The decision to pursue a career in nursing starts an exciting and rewarding journey, but for many students, financing their education is a significant concern. Whether starting your education for the first time, returning to school to advance your credentials, or navigating the repayment process, understanding how student loans work is essential to making informed financial decisions. 

In this blog, you’ll gain a better understanding of the different types of student loans, repayment strategies, and an overview of how student loans can help you finance your nursing education. Keep reading to learn more about understanding student loan debt!

What Are Student Loans?

According to the Department of Education, a student loan is funds borrowed to cover education expenses that must be repaid with interest. These loans can be sourced from various institutions, including the government, private banks or credit unions, independent organizations, and other financial institutions. 

Student loans can be a valuable tool for many nursing students to further their education. In fact, according to the Education Data Initiative, approximately 42.7 million Americans have student debt in some capacity. While the amount an individual student needs to borrow can vary based on tuition cost, educational expenses, and other factors, student loans are a resource that helps make education possible for many aspiring nurses. 

The Different Types of Student Loans

Understanding the types of student loans and their unique terms is essential. Loans can be categorized into either federal loans or private loans. 

Federal loans typically offer fixed interest rates and income-based repayment options and are more commonly sought after than private loans. The Federal Student Aid website outlines the four types of federal student loans:

Direct Subsidized Loans

This type of loan is available to undergraduate students who present financial need. The U.S. Department of Education pays the interest on these loans in a few different circumstances, including: 

• While the student is enrolled in school at least part-time and continues paying interest during the grace period (the first six months after the student graduates from college) 
• During a deferment period  

Direct Unsubsidized Loans

This type of loan is available to undergraduate, graduate, and professional students regardless of financial need. The loan interest accumulates from when the loan begins, and the student is responsible for paying the interest. 

This also includes the time the student is in school, during the grace or deferment periods. Individuals with direct unsubsidized loans should be aware that the loan amount they will repay will be larger than that borrowed because of the accumulated interest.

Direct PLUS Loans

This type of loan requires a dependent undergraduate student’s parent or guardian or an eligible graduate or professional student to complete the loan process, including a credit check and approval, on behalf of the student. These are also known as Parent PLUS loans or Grad PLUS loans.  

Direct Consolidation Loans

This type of loan is for students who possess multiple eligible student loans and want to consolidate them into one single loan. This can be a helpful tool to lower monthly payments, have a fixed interest rate, have fewer balances to manage, and have access to specific repayment plans. 

Private Loans

This type of loan is an option for students who may not be eligible for federal student loans or individuals who may need to borrow additional funds beyond federal loan borrowing limits.  A private loan can be obtained at a bank, credit union, or other financial institution. 

Because of this, the lender sets the terms and conditions of the loan. And they often have higher interest rates and more strict repayment requirements. If possible, students should avoid taking private loans to finance their education.

Strategies To Manage Student Loan Debt

While student loans are a valuable tool that allows many nursing students to complete their education, they can also easily add up and become overwhelming. Planning and following strategies to help manage student loan debt is essential. Here are five methods to reduce student loan debt after nursing school. 

1. Only Borrow What You Need

One way to minimize your debt after school is to only borrow what you need. Calculate the total tuition and school-related expenses and only take out a loan for that amount. Using student loans to pay for things like housing, transportation, or entertainment can be tempting, but remember that you will end up paying for it later on—with interest. 

2. Make Payments While In School

The majority of federal student loans do not require you to pay anything while you are in school or during the six-month grace period. However, it can be wise to make small payments on the loan, even if you are not required to. 

This can reduce the overall amount you owe upon graduation and allow you to become accustomed to making a payment. This can also be especially helpful if you take out direct unsubsidized loans: making payments that equal at least the accrued interest can help reduce the final balance. 

3. Explore Loan Forgiveness Programs

Individuals who meet specific requirements may be eligible for loan forgiveness programs. This is often seen in healthcare industries and can be worthwhile to look into as a nursing student. This list offers nine loan forgiveness options for nurses. These programs vary and often have strict parameters, so it is important not to rely on this option when managing student loan debt. 

4. Consider Refinancing or Consolidation

Loan consolidation can be an excellent option for students with multiple loans or high interest rates. This can help manage monthly payments, lower interest, and possibly reduce the monthly payment. However, it is important to acknowledge that refinancing student loans may extend the total loan term. Before consolidating, weigh the pros and cons of each option and speak to multiple lenders to find the best fit. 

5. Create A Budget and Stick To It

Sticking to a budget while in nursing school and beyond can help you be more financially responsible and prevent using loans to pay for non-school-related expenses. It may be necessary to make sacrifices while in nursing school, but remember that the end goal is worth it!

Resources For Nursing Students

Navigating the challenges of nursing school can seem daunting, but there are many online resources that can help you along the way. Some nursing schools, like East Ohio College, offer student resources that include financial planning, academic and personal support, and more. 

The journey to becoming a nurse is a challenging one, but it is also gratifying. Student loans are often shed in a negative light, but they can be an invaluable tool in pursuing your nursing education. By understanding the ins and outs of student loan debt, you can make informed decisions when it comes to your financial future. 

‍Kenzie Sullivan is the blog content and SEO specialist for a family of career schools in West Virginia, Ohio, and Pennsylvania: West Virginia Junior College, East Ohio College, United Career Institute, and Boardman Training Center.