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Student loan forgiveness for mental health professionals

Becoming a licensed therapist involves a lot of work — and a lot of education.

December 21, 2023 • Updated on June 10, 2026

By the Headway Editorial Team • Clinically reviewed by Natalia Tague, Ed.S., LPC, ACS

9 min read

By the Headway Editorial Team • Clinically reviewed by Natalia Tague, Ed.S., LPC, ACS

Becoming a licensed therapist involves a lot of work, and a lot of education. And like many American college graduates, you may also be burdened by thousands (or hundreds of thousands) of dollars in student loan debt. 

Whether you’re starting out as a therapist for the first time or you’ve been working in the field for a while now, debt can be overwhelming. Luckily, for many mental health professionals, student loan forgiveness is an option. Learn more below about your options for repaying your student loans if you work as a mental health clinician.

Key insights

1

Eligibility for student loan forgiveness depends on where you live, where you work, what type of loan you have, and what kind of degree you have.

2

Therapists may qualify for Public Service Loan Forgiveness, income-driven repayment plans, the National Health Service Corps Loan Repayment Plan, state-based plans, and more.

3

Even if you’re not eligible for loan forgiveness, Headway’s competitive reimbursement rates and administrative support can help you run a profitable practice.

Do you qualify for loan forgiveness as a mental health professional?

That depends! The government and other organizations incentivize mental health careers by offering student loan assistance in certain scenarios. But to qualify for loan forgiveness as a mental health professional, you need to meet certain criteria. Whether you qualify for a particular program can depend on factors like:

  • Where you live
  • Where you work, and how long you’ve worked there
  • What kind of loan you have (private or public)
  • Your degree

Each repayment program is different, so before taking steps to apply, do your homework to understand if you qualify to reduce your student loan burden.

Finding a loan forgiveness plan

Finding the right loan forgiveness plan for you depends on a number of factors, from the type of loan you have to where you provide your therapy services. Spending some time researching options can help you quickly determine the best fit for you. Try to keep a detailed record of your employment history and student loan payments to streamline your research process. It may help to speak with a student loan specialist or financial advisor to ensure you’re on the right track. If you’re a recent graduate, researching loan forgiveness plans early on can help you manage your debt as you create a budget for your practice.

To find the right loan forgiveness plan for you, follow these steps:

  1. Pull together all of your paperwork. Make sure you know what type of loan you have (private or public), how much total debt you have, your employment history, and exactly how much you make per year.
  2. Search for loan forgiveness programs available for your license type, loan type, and area.
  3. Compare and contrast different options to determine their effects on your work life (i.e., would you have to adjust your location or hours?), loan payments, taxes, and total amount of debt.
  4. Consult a loan specialist or financial advisor if you’re unsure.

Student loan forgiveness options for mental health professionals

Public Service Student Loan Forgiveness

If you work as a therapist for a public organization and you have federal student loan debt, PSLF may offer some loan forgiveness. PSLF was formed to reduce federal student loan debt for people who work in certain public-serving roles. Qualified workplaces include: 

  • Local, state, or federal government organizations 
  • For example: Public schools, child care facilities, law enforcement, or public safety agencies
  • 501(c)3 nonprofit organizations 
  • Nonprofits that aren’t designed as 501(c)3 but meet other public service requirements 
  • AmeriCorps or the Peace Corps

To qualify, you must make 120 payments toward your loan (they don’t have to be consecutive). After that point, the government will forgive your remaining balance. 

You can learn more about PSLF via the U.S. Department of Education PSLF Help Tool. 


Income-Driven Student Loan Repayment Program

For therapists who don’t qualify for PSLF, income-driven repayment (IDR) is an option. IDR plans include: 

With these plans, your loan servicer will calculate your payments based on your family size and income (usually, around 10-20% of your discretionary income, but the amount ultimately depends on the plan you’re part of), rather than your loan amount.

After 20–25 years (depending on the plan) of income-based payments, the remaining balance of your student loans will be forgiven. After the balance is paid off, you’ll pay taxes on the forgiven amount. Before enrolling in an IDR program, it's worth looking into local and state options that may kick in faster or don’t include a hefty tax payment. 

IDR plans can make sense for people with lots of debt and relatively low incomes. Under these conditions, percentage-based payments are likely to be lower than what you’d pay based on your loan amount alone.

These plans are likely not a fit if you plan to take out additional loans. Under a recent federal law, they will close to new borrowers starting July 1, 2026. In the future, ICR and PAYE plans will be phased out entirely, forcing people on those plans to switch to other surviving IDR options. 


National Health Service Corps Loan Repayment Program

Equity in behavioral health is a major issue — and working in a high-need area can help increase access to mental health services for those who need it most. Along with the rewarding experience of expanding opportunities for people to get the support they need, you can also get help with your student loans. 

If you agree to a two-year service commitment in a designated Health Professional Shortage Area (HPSA), you may qualify for student loan debt forgiveness that applies to mental health clinicians. You could receive up to $50,000 in forgiveness, but the NHSC program forgives amounts based on the level of need at particular workplaces. 

This program works well for people who are open to relocating or already live in an HPSA. You must also be prepared to meet requirements about your working hours, as this program is available only to clinicians who plan to see patients for at least 20 hours per week, 45 weeks per year. To learn more, check out the Health Resources and Services Administration website.


National Institutes of Health Loan Repayment Program

For psychologists with Ph.D. or Psy.D. degrees engaged in research projects for qualified organizations, the National Institutes of Health (NIH) could repay up to $50,000 in student loans each year. Qualifying research doesn’t have to be NIH-funded, but it must align with the NIH’s mission, and psychologists need to commit to at least two years of research.

To be eligible for this program, your debt must be equivalent to at least 20% of your base salary and you must spend at least 20 hours per week conducting research supported by a nonprofit, university, or the U.S. government. While eligibility requirements are fairly narrow, people who meet them stand not only to relieve debt, but also to further their careers by contributing to science. You can learn more about the program at the NIH website.


State or local programs

Your municipality or state may also offer student loan repayment options for therapists. For example, in New York state, licensed social workers providing mental health services can qualify for $6,500 in public or private student loan forgiveness for four years of qualified service, and possibly more if you work in a critical-need area.

In California, mental and behavioral health professionals who work in areas with clinician shortages at approved practice sites could qualify for awards toward loan repayment. Amounts vary, and repayment is contingent on two-year full-time or four-year half time service. 

To find out about potential options in your state, search “therapist loan forgiveness in [state]” or “mental health professional loan forgiveness in [state].”

Tips for applying for student loan forgiveness plans

There’s a lot of fine print to read when applying for loan forgiveness. As you get started, remember to:

  • Make sure you understand the type and amount of debt you have
  • Research all your options — state and federal — to pick the one that serves you best
  • Use resources like the PSLF Help Tool and the Health Workforce Connector to confirm eligibility for certain programs
  • Look into certification requirements to ensure you stay in compliance moving forward (for example, you must recertify your income and family size each year under an IDR plan)
  • Consider consulting a loan specialist or financial advisor for additional help

Key considerations for mental health student loan forgiveness plans

If you’re eligible for a loan forgiveness plan, it may seem like a no-brainer to move forward. But in reality, it’s worth careful consideration. 

Taking part in a loan forgiveness plan may limit your personal and professional flexibility. To maintain eligibility, you may not be able to move, switch employers, or adjust your hours for a fixed period of time. That can feel constraining, particularly early in your career.

It’s also worth carefully researching the tax implications of your chosen plan. Under an IDR plan, for example, you must pay taxes on the total forgiven amount. You may be on the hook for a hefty lump-sum payment once your balance is paid off, so make sure to budget for that well in advance.

FAQs on mental health student loan forgiveness

What professions are eligible for student loan forgiveness?

Eligibility requirements vary by program. But psychiatrists, psychiatric nurse practitioners, psychologists, licensed clinical social workers, licensed professional counselors, marriage and family therapists, and others may qualify for at least some loan forgiveness plans.

Can private loans be forgiven?

Potentially, but certain plans — including PSLF and IDR — are only open to people with federal loans. Make sure to double check eligibility requirements before applying to any loan forgiveness program.    

Can I get student loan forgiveness in private practice?

Yes, but only through certain programs. PSLF, for example, is not open to therapists in private practice. But you may be eligible for other programs, depending on your income and where you practice. 

Is forgiven loan debt taxable?

It depends. Debt forgiven through PSLF is not taxable, but debt forgiven through IDR plans is. Depending on how much debt you carry, that down-the-road tax payment could be significant—so make sure to research both federal and state tax implications when selecting a loan forgiveness plan. 

Can I work part-time and still qualify for loan forgiveness?

Yes, in some circumstances. Some providers working part-time may qualify under state programs or those meant for clinicians working in high-need areas, for example. 

Explore ways to boost your income to help manage debt

Not eligible for student loan forgiveness? There are plenty of ways to increase your earnings to minimize the squeeze of debt. Among others:

  • Look for ways to reduce overhead costs, such as by subletting space in another therapist’s office rather than taking out your own lease.
  • Make sure you’re charging enough for your services based on your area, license type, experience, and treatment specialty. 
  • Market your brand and treatment niche effectively to attract new clients.
  • Create new income streams, such as selling access to paid content or offering consulting services.
  • Become a supervisor for new therapists in training.

How Headway helps mental health professionals make more money

Headway helps therapists earn more by negotiating competitive insurance rates. With Headway managing billing, claims, and credentialing, therapists can focus on seeing clients instead of chasing paperwork or payments. Headway’s platform also offers tools that reduce no-shows and make it easier to build and maintain a full caseload.

By simplifying the business side of private practice, Headway creates more opportunities for providers to grow their income without taking on more administrative burden. Whether working part-time or expanding a practice, therapists can do what they love — and get paid what they’re worth.

Talk to a practice consultant

This content is for general informational and educational purposes only and does not constitute clinical, legal, financial, or professional advice. All decisions should be made at the discretion of the individual or organization, in consultation with qualified clinical, legal, or other appropriate professionals.

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Life as a provider