Physical therapists and occupational therapists often graduate with a tremendous amount of student loans.
In fact, the American Physical Therapy Association’s Impact of Student Debt on the Physical Therapy Profession in 2020 found that physical therapists that had graduated at most four years prior to the study were burdened with an average of $152,882 of debt, $116,183 of which was directly attributed to physical therapy education-related student loans.
Unfortunately, I have not been able to locate any similar student conducted by the American Occupational Therapy Association’s website. However, my wife is an occupational therapist and I can assure you her student loan balance is anything but small.
So what options exist for physical therapists and occupational therapists looking to most effectively manage their student loan debt?
This article will provide physical therapists and occupational therapists with the current options I have been able to identify for managing their student loans.
Let’s get started.
Option #1: Student Loan Forgiveness Through A Federal Program
1. Public Service Loan Forgiveness (PSLF)
This federally-sponsored option can allow a physical therapist or occupational therapy to obtain student loan forgiveness after just 10 years. However, certain rules must be followed precisely.
That is likely a major reason why only 2.16% of Public Service Loan applications have been accepted since November 2020.
If this is the option you would like to pursue, be sure to read the following articles:
- 14 Essential Tips For Physical Therapists And Occupational Therapists Preparing For Public Service Loan Forgiveness (PSLF)
- How Physical Therapists And Occupational Therapists Can Benefit From The Public Service Loan Forgiveness Waiver
2. Income-Driven Repayment Plans
The Income-Driven Repayment Plan is another federally-sponsored student loan forgiveness option.
There are four different types of Income-Driven Repayment Plans:
- Income-Contingent Repayment Plan (ICR Plan)
- Income-Based Repayment Plan (IBR Plan)
- Pay As You Earn Repayment Plan (PAYE Plan)
- Revised Pay As You Earn Repayment Plan (REPAYE Plan)
Each of these types of Income-Driven Repayment plans allows for student loans to be forgiven in a specified amount of time.
If you are considering this option for student loan forgiveness, be sure to read the article listed below to get more detailed information:
3. Perkins Loan Cancellation
Perkins student loans came from the Federal Perkins Loan Program. They were available to both undergraduate and graduate students demonstrating financial need.
However, Perkins loans ceased being issued on September 30, 2017.
If you have Perkins loans, you can receive partial or full loan cancellation if you are working as a school teacher.
Unfortunately, this option does not appears to apply to physical therapists or occupational therapists teaching at physical therapy or occupational therapy programs since it requires that you must be working as an elementary school or secondary school teacher.
If this might still apply to you, though, then be sure to read more about Perkins Loan Cancellation by clicking here.
4. HRSA Faculty Loan Repayment Program
Unlike the Perkins Loan Cancellation option, the Health Resources and Services Administration (HRSA) does offer financial assistance to physical therapists and occupational therapists willing to teach at physical therapy and occupational therapy programs.
Their Faculty Loan Repayment Program will pay off as much as $40,000 of your student loans if you teach as a faculty member at an eligible public or private non-profit health professional school for at least two years.
If this amount of loan forgiveness won’t quite cover your entire student loan balance, you can reapply for another 2-year period.
Additionally, the program acknowledges that you will be taxed on the $40,000 provided to you. To offset this tax, they provide you with an additional sum of money equal to 39% of your loan repayment amount to offset the anticipated tax.
Check out the Health Resources and Services Administration’s Faculty Loan Repayment Program website for more information.
5. Department Of Veterans Affairs
The Department of Veterans Affairs (“The VA”) offers the Education Debt Reduction Program (EDRP) for healthcare workers will to work in jobs that the VA is having difficulty filling.
While this might not sound appealing at first, take note that the program offers student loan forgiveness for as much as $40,000 per year for as many as five years.
In total, this could be up to $200,000 ($40,000 x 5 years) in student loan forgiveness!
And best of all, this money is tax-free.
You don’t even have to be in the military to work in a job that qualifies for the Education Debt Reduction Program.
To search for physical therapy or occupational therapy jobs that qualify for the Education Debt Reduction Program, visit the U.S. Department of Veterans Affairs website or the USA Jobs website and type one of the following into the keywords box:
- EDRP physical therapist
- EDRP occupational therapist
Sometimes jobs eligible for the Education Debt Reduction Program will include EDRP in the job title and other times you will have to click on the available job’s title to find a phrase stating that the job is eligible for the Education Debt Reduction Program.
The Department of Veterans Affairs also recommends that you speak with human resources when applying for a job to ensure that job’s eligibility for the Education Debt Reduction Program.
Visit the Education Debt Reduction Program’s website and view their handout for more information.
Option #2: Student Loan Forgiveness Through A State Program
1. Alaska SHARP Program
Alaska’s SHARP Program has two different programs:
1. SHARP-1
2. SHARP-3 also called the Health Care Professionals Workforce Enhancement Program
SHARP-1 is sponsored by the Health Resources and Services Administration (HRSA) and provides medical, dental and behavioral health clinicians with education loan repayment if they work two years at a non-profit or government organization in what is deemed as a “Health Professional Shortage Area.”
Unfortunately, the physical therapy and occupational therapy professions are not likely to qualify for SHARP-1 in the group of professions listed above.
However, physical therapists and occupational therapist might qualify for the newer SHARP program. Referred to as either SHARP-3 or the Health Care Professionals Workforce Enhancement Program, this program is funded by private donors and for-profit businesses. It offers the opportunity to include even more healthcare workers than the SHARP-1 program and the SHARP-3 program also offers either education loan repayment or direct incentive.
Although the SHARP-3 Program requires that the clinician work three years to receive either the education loan repayment or direct incentive, the job worked does not need to be in a “Health Professional Shortage Area.”
For more information, visit Alaska’s SHARP Program website.
2. Iowa Health Professional Recruitment Program
Iowa’s Health Professional Recruitment Program is geared specifically towards a group of clinicians that includes both physical therapists and occupational therapists who have graduated from an eligible college or university located in Iowa.
Clinicians willing to work up to four years in communities that are deemed “high-need” will be provided with up to $12,500 per year for a maximum four-year total of $50,000.
However, this award can only be applied to Federal Stafford Loans or Grad PLUS Loans. Refinanced loans can only qualify if the clinician refinanced their student loans only after signing their contract to work in Iowa’s Health Professional Recruitment Program.
See Iowa’s Health Professional Recruitment Program website for more details including a map of the geographic areas deemed as “high-need.”
Option #3: Pay Off Your Student Loans
Don’t forget, paying off your student loans might still be your best option.
After all, if you have private student loans then you probably won’t qualify for any of the federal student loan forgiveness options listed above.
One of the reasons why many physical therapists and occupational therapists end up with incredibly high student loan balances is because of the high interest rates on their loans. If you want to pay your loans off, you can likely significantly decrease your interest rate by refinancing your student loans.
Read more about why you should or should not refinance your student loans here:
Should I Refinance My Physical Therapy Or Occupational Therapy Student Loans?
If you are ready to refinance your student loans, make sure to shop around to get the best rate.
Final Thoughts. . .
Managing your student loans can be an incredibly complex task. I hope this article helps you better weigh your options so you can make a more informed decision that is in your best interest.
How have you been managing your student loans? Do you have anything else to add or any questions to ask? Let me know in the comments section below!
