New loan program aimed at tackling nursing shortage will create more student debt

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By Molly Minta

mississippi today

Registered nurses Haley Gibbs, left, and Dominic Villa review a patient’s chart during their shifts at Ocean Springs Hospital in Ocean Springs, Mississippi, Wednesday, Feb. 16, 2022. Credit: Eric Shelton/Mississippi Today

A new program intended to graduate more nurses in Mississippi will create more student debt and do little to solve Mississippi’s growing nursing shortage this year, financial aid experts say. It would also put the state on the hook to hunt down nurses who do not honor the loans they have borrowed.

The state is short by about 3,000 nurses, or about one-fifth of Mississippi’s entire nursing workforce, according to a recent study by the Mississippi Hospital Association.

The Nursing and Respiratory Therapy Education Incentive Program, proposed by Pro-tem President Jason White, R-West, was one of many programs lawmakers created this session to address the nursing shortage. This is a forgivable loan program through which nursing students can get loans that they won’t have to repay if they work in Mississippi for five years after graduation. Nursing students who fail to fulfill their part of the agreement will be required to repay the loans with interest.

Lawmakers allocated $6 million in US bailout funds to the program. The bill does not specify how many nurses can get a loan each year, or the amount of loans a nursing student can receive.

Hospital officials say they desperately need more nurses now, but this program won’t put new nurses on the bedside for years – they’ll have to graduate first. And even though the program was to go into effect on July 1, the state agency responsible for implementing it said it would not be able to issue loans until next year due to the complexity. administration of forgivable loans.

“We have a lot of questions about the program, how it should work, how it can work,” said Jennifer Rogers, director of the Office of Student Financial Aid, at a recent Council on Post-Secondary Education meeting. .

The new program is similar to ones Mississippi already has on the books for nurses, but lawmakers haven’t funded in years. These five programs offer better conditions for student borrowers, typically requiring nurses to work in the state for one or two years after graduation to get their loan forgiven, instead of five years.

Lawmakers, doused in stimulus money this session, funded those programs for the first time since 2015. Rogers told the Post-Secondary Board that she was concerned about offering the new student loan program, considering it has worse conditions.

“If it’s just a one-time amount of money, and we gave scholarships for one year this year, and then those students have to pay five years of state service, is that ethical, then that we have these other programs?” She asked. “There are just a lot of questions.”

OSFA wanted lawmakers to adopt a different agenda, the Loan Repayment Program for Retention of Hospital Nurses and Respiratory Therapists, which was proposed in the Senate. This program, which was drafted in consultation with Rogers’ office, would have effectively erased Mississippi student debt by repaying existing loans on behalf of nursing students already working in the field. It also aimed to address the shortage of nurses. But House lawmakers refused to negotiate in the final weeks of the legislative session; the bill died in conference.

White, the House bill’s sponsor, did not return Mississippi Today’s request for comment. On the House floor In early February, Rep. Sam Mims, R-McComb, who chairs the House Public Health Committee, called White’s program a “long-term solution” to Mississippi’s nursing shortage.

“Our goal is to create more nurses, and this legislation does that,” Mims said. “That could be a long-term solution to getting more nurses into our state, because we know that without nurses…that’s why you don’t see any beds available in our hospitals.”

The OSFA will likely come up with rules for the program in September. Institutions of higher education also verify whether this program is an authorized use of ARPA dollars, which must be spent end of 2026.

Mississippi has used various loan programs since the 1940s to encourage people to enter teaching, nursing, and other lower-paying health professions. These programs, in theory, can solve labor shortages by using student debt as a tool to lure borrowers into the field that needs college-educated workers.

Through repayable loan programs, states aim to accomplish this by providing loans that students can repay by working in a particular industry for a period of time. These types of programs are essentially grants that turn into loans if a student doesn’t meet their service obligation, which is why researchers sometimes call them “groans,” said Mark Wiederspan, director of an office of state financial aid in Iowa.

To administer the “groanings,” the state must essentially become a bank. Students sign a promissory note, and if they are unable to repay the loans, the state sends them to collections. Even though Mississippi hasn’t issued new forgivable loans since 2015, OSFA continues to collect about $12 million in debt from 1,500 borrowers who defaulted, according to its report. recent annual report.

With loan repayment programs – OSFA’s preferred program – the state does not issue new loans but tries to lure workers into an industry by promising to cancel their existing student debt. These programs aim to achieve a similar goal but do not create new opportunities for students to incur state-funded debt, which is one of the reasons states increasingly prefer this type of program.

“If you think student loans are a problem for students, then giving them an extra loan that they might not be able to repay doesn’t seem like a solution,” said Sandy Baum, who studies the finances of higher education for the Urban Institute. . “The solution should be targeted at the loans they are already taking.”

The Senate bill would have paid up to $15,000 in student debt — up to $3,000 a year for up to five years — for nurses who work in Mississippi. The bill would have granted loans to 150 new registered nurse applicants, 50 new practical nurse applicants and 25 respiratory therapists each year, Sen. Rita Potts-Parks, R-Corinth, explained during a committee hearing in early January.

“It’s to try to address the shortage of healthcare professionals, especially nurses, LPNs, RNs, respiratory therapists,” she said. said. “I think we all get weekly or daily emails about the needs of our hospitals and our universities as well.”

Another important difference between the two types of programs, Wiederspan said, is that loan forgiveness programs put more money in the pockets of colleges and universities because students get the loans to pay for their education. Loan repayment programs, on the other hand, are essentially a “bonus” for graduates.

Both types of loan programs have an effect on labor shortages, Wiederspan said, but more research is needed to determine how and why. As a professor at Arizona State University in 2018, Wiederspan reviewed studies of these programs and found that there was “no strong evidence to suggest that individuals are motivated to choose a particular profession or academic specialization. because of the financial support”.

What’s clear is that the loan programs aren’t addressing the root cause of Mississippi’s nursing shortage, Baum said. Hospitals cannot compete with high salaries offered by travel nurse companies. Nursing schools, lacking capacity, obliged to refuse potential students.

“The idea that you could go be a nurse somewhere where you’ll make three times as much money, or you can go to Mississippi and they’ll help you pay off your loans?” It may sway some people, but it doesn’t seem like a miracle cure for the nursing shortage,” she said.

A 2018 report of the Congressional Research Service supports Baum’s argument – he found that “despite these programs providing a financial incentive for individuals to enter a specific field that is relatively lower paying…the amount received is generally well lower than the overall lifetime earnings gap”.

The report recommends that policy makers ask themselves three questions before implementing these types of loan programs: Will people go into a field or industry without the incentive of a loan program? Is student debt the “single or biggest barrier” to entering this industry? Do these programs encourage students to take on more debt than they otherwise would?

“You’re asking people to make different life choices because of that and you’re making it a little easier to do what you want,” Baum said. “But it seems so obvious that as long as wages are low it will have limited impact than something like this little band-aid.”

Instead of repayable loan programs, states are increasingly turning to loan repayment programs. Prior to this session, Mississippi seemed to be doing the same thing.

In 2014, Wiederspan discovered that the state had the most repayable loan programs in the country. But last year, the state moved into teaching, another understaffed industry. Many teacher loan forgiveness programs have been dissolved and replaced by the William Winter Teacher Loan Repayment Program.

Those programs also don’t address the rising cost of higher education in Mississippi, said Tom Harnisch, vice president of government relations at the State Higher Education Executive Officers Association. He said lawmakers should consider policies that make it easier for students to get into college and don’t create more student debt.

“That’s not to say these programs don’t have benefits for participants, I’m sure, but there are more systemic issues for lawmakers to consider,” he said. “We need to get back to funding higher education as a public good.”


This article first appeared on mississippi today and is republished here under a Creative Commons license.

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