Lori Meadows
Physical therapists can expect to graduate with a large amount of student debt, averaging $142,489 in the US. With such a substantial financial burden, it is important to consider the options available for repayment and loan forgiveness. Federal and private loans have different repayment plans, and it is advisable to understand these before choosing how much to borrow. There are a variety of strategies to pay off loans, from picking up extra hours at work to choosing an employer that offers tax-free loan repayments as a benefit. Loan forgiveness programs are also available, such as the Public Service Loan Forgiveness (PSLF) program, which offers full forgiveness after 10 years of nonprofit or government work. Other options include income-driven repayment plans, refinancing, and state-specific programs.
| Characteristics | Values |
|---|---|
| Average student loan debt for physical therapists | $142,489 |
| Average student loan debt for physical therapy graduates | $90,000 |
| Average yearly salary for physical therapists | $80,000 |
| Repayment options | Federal or private loans |
| Loan forgiveness options | Public Service Loan Forgiveness (PSLF), Income-Driven Repayment (IDR), The Education Debt Reduction Program (EDRP), The Indian Health Service Loan Repayment Program (IHS), Faculty Loan Repayment Program, New Mexico's Allied Health Loan for Service Program, Iowa's Health Professional Recruitment Program, Alaska's SHARP Program |
| Strategies to pay off debt | Picking up extra hours at work, choosing a higher-paying job, tracking expenses and budgeting, refinancing, employer-sponsored student loan assistance programs, leveraging financial windfalls, increasing earnings through flexible work options, professional development and certifications |
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What You'll Learn
Loan forgiveness programs
Public Service Loan Forgiveness (PSLF)
PSLF is the most commonly used program by physical therapists. It requires working for a qualifying employer, such as a government agency or a nonprofit 501(c)(3) organization, and making 120 qualifying payments over 10 years. The good news is that the repayment period doesn't have to be consecutive, so even if you take a break or switch careers, you can still pursue this option as long as you meet the total payment and work duration requirements. One of the major benefits of PSLF is that borrowers will not owe taxes on any balance forgiven at the end of the repayment period.
Income-Driven Repayment Plans
Income-driven repayment plans are another option for physical therapists, especially those in the private sector. Under these plans, borrowers pay a portion of their income each month, typically 5% to 10% of their discretionary income, for 10 or more years. After that, if there is any remaining balance, it can be forgiven. However, it's important to note that the forgiven amount under these plans may be taxable as income, resulting in a large tax bill.
State and Federal Programs
In addition to PSLF, there are other state and federal programs that offer loan repayment assistance for physical therapists in high-need or underserved areas. These include:
- The Education Debt Reduction Program (EDRP) through the Department of Veterans Affairs (VA), which offers up to $200,000 in student loan reimbursement over a five-year period for healthcare professionals, including physical therapists, depending on the facility's needs.
- The Indian Health Service Loan Repayment Program (IHS), which offers up to $50,000 in student loan repayment for serving in an American Indian or Alaska Native community for two years.
- The Faculty Loan Repayment Program administered by the Health Resources and Services Administration (HRSA), which provides up to $40,000 in loan assistance for those pursuing a teaching role in health professional education with a two-year commitment.
- State-specific programs such as New Mexico's Allied Health Loan for Service Program, Iowa's Health Professional Recruitment Program, and Alaska's SHARP Program.
Employer Student Loan Repayment Benefit
Another option to consider is working for an employer that offers tax-free student loan repayments as a benefit. Employers can contribute up to $5,250 tax-free annually towards each therapist's student loans, helping them save thousands of dollars in principal and interest payments and pay off their loans faster.
It's important to note that eligibility for these programs may vary, and it's always a good idea to speak to a financial specialist or loan servicer to understand your specific situation and explore all available options for managing your student loan debt.
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Repayment assistance
Repaying student loans can be a daunting task for physical therapists, with average student loan debt for recent graduates being as high as $142,489. However, there are several repayment assistance programs and strategies available to help ease the burden. Here are some options to consider:
Public Service Loan Forgiveness (PSLF)
If you choose to work in the public sector, you may be eligible for PSLF. This program allows you to get your federal student loans forgiven after 10 years of repayment while working in public service. The repayment period doesn't have to be consecutive, and you can still qualify even if you take breaks or switch careers, as long as you make 120 total payments and work in the public sector for 10 years with a qualified employer.
Income-Driven Repayment Plans
Income-driven repayment plans, such as the Save or IDR plans, allow you to pay a portion of your discretionary income (usually 5% to 10%) each month for 10 or more years. After this period, if you have any remaining balance, it will be forgiven. However, it's important to note that the forgiven amount is typically considered taxable income, so you may need to prepare for a potential tax bill.
The Indian Health Service Loan Repayment Program (IHS)
The IHS program is designed to encourage physical therapists to serve in American Indian and Alaska Native communities. By committing to serving in these communities for two years, you can receive up to $50,000 in loan repayment assistance. This program can also assist you in finding qualifying employment and matching you with an approved site.
Faculty Loan Repayment Program
If you're interested in pursuing a career as a faculty member at a school for health professionals, the Faculty Loan Repayment Program through the Health Resources & Services Administration (HRSA) may be an option. This program offers up to $40,000 in assistance with a minimum two-year service commitment. It is specifically designed for disadvantaged candidates pursuing teaching roles.
State-Sponsored Programs
Various states have forgiveness and repayment assistance programs, especially if you work in underserved areas. For example, the Allied Health Loan For Service Program in New Mexico offers up to $16,000 per year toward your student loan for serving in a high-need area. Completing the service term may even result in full loan forgiveness.
Employer Student Loan Repayment Benefits
Some employers offer tax-free student loan repayment benefits as part of their compensation packages. Employers can contribute up to $5,250 tax-free annually toward your student loans, helping you save on principal and interest payments and accelerate your loan repayment.
Additional Income and Budgeting
As a physical therapist, you may have the option to pick up extra hours or work at a higher-paying job to increase your income. Additionally, creating a budget and tracking your expenses can help you identify areas where you can cut back without sacrificing your quality of life. Downsizing expenses, such as choosing a used car over a new one, can free up funds that can be directed toward loan repayment.
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$7.99
Budgeting strategies
Understand your debt and repayment options:
Firstly, it is crucial to understand the extent of your debt. Make a list of all your debts, including student loans, credit card balances, personal loans, and any other financial obligations. Then, research the various repayment options available for each type of debt. For student loans, consider federal repayment plans, income-driven repayment plans, or loan forgiveness programs.
Create a monthly budget:
Start by listing all your monthly income sources, such as your salary, bonuses, or any side hustles. Next, list all your monthly expenses, including fixed costs like rent, utilities, and insurance, as well as variable costs like groceries, entertainment, and transportation. Ensure you capture all expenses, as this will help you understand your spending patterns and identify areas where you can cut back if needed.
Prioritize loan repayments:
Once you have a clear picture of your income and expenses, allocate a significant portion of your monthly budget towards repaying your student loans. Consider making payments higher than the minimum required amount to reduce the overall loan term and the total interest paid.
Track your spending and expenses:
Use budgeting tools, spreadsheets, or financial apps to record your spending and expenses. This will help you stay disciplined and aware of your financial position. Review your budget regularly to identify areas where you can reduce unnecessary spending and redirect those funds towards loan repayment.
Increase your earnings:
Consider taking on additional work, such as part-time jobs, freelance work, or offering your services online. You can also explore flexible work options, such as virtual physical therapy services, which often provide competitive pay and the opportunity to set your own hours.
Take advantage of employer benefits:
Some employers offer student loan repayment assistance as a benefit. This can include tax-free contributions towards your student loans, helping you save on principal and interest payments. Additionally, look into employer-sponsored student loan assistance programs, which can provide extra financial support and accelerate your repayment journey.
Remember, budgeting is a personal process, and you should tailor it to your specific financial situation and goals. Combining these budgeting strategies with income-driven repayment plans and loan forgiveness programs can help you effectively manage your student loan debt as a physical therapist.
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Flexible work options
In-Home and Virtual Physical Therapy Services
Working with companies that offer in-home and virtual physical therapy services, such as Shasta Health, can provide competitive pay and the opportunity to set your own hours. Physical therapists in these roles can often earn 20%-30% more than those in traditional settings, allowing for faster repayment of student loans.
Per Diem Work
Per diem work allows physical therapists to pick up extra hours during the weekends or evenings, often at a high hourly rate. This flexibility can help maximize income and accelerate student loan repayment.
Employer-Sponsored Student Loan Assistance Programs
Some employers offer student loan assistance programs, providing extra financial support to their employees. For example, the Department of Veterans Affairs (VA) has the Education Debt Reduction Program (EDRP), where healthcare professionals may receive reimbursement of up to $200,000 over five years. Physical therapists working in VA hospitals or other qualifying facilities may be eligible for this program.
Loan Repayment Programs for Underserved Areas
State and federal programs offer loan repayment assistance for healthcare professionals, including physical therapists, who work in underserved areas. Examples include New Mexico's Allied Health Loan for Service Program, Iowa's Health Professional Recruitment Program, and Alaska's SHARP Program. These programs provide targeted loan repayment assistance while allowing physical therapists to gain valuable experience in communities that need their skills.
Faculty Positions
Physical therapists interested in teaching can explore faculty positions at schools for health professionals. The Faculty Loan Repayment Program through the Health Resources & Services Administration (HRSA) offers assistance of up to $40,000 with a minimum two-year service commitment. This option combines career advancement with loan repayment assistance, providing both financial and professional benefits.
By leveraging flexible work options, physical therapists can increase their earnings, set their own schedules, and accelerate their journey toward becoming debt-free.
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Federal loans
Physical therapists often graduate with substantial student loan debt, averaging $142,489. Federal loans are a common way to finance physical therapy education, and there are various options available for repayment and loan forgiveness.
Firstly, it is important to understand the different repayment plans for federal loans. Physical therapists can choose from standard, graduated, or extended repayment plans. Standard and graduated repayment plans typically have a term of 10 years. In contrast, extended repayment plans offer a longer repayment period of 25 years. Income-driven repayment (IDR) plans are another option, where monthly payments are adjusted based on income and family size. IDR plans usually have a repayment term of 20-25 years, and they include options such as Revised Pay As You Earn (REPAYE), Pay As You Earn (PAYE), and Income-Based Repayment (IBR). Under these plans, borrowers pay a portion of their discretionary income, typically ranging from 5% to 10%, for 10 or more years. After this period, any remaining balance may be forgiven.
Loan forgiveness programs can significantly reduce the repayment burden for physical therapists with federal loans. One popular option is the Public Service Loan Forgiveness (PSLF) program, which offers full loan forgiveness after 10 years of qualifying payments. To be eligible, physical therapists must work full-time for a qualifying employer, such as a government agency or a nonprofit 501(c)(3) organization. This includes working in settings like VA hospitals, public schools, or nonprofit healthcare facilities. It is important to note that PSLF only applies to Direct Federal Loans, and private loans are generally not eligible for this program.
In addition to PSLF, there are other federal loan forgiveness programs targeted at physical therapists serving in high-need or underserved areas. For example, the Indian Health Service Loan Repayment Program (IHS) offers up to $50,000 for a two-year service commitment in American Indian or Alaska Native communities. The National Health Service Corps (NHSC) Loan Repayment Program provides up to $50,000 in loan repayment for working in Health Professional Shortage Areas for two years. State-specific programs, such as New Mexico's Allied Health Loan for Service Program and Iowa's Health Professional Recruitment Program, also offer loan repayment assistance for physical therapists working in designated high-need areas.
Physical therapists can also explore employer-provided benefits to help with student loan repayment. Some employers offer incentives, such as monthly contributions or annual payments of up to $5,250 tax-free, to assist their employees in reducing their student loan debt. Additionally, working per diem jobs or choosing a higher-paying position can provide extra income to accelerate loan repayment.
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Frequently asked questions
The average student loan debt for a physical therapist is between $116,000 and $142,500.
The standard repayment term for federal loans is up to 10 years, with a fixed payment per month.
You can pay off your loans faster by working per diem at an additional job on weekends or in the evenings, committing any windfalls of money towards your student loans, refinancing your loan to lower your interest rate, or choosing a shorter loan term.
If you work for a qualifying employer, such as the government, a 501(c)(3) nonprofit, or another qualifying nonprofit, for 10 years and make 120 qualifying payments, you can take advantage of the federal Public Service Loan Forgiveness (PSLF) program. Physical therapists may also be eligible for The Indian Health Service Loan Repayment Program (IHS), which offers up to $50,000 if you commit to serving in an American Indian or Alaska Native community for two years.
