Did you know that if you’re a health professional with an advanced degree such as an MD, PhD, PsyD, or PharmD, the National Institutes of Health (NIH) may be willing to repay up to $70,000 of your student loan debt over a two-year period?
NIH, the U.S. government agency responsible for overseeing human health research, currently manages a group of eight Loan Repayment Programs (LRPs). These LRPs are used to repay lenders for the existing principal and interest on loans. The catch, si that your loans must have been obtained from a qualifying lender (more details below).
The LRPs are meant as incentives for professionals who demonstrate the commitment and expertise to pursue a career in biomedical or bio-behavioral research but still owe a substantial amount in student loan debt. NIH recognizes that the high cost of education may cause many highly qualified individuals to pursue more lucrative careers in industry or private practice rather than in research, and hopes that a reduction in student loan debt may turn the prospect of a research career into a more attractive option.
What happens when you receive an award
All awards last for two years. If you receive an award, you are contractually obligated to engage in an average of at least 20 hours of research per week, funded by a U.S. non-profit such as a university or hospital.
How much can you receive?
All awards last for two years and during that time NIH will repay 25% of your eligible education debt (up to $35,000) for each of those years. For example, if you have $40,000 of qualifying educational debt, the LRP will give you $10,000 per year (25% of your total debt), for a total of $20,000 over the two-year period. Awardees can also apply to have their awards renewed after the two years are up.
Types of LRPs
You must also choose which one of the eight LRPs you wish to apply for; this choice will depend on what type of research you are planning to pursue. You may either choose research within the NIH (Intramural) or outside the NIH (Extramural) Specific LRP areas of research include:
Are you eligible?
In order to be eligible to apply for an LRP, you must possess an advanced professional degree and have demonstrated the potential for a successful research career. Additionally, your student loan debt must exceed 20% of your base salary at the institution where you are employed at the time of the award.
Your loans must also be eligible for the repayment program.
Loans that are eligible
A majority of the loans you have likely taken out yourself from the government or a financial institution are eligible. Even loans taken out to cover cost of living while attending college may be eligible, if these loans are within a reasonable amount. According to the NIH website, the following loans are eligible:
- Undergraduate, graduate, and health professional school tuition expenses;
- Other reasonable educational expenses required by the school(s) attended, including fees, books, supplies, educational equipment and materials, and laboratory expenses; and
- Reasonable living expenses, including the cost of room and board, transportation and commuting costs, and other living expenses as determined by the Secretary.
However, your loans will be ineligible if you’ve consolidated with another person such as a spouse or child. Loans will also be ineligible if you’ve merged with with non-educational loans.
Loans that aren’t eligible
- Loans that are delinquent, in default or not on current repayment schedule.
- Loans already paid in full, meaning you can’t get your money back retroactively for loans you’ve paid off.
- Parent PLUS loans.
- Loans consolidated with another individual such as spouse, child or those consolidated with a non-educational loan.
- Loans not obtained for educational purposes, even if you used them for education, such as a home equity loan.
- Loans not from the U.S. government, a U.S. academic institution, a U.S. commercial or chartered lending institution, such as loans from friends or family.
- Loans without eligibility documentation that is submitted in PDF form or print outs. This documentation includes:
- Account statements less than 30 days old. You can find a sample account statement here.
- Promissory notes/Disclosure statements for non-consolidated loans and consolidated loans. You can find a sample note here.
- Consolidated loans will also require a complete list of loans that were consolidated. You can find a sample note here.
- National Student Loan Data System Aid Summary and Detail Loan information reports.
- Loans that exceed the reasonable level for educational or living expenses. Reasonable level is determined by the standard school budget for the year in which the loan was made.
- Loans or financial debts that you received as a result of failure to satisfy a service obligation including but not limited to: Armed Forces Health Professions Scholarship, Indian Health Service Scholarship Program and National Institutes of Health Undergraduate Scholarship Program (UGSP).
- Loans you take out after accepting a LRP from NIH.
Learn more about loan eligibility here.
How loans get repaid when you have more than one
You probably have student loan debt from more than one source, so you may be wondering how these debts will get prioritized by the NIH? Unfortunately, you won’t be able to do what you want with the LRP money. Instead, the NIH will determine the order in which loans are repaid based on the following priorities. Unfortunately, this does mean you can’t make repayments based on interest rates or loan amount.
Loans guaranteed by the U.S. Department of Health and Human Services, these include:
Health Education Assistance Loans (HEAL)
Health Professions Student Loans (HPSL)
Loans for Disadvantaged Students (LDS)
Nursing Student Loans (NSL)
Loans guaranteed by the U.S. Department of Education, these include:
Graduate PLUS Loans (on or after July 1, 2006)
Federal Family Education Loans (FFEL)
Loans that have been made to you or guarnateed by your State, the District of Columbia, the Commonwealth of Puerto Rico or a territory or pession of the United States (for example, Guam).
Loans made to you by an academic institution
Private (Alternative) Educational Loans:
Private (non-guaranteed) Consolidation Loans
How to apply
You can register and start the application process by registering here on the NIH website. The application cycle is typically open from September 1 to November 15 of each year.
The application process is long, extensive and competitive. The NIH provides an outline of tips for how to write a strong application as well as a road map to follow to ensure you’re checking off all the steps.
What you’ll need
- Letters of recommendation
- A research plan
- Mentor who provides a mentoring plan
- Demonstrate your qualifications and commitment
- Verify your research is within the scientific method of the NIH Institute or Center to which you are applying
- Loan documentation
- Estimate quarterly LRP repayment
Unfortunately, this isn’t like forgiveness programs and your LRP loan repayments will be counted as taxable income. This could, and likely will, have significant implications for your tax bill. You’ll receive a form 1099-G if you have an Extramural LRP and a W-2 if you have an Intramural LRP.
Fortunately, the LRPs do help offset this tax burden by making a tax payment to the IRS that’s equal to 39% of the annual LRP repayment. If you owe an additional amount, then it will be your responsibility to pay.
Who should apply?
So if you’re a young researcher who is interested in a career in biomedical or biobehavioral research but are concerned about whether such a career will allow you to pay off your student loan debt in a timely fashion, consider applying for an LRP. While these awards are considered to be competitive, NIH states that approximately 1500 individuals have received awards each year thus far. Additional information on eligibility and the application process can be found at the NIH Division of Loan Repayment website.