Drowning in debt?

It's no secret that student loan debt is growing at an astronomical rate. In 2009, the median amount of student debt for recent doctoral psychology graduates was an astounding $80,000 and a quarter of students had amassed $130,000 or more, according to the APA's 2011 Doctorate Employment Survey.

These levels of debt seriously affect the choices graduates make in just about every walk of life, says Jennifer Smulson, the senior legislative and federal affairs officer in the APA Education Directorate. "Educational loan decisions can affect all kinds of future decisions — where you live, if and when you buy a house," she says. In fact, excessive debt is rated as one of the greatest barriers to well-being, according to a 2012 article in Training and Education in Professional Psychology.

Luckily, two federal programs can help. Clinicians can apply to the National Health Services Corps (NHSC) Loan Repayment Program, which sends providers to work in underserved areas and, in return, helps pay off their loans. Researchers can consider the National Institutes of Health (NIH) Loan Repayment Programs, which are aimed at drawing young scientists to the research arena and keeping them there.

Here's a rundown of how the two programs function and how to apply. For more detailed information, visit their websites at NHSC and LRP.

The National Health Services Corps

The NHSC program is part of the government's Health Resources and Services Administration (HRSA). The program will help pay off your entire debt over as many years as it takes, provided you're working in an NHSC-approved site. The idea is that with your advanced degree, you'll give back to the communities that need it the most — and in exchange, the government will take care of your debt. Nearly 10,000 health professionals are enrolled in the corps at present and more than a quarter of those are mental health providers.

The experience can be incredibly rewarding and a win-win for all involved, says Becky Spitzgo, HRSA associate administrator and director of the NHSC.

The basic requirements are:

• You must be a U.S. citizen.
• You must be employed by an NHSC-approved clinic before you apply for the NHSC loan repayment program.
• You must have an advanced degree from an accredited school and be licensed in the state in which you'll be an NHSC member.
• As a mental health provider, you must be a health service psychologist (HSP), licensed clinical social worker (LCSW), psychiatric nurse specialist (PNS), marriage and family therapist (MFT), or licensed professional counselor (LPC). Many types of higher degrees in health care are eligible, including MD, DO, DDS, NP and others.
• You cannot have consolidated other forms of loans (home equity, for example) and student loans.
• You cannot have defaulted on a loan in the past.
• You can't have a prior work commitment or scholarship that ties you to a particular location.

See the full list of requirements (PDF, 397KB).

One of the most important eligibility requirements is that you can't have consolidated loans, since this makes it almost impossible for the administrators to see where debt is coming from, says Spitzgo. "Loan vetting is the really challenging part of the process," she says. "Sometimes folks consolidate loans using home equity, and then we lose visibility into what the purpose of loans was. In those instances where we can't tell that the loan was for education, this can make loans ineligible."

Getting a job at an NHSC-approved site is the first step toward joining the program. Mental health clinics that wish to be considered for NHSC approval must be located in a Health Professional Shortage Area and meet the NHSC site requirements. Each approved site is given a HPSA score, which ranges from 1 to 25.

"If you're working at a clinic that has a HPSA score of 16 or higher, chances are good you may receive loan repayment based on our current funding levels," says Spitzgo. "When we evaluate applications, we start at the top, 25, and work our way down. Last year we were able to fund down to a HPSA score of 13."

Once you've been accepted into the program, you commit to it for a two-year period. During that time, if you're working full time in a clinic with a HPSA score of 14 or higher, the NHSC will pay $60,000 of your student loan debt. For scores of 13 and lower, the amount is $40,000. There's also an option for people to work part-time. Rather than communicating with the lender on your behalf, the NHSC gives you the funds directly, and you repay your lender. After the initial two years you must re-apply every year for an extension, but there's no limit on the time it takes to pay off your debt. Spitzgo says the average time to repay debt is about three to four years.

The program's benefits aren't just monetary. Much of its beauty is in the good it does for communities that may not have much access to mental health care, says Jonathan Leggett, PhD, an NHSC psychologist in Indiana. "Our culture's attitude toward mental health is changing, slowly, but it still takes specific work in individual communities," says Leggett, who grew up in a rural, underserved area himself. He says he's very grateful to be able to give back to a similar community as an adult. "The effort I've put into this community has really changed things there — the stigma is starting to fade, little by little."

The program's retention rate speaks for its effectiveness, says Spitzgo. "About 80 percent of the people who do the NHSC program stay in the clinic after they've paid off their debt," she says. "We have a high retention rate because working in this type of environment can be very fulfilling for the provider."

The NHSC application cycle opens in February. It is important to begin the process early, because you need to be employed at an NHSC-approved facility before applying. You can search for open positions using the NHSC search function, which allows you to find positions by discipline and geographic area.

The NIH Loan Repayment Program

Research-minded students, meanwhile, should look to NIH's loan-repayment programs, which are designed for investigators who are doing scientific research that accounts for at least half of their workload. Eligibility requirements include:

• You must have a doctoral degree (MD, PhD, PsyD, PharmD, etc.).
• Your total amount of educational debt must be 20 percent or more of your annual base salary.
• Your research must be supported by a domestic nonprofit institution, such as a university, nonprofit foundation, professional association or U.S. government agency.
• Research must constitute 50 percent — or 20 hours per week — of your total work.
• Part-time federal employees are eligible if they are also doing part-time work (under 20 hours per week) for a qualifying nonprofit institution.
• You cannot have consolidated your debt with other, non-educational types of loans or with other people, such as a spouse or a child.

Your research should fall into one of five areas: clinical, pediatric, health disparities, contraception and infertility, or clinical research for individuals from disadvantaged backgrounds. If you're accepted into the program and commit to it for two years, it will take care of 25 percent of your total debt, up to $35,000 per year. (For example, if you have $140,000 of debt or more, it will repay $35,000 per year; if you have $60,000, NIH will repay $15,000 per year, and so on.) Unlike the NHSC program, the NIH program pays the lenders directly, so you don't have to think about it. If your contract is renewed, the program will repay 50 percent of your remaining debt, up to $35,000 for each year or renewal.

"Out of the 3,200 applications we had last year, we were able to fund just under half," says Stephen J. Boehlert, director of operations in the NIH Division of Loan Repayment. More than 300 of those successful applicants were specialists in mental health — 274 PhDs in psychology and PsyDs, and 49 MDs specializing in psychiatry.

About 70 percent of applicants are renewed after the first two years, and renewals may be for either one or two years. There is no upper limit on the number of renewals a person can get, but in 2012, the largest number of prior awards for re-applicants was six. The average amount of debt for participants in the program was $101,000, with nearly a quarter having more than $150,000. For full statistics, see the Division of Loan Repayment (PDF, 611KB).

NIH's goal is to attract and keep young researchers doing what they love, which is getting harder in this economic climate, according to Boehlert. "As the funding opportunities become scarcer, it oftentimes becomes a more attractive option to leave research for clinical practice. Our programs are mandated by Congress and designed to allow those individuals who very much want to do research the monetary assistance that will allow them to remain there."

In your application, you'll have to detail the kind of research you do, the problems you solve and the directions it will move in the future — very much like a grant application. "The great thing is that even if you get turned down the first time, it's in no way a waste of time," says Shawn McClintock, PhD, MSCS, an associate professor of psychiatry and behavioral sciences at Duke University School of Medicine, and governance and membership representative of APA's Committee on Early Career Psychologists. He was turned down on his first program application, but just received his second renewal. "Applying for the program is just like writing a grant application, so you can easily use this info to write other grants. Because of this, it's worthwhile, however it turns out," McClintock says.

Interested applicants should start preparing early, McClintock advises. With a Nov. 15 deadline, he says, "don't wait until October to request academic transcripts and letters of recommendation, because you'll miss your deadline. Start months in advance."

Alice G. Walton, PhD, is a writer in New York.