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Loan Forgiveness for Social Workers

By Janice Monti
Published on August 17, 2020

Although some social workers enter the field after earning a bachelor's degree, clinical social workers must hold an MSW and state licensure. After spending 4-6 years completing their education, many social workers begin their career carrying substantial amounts of student loan debt. In fact, over 80% of social workers with a bachelor's and master's degree, and 65% of doctoral degree-holders, graduate with student debt. Compared to the $29,200 average debt load for all college graduates, the mean amount of debt for social work graduates ranges from $31,880 to $42,149.

While the demand for social workers continues to expand -- especially in federal and state government agencies and ambulatory healthcare settings -- salaries in the field vary considerably. The median annual salary of $50,470 remains relatively low in comparison to other professions. The highest paid social workers earn over $82,000 a year, whereas the lowest 10% make less than $32,000.

This guide describes how loan forgiveness programs for social workers can encourage new graduates to persevere in their career and reduce this burdensome debt load.

Loan Forgiveness Programs for Students

Loan forgiveness programs for social workers can help ease the crushing debt load experienced by many recent graduates just beginning their careers. Social work students may take advantage of public service loan forgiveness programs, National Health Service Corps (NHSC) loan repayment programs, income-based repayment plans, and state-based programs -- each with its own application and eligibility requirements.

The information presented here focuses primarily on student loan forgiveness for social workers. However, students from many different disciplines may qualify for some of these resources.

Public Service Loan Forgiveness Program

Social workers looking for ways to reduce their student loan debt should investigate the Public Service Loan Forgiveness (PSLF) program. Designed specifically for employees of federal, state, local, or tribal government or qualifying tax-exempt not-for-profit organizations, the PSLF forgives the outstanding debt from Direct Loans or other federal loans, such as the Federal Family Education Loan or the Perkins Loan that have been consolidated into Direct Loans.

Social workers may qualify for this program after making 120 payments to a qualifying income-driven repayment plan, even if they have worked for more than one qualifying employer. The PSLF does not forgive loans in default. Unlike some of the other forgiven, discharged or canceled loan programs, the IRS does not require PSLF recipients to pay federal taxes on the amount of loan forgiveness.

National Health Service Corps Loan Repayment Program

Licensed clinical social workers (LCSWs) may participate in the NHSC Loan Repayment program. Established for healthcare professionals currently employed at an NHSC-approved facility or in a recognized health professional shortage area, the Corps awards a maximum of $50,000 for a two-year full-time work commitment. Participants who still have unpaid educational loans after the initial two years may reapply annually to extend their loan repayment if they continue to work at the eligible placement.

Because of the limited availability of funds, the Corps gives priority to LCSWs from disadvantaged backgrounds or those most likely to remain employed in a healthcare shortage area. Unpaid federal loans, commercial bank loans, and reasonable academic and living expenses not consolidated into other non-educational loans all qualify for repayment in this program.

Income-Based Repayment Plan

An income-driven repayment plan helps ease student loan obligations by setting a monthly repayment amount based on income and family size. The federal government has established four income-based plans: the Revised Pay As You Earn Repayment (REPAYE) plan, the Pay As You Earn Repayment (PAYE) plan, the Income-Based Repayment (IBR) plan, and the Income-Contingent Repayment (ICR) plan.

These four plans vary by eligibility requirements, the length of the repayment period, and the types of loans that qualify for repayment. Payment amounts for these income-based plans range from 10-20% of discretionary income. For all plans, monthly repayment amounts may increase or decrease if earnings or family size changes from one year to the next. Defaulted loans do not qualify for repayment under any of these plans.

State-Based Programs

Social workers can get help managing their student loan obligations through several state-based debt relief programs. The NHSC operates the State Loan Repayment Program in partnership with all 50 states to support the recruitment of healthcare professionals. Eligibility, practice sites, length of work commitment, and the amount of the loan repayment differs for each state-based program.

For example, New York offers a loan forgiveness program restricted to licensed social workers employed in critical human service areas, such as mental health, substance abuse, HIV/AIDS treatment and child welfare. The program cancels the outstanding balance on eligible student loans up to a maximum award of $26,000.

Kentucky offers a 50/50 matching student loan repayment program in partnership with employers and other sponsors to recruit healthcare providers to underserved and rural areas. Participants receive a tax-free repayment award in exchange for a two-year service commitment. Oregon also offers loan repayment amounts up to $35,000 for healthcare providers who agree to a three-year work commitment.

Highest Paying Areas for Social Workers in the United States

Favorable employment prospects in social work should help offset concerns about incurring large amounts of student loan debt. The Bureau of Labor Statistics projects an overall 11% job growth for social workers between 2018-28. Those entering the expanding mental health and substance abuse specialty can expect an 18% increase -- the highest rate in the field -- followed closely by 17% for healthcare social workers.

Compensation varies considerably by specialty and geographic location. Specializations like criminal justice or forensic social work offer mean annual salaries over $61,000. California's San Jose/Sunnyvale/Santa Clara metropolitan area offers the top pay for these specialized social workers, who may earn an average yearly income of $97,680.

Healthcare social workers receive an average annual income of $59,300. Employers pay significantly more for these social workers in California's metropolitan centers, ranging from $83,430 in Los Angeles/Long Beach/Anaheim to over $90,000 in the Vallejo/Fairfield area.

Social workers who enter lower-paying specialties can expect the highest salaries in urban or underserved areas. Child, family, and school social workers make over $70,000 yearly in the most populated areas of Connecticut and New Jersey. Mental health and substance abuse professionals can expect average annual incomes of over $83,000 in the Trenton, New Jersey area, and in the urban centers of Santa Rosa, Napa, and Vallejo/Fairfield, California.

Social workers worried about paying off student loans should take advantage of loan forgiveness programs and make wise decisions about their specializations and where they seek employment.