from undergraduate or graduate schools, again, based on a variety of different factors.
How do you know if you’re economically or environmentally disadvantaged? The only way to be sure of it will be to contact your school, and request them to provide you with their specific requirements, then see if you fit those requirements.
Personally, I find this to be a little overly restrictive, but I don’t set the rules for these programs, I just explain them.
What Health Professions Degrees & Certificates Are Eligible?
There’s a pretty big list of eligible health professions degrees and certificates, meaning that almost anyone who works in Nursing will be able to qualify for this portion of the eligibility requirements.
Here’s the complete list of eligible certificates and degrees for this year:
- Physician Assistant
- Public Health (Graduate Level only)
- Nursing (RNs or Advanced Practice RNs only)
- Veterinary Medicine
- Podiatric Medicine
- Osteopathic Medicine
- Allopathic Medicine
- Behavioral and Mental Health (graduate level only): Clinical Psychology, Clinical Social Work, Professional Counseling, Marriage Family Therapy
- Allied Health Professions: Dental Hygiene, Medical Laboratory Technology, Occupational Therapy,
Physical Therapy, Radiology Technology, Speech Pathology, Respiratory Therapy, Audiology, Registered Dietitians (Baccalaureate or Graduate Level only)
So, as you can see, satisfying the degree or certificate requirement isn’t that hard, and opens this program up to just about anyone working in the Healthcare industry, which is excellent, because most of the time these types of benefits are limited to only a tiny portion of the general population.
What Types of Health Professions Schools Are Eligible?
The list of eligible Health Professions Schools is almost identical to the list of eligible certificates, but there are some subtle differences.
- Schools offering graduate programs in behavioral and mental health
- Schools offering physician assistant education programs
- Public Health (Graduate Level only)
- Veterinary Medicine
- Podiatric Medicine
- Allied Health
- Allopathic Medicine
- Osteopathic Medicine
Keep in mind that you don’t just have to be a Faculty member at a school offering training in one of the fields listed above, but that you also have to work full-time for at least 2 years, or part-time for 4 years at that school.
And finally, that school must be located in a State or U.S. Territory, and it must also be an accredited, public or private non-profit school.
What Other Requirements Are There?
One strange thing about the way FLRP works is that your school technically has to become a partner with you in this program, in that they’re willing to say they will pay the principal and interest for your educational loans in the same amount that the HHS will pay them.
So, technically, the way the payments work are that the HRSA pays your school, and your school pays your loans, and you’ll have to get it in writing from your school that they’re willing to do this, otherwise you won’t qualify for the benefit.
The only way out of that arrangement is if the school submits a request for a full or partial waiver of the match requirement to HRSA, and HRSA agrees to approve that request.
To ensure you’ll receive your benefit, you’ve got to get this agreement from the school, which you’ll be required to provide to HRSA, and which will need to state that the school is willing to make a full match (if you want the full benefit) or a partial match (for a portion of the potential $40,000 total).
Now, it is possible to get the benefit even if the school isn’t willing to fund any of the money, but only if you can provide HRSA an official letter from the school requesting that their full or partial match requirement be waived because it would place an undue financial hardship on them.
Things That Make You Ineligible for the FLRP
Just like any other forgiveness benefit, there are all sorts of ways to disqualify yourself from the program, including if you:
- Have failed to apply all of the FLRP funds you received from any previous service commitment towards your qualifying education loans
- Are excluded, debarred, suspended, or disqualified from participating in a covered transaction by a Federal agency
- Had any Federal or non-Federal debt written off as uncollectable, or if you had any previous Federal service or payment obligations waived
- Have defaulted on prior service obligations to Federal, State or local Governments (like the NURSE Corps Loan Repayment Program or the NURSE Corps Scholarship Program)
- Have defaulted on any Federal payment obligations, like Health Education Assistance Loans, FHA Loans, Federal Income Tax Liabilities, Court-Ordered Spousal Support Payments, etc.
- Have an outstanding contractual obligation or existing service obligation to some other program,
like the National Health Service Corps Loan Repayment Program, the State Loan Repayment Program, the NURSE Corps Loan Repayment Program, etc.
- Have any judgment liens that were created because of outstanding Federal debt
In a nut shell, you can’t have failed to finish any other Federal financial assistance programs, or have defaulted on any Federal loans or financial obligations.
What Types of Loans Are Eligible for FLRP?
Not all loans are eligible for FLRP benefits either, so you’ll need to pay close attention to the following requirements to ensure that you really do have a chance of qualifying for the $40,000 in assistance the program offers.
Qualifying Loans can include the costs of the loans from Government Lenders (Federal, State or Local Sources) as well as Private Commercial Lenders, but those costs can only include:
- Tuition, fees, and other reasonable educational expenses for undergraduate or graduate education programs
- Reasonable living expenses that you incurred while you were enrolled in qualifying undergraduate or graduate education programs
- Examples of qualifying loans include loans like Stafford Loans, Commercial Supplemental Loans for Students, Federal Perkins Loans that aren’t eligible for Cancelation, etc.
Consolidated Loans are also eligible for the program, but only if they satisfy the following guidelines:
- The consolidated loan can be from either a Government lender (Federal, State or Local), or a private commercial lender, but the loan must only include qualifying education loans (can’t include home loans,
credit card debt or other forms of debt)
- If your qualifying loan is consolidated with a non-qualifying loan, then the entire consolidated loan is ineligible for repayment benefits
- The original loan dates must coincide with the period of time that you were actively pursuing qualifying health professions education
All sorts of loans won’t qualify for this program, including any loans that you can’t prove were taken out to support an eligible health profession, loans that were obtained from family members or other sources not subject to Federal or State examination, loans that have already been fully paid off, Parent PLUS Loans, Credit card debt, loans subject to Cancellation benefits (Perkins Loans, Nurse Faculty Loan Program Loans, etc.), or loans made after your qualifying health professions education was completed.
Requirements of Your Health Professions Institution
Like I’ve mentioned above, your employer must be an eligible “Health Professions Institution”, and they’re going to have to complete quite a bit of paperwork to ensure that you’ll be eligible to actually receive your benefit.
Here’s a list of the things that your school will need to do in order to get your application for FLRP approved:
- Fill out an Employment Contract – This must state that you will be serving as a full-time faculty member for a minimum of two years (or part-time for four years), and be signed by the school, and you
- Provide a Letter of Employment – On official letterhead, used to indicate the same thing as the Employment Contract, but addressed to the HRSA instead of you
- Provide a Loan Repayment Agreement or Waiver of Employer’s Match Loan Requirement – This either states that the school will match the loan amount HRSA agrees to provide for you, or it must explain why the school can’t afford to do that, and HRSA must approve their Waiver Request
- Provide a “Institution Employment/Loan Repayment Verification Form” – This is done to verify that you’re going to serve full-time for two years, and it’ll prove that your school is able to make the required loan repayments (which HRSA will reimburse them for)
These are some of the most complicated requirements in the process, so for additional details on them, I recommend that you look at the official program application form here.
What Happens After You Apply?
After you complete all the application processes, then HRSA will contact you to let you know whether or not you’ve been selected TO BE ELIGIBLE FOR THE BENEFIT.
Note that HRSA gets more applications than they can fund each year, so they don’t approve everyone who requests funding, and simply being notified that you’ve been selected does NOT mean you’ll receive the benefit, but means that you will receive it IF AND ONLY IF you satisfy all the program requirements.
There’s a five step process to receiving and actually claiming the FLRP award, which goes like this:
- Award Letter
- Welcome Packet
- Participant Award Worksheet (PAW)
- FLRP Signed Contract
- FLRP Site Letter
Student Loan Forgiveness & Taxable Income Laws
It may sound scammy, but the reality is that the IRS is insane about student loan forgiveness benefits, as they consider all Loan Forgiveness Benefits to be Taxable Income, meaning that they require you to pay taxes on whatever amount of money you receive when filing your taxes.
And that’s a big deal, because many people who receive Federal Student Loan Forgiveness Benefits don’t realize they’re going to have to pay taxes on the money, and end up being faced with a huge tax bill the year they receive the funding.
As a quick example, let’s say you receive $10,000 in loan forgiveness benefits in 2017. The IRS will require you to list that as part of your taxable income for the year, and to pay taxes on that $10,000, at your normal income tax rate.
Most people pay about 20-30% in taxes, so getting that $10,000 in forgiveness would mean you’d owe the IRS about $2,500 to $3,000 in additional taxes for the year, and if you’re like most Americans, you probably don’t have that kind of money just sitting around.
Because student loan forgiveness is becoming more and more popular each year, I’m certain that we’re building toward an eventual IRS Debt Crisis, just like we’ve faced with the Housing Crisis, Credit Card Crisis, Medical Crisis, and now Student Loan Crisis, so I’ve created a new website to help anyone facing terrible IRS problems, called Forget Tax Debt.
If you’re struggling to pay back money you owe to the IRS, then you should visit Forget Tax Debt, as I’ll teach you how to do things like Apply for IRS Debt Forgiveness, Reach an IRS Tax Debt Settlement, and Sign Up For the IRS Fresh Start Initiative.
How Much Taxes Will I Owe From the FLRP Program?
Just to make things crystal clear, one of the big benefits to HRSA’s Faculty Loan Repayment Program is that they’ll take your tax liability into account when distributing your loan repayment benefits, sending a portion of the $40,000 you earn to your loan servicer, and another amount to the IRS to cover your tax liabilities.
I think they’re overwithholing, since they claim that they’ll distribute 39% of the benefit directly to the IRS, but I’m sure they’re just thinking they want to overpay to make sure you don’t end up with any out of pocket costs, and by overpaying, you’re virtually guaranteed to get at least a little bit of that money back in the form of an IRS refund at the end of the year (as long as you pay the right amount on your normal income taxes!).
To make the numbers clear, that means you’ll receive $24,400 in actual loan forgiveness, while $15,600 of your benefits will be sent to the IRS.
What Other Things Should I Know?
There’s all sorts of other legal language in the official program brochure, so I recommend that you check it out by downloading it here.
Where Can I Go To Ask Questions?
If you have any questions about how the program works, please feel free to post them in the Comments section below and I’ll do my best to get you a response.
If I can’t help you, I’ll recommend other resources to refer to.
As you can imagine, producing this sort of detailed, comprehensive content about a complicated topic like the HRSA Faculty Loan Repayment Program is no easy task, and it takes me a great deal of time to type up these guides, answer questions about the benefits, and ensure that I’m sharing the latest details with all of you.
If you found this page to be useful, then please consider helping me out by sharing a link to it with your friends, family or colleagues. Post it on Twitter, Facebook, your Blog, or Email it to the people you know who’d be interested in the information found here.
The more people who visit the site, the more time I can spend on it, and the more useful it’ll be to you and the wider community of people working to reduce their student loan burdens.
Disclaimer:Information obtained from Forget Student Loan Debt is for educational purposes only. You should consult a licensed financial professional before making any financial decisions. This site receives some compensation through affiliate relationships. This site is not endorsed or affiliated with the U.S. Department of Education.