Nursing Student Loan Debt

A Secondary Analysis of the National Student Nurses' Association Annual Survey of New Graduates

Veronica D. Feeg, PhD, RN, FAAN; Diane J. Mancino, EdD, RN, CAE, FAAN


Nurs Econ. 2014;32(5):231-239. 

In This Article


In this secondary analysis of questions from the NSNA New Graduate Annual Survey related to nursing student debt and financial choices, we discovered nursing students are similar to all undergraduate college students with average student loan debt (approximately $30,000 per borrower). Student loans are the largest source of student funding for undergraduate nursing education. In looking at the differences between ADN and BSN graduates, as expected, BSN students have higher debt. Nonetheless, the fact is ADN graduates also have considerable debt. Having fewer job prospects, ADN students often immediately opt into seamlessly progressing to their next academic program. This not only makes them more marketable for entry–level positions, but it also delays the start of loan repayments.

In a recent NSNA followup survey of members, findings corroborate the issue of student loans with lack of knowledge about financing. For example, when selecting a nursing program, only 16% (n=194) of students answering NSNA's "One–Minute Trend Survey" (n=1,209), chose "affordability" as their primary criterion; 21% (n=257) indicated geographic location; and 47% (n=565) chose school reputation (NSNA, 2014). Forty–nine percent (n=595) of respondents revealed student loans were their primary source of funding for tuition, fees, and books, but 34% (n=193) reported they did not know their loan interest rate and 34% (n=194) did not know if it was a fixed or variable rate (NSNA, 2014). Without a doubt, students must closely examine their return on investment when considering financing their nursing education. They also need more education about borrowing (Javine, 2013). As one student stated, "Nursing school is expensive, but worth every penny. But it is a burden to wonder how I will afford tuition and how I will be able to afford payments on student loans within 6 months after graduating. Nursing school requires my full devotion and working to afford this program takes away some of my study time and only adds more stress … I wish there were more resources to pay for school" (NSNA, 2014).

Repayment of student loans is an important policy issue. It is important to the school, the financial institutions and, of course, to the student. High student loan repayment impacts the economy as well as the post–graduate life of the loan consumer. Rising tuition rates will require higher loan amounts needed to complete a program. Skipped or nonpayment will impact the loan consumer's credit rating and may impact his or her ability to qualify for mortgages and other loans. These life issues need to be part of the decision process in choosing schools and educational goals. But it is equally important that schools are not incentivized to promise job success in these uncertain economic times accompanied by high tuition and fees. The gainful–employment rule coming out of the U.S. Department of Education would deny federal student aid to programs where too many students default on their loans or where their debt, relative to their earnings or discretionary income, is too high (Blumenstyk, 2014). The rule, if implemented, is expected to affect more for–profit college students. The data from this analysis suggest there are issues related to borrowing trends of nursing students in for–profit institutions compared with all other nursing students that need further investigation. With ongoing policy discussions about the growth of proprietary schools, it is important to note this loan debt affects nursing students as well.

Schools must document loan repayment and satisfy other rules to maintain participation in the federal loan program. Academic institutions have a vested interest to assure their students meet federal financial obligations. As consumers of student loans, students and their co–signers need to be well informed and read the fine print before accepting student loans. According to Javine (2013), students need to understand the ramifications of taking student loans and financial aid administrators need to develop programs to educate students about debt, particularly those at–risk of higher levels of debt. Loan consumers must play it forward: What happens after they graduate (or do not graduate)? When will loan payments start? What is the interest rate and is it fixed or variable? What will they do if they cannot find a job and loan repayment starts? These and other questions should be considered carefully along with the exploration of all student financing options including pre–payment tuition plans, loan forgiveness, and employer tuition reimbursement. Student loan debt follows the new nurse until it is paid off. Investing the time to do in–depth research on all forms of student support before, during, and after graduation, will pay off in the long run. The Internet is a powerful tool to aid in this effort with access to helpful websites that offer students information and guidance about loans and debt management (see Table 2).

Loan consolidation is available to eliminate multiple loan monthly payments. Advocacy for policies that allow student loan refinancing will reduce the burden of interest payments. These and other considerations to reduce student debt, if enacted, will put more money in the hands of consumers for other uses, taking the pressure off new graduates as they establish households and support families.

To attract and keep talented employees, corporations and others are supporting tuition reimbursement while the student is still employed by the company. For example, Starbucks® recently announced a new college tuition financing program benefit for employees. During periods of nursing shortages, hospitals provided nursing students with tuition support if they signed an agreement committing a certain number of years of service to the institution (NSNA, 2010, 2011). But if the graduate decided not to work in the institution, the tuition funding was converted to a loan, which had to be paid back by the student (NSNA, 2010, 2011). These attractive financing approaches need careful consideration. It is interesting to note that when the Great Recession began in 2008, NSNA New Graduate Surveys revealed jobs were not available for students to "pay back" their service commitment forcing many students to pay back the loan without assistance (NSNA, 2010, 2011). One student commented in 2010 that 14 students were offered employment (to repay their work–commitment agreements) and over 100 new grads had to repay the hospital (NSNA, 2010). As the recession deepened, hospitals ceased offering these incentives. Employers are also closely scrutinizing college tuition assistance. As more hospitals hire per diem and part–time RNs, the hired new graduate may not meet the qualifying amount of work hours to forgive the loan. Some institutions will pay full tuition to employees who return to school to prepare for greater and different responsibilities (for example, certified nursing assistant becomes an RN) in return for years of service in the new role (NSNA, 2010, 2011).

Among other forms of support for nursing education, the passage of the landmark Nurse Training Act of 1964 established a student loan program for undergraduate nursing students (Yett, 1966). Today, funding for advance practice registered nurse education dominates the grant programs offered through the Health Resources and Services Administration (HRSA). The only undergraduate funding available through HRSA Grant Programs support nursing education opportunities for individuals who are from disadvantaged backgrounds, including racial and ethnic minorities who are underrepresented among registered nurses (HRSA, 2014). Policymakers and those who influence policy decisions need to consider RN pipeline projections. Entering the nursing profession with higher student loan debt could delay academic progression, which results from the necessity to work to repay loans. As the nursing profession continues to collectively implement the Institute of Medicine Report (2010) Future of Nursing: Leading Change and Advancing Health, it is important to understand how to determine where student financial needs are the greatest.

All new college graduates today face a tough employment market with significant debt, and new nursing graduates appear to be experiencing similar challenges. While health care graduates have traditionally had lower unemployment rates than liberal arts and social sciences graduates, the data from the NSNA New Graduate Annual Surveys suggest they are more likely to be in debt than in the past and the money borrowed may impede their future choices in life and impact their academic progression. Policy–makers and educators need to be aware of the debt that is carried by these new graduates. It is imperative strategies be created to support a workforce that is prepared to meet the health care challenges faced by the next generation of nurses.