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New nursing loan program will do little to address shortages

A new program aimed at graduating more nurses in Mississippi will create more student debt and do little to fix Mississippi’s growing nursing shortage this year, financial aid experts say. It would also put the state in jeopardy for tracking down nurses who default on loans they’ve borrowed.

The state lacks about 3,000 nurses, about a fifth of Mississippi’s entire nursing workforce, according to a recent survey by the Mississippi Hospital Association.

The Respiratory Therapy and Nursing Education Incentive Program, proposed by Caretaker Chairman Jason White, R-W, was one of many programs lawmakers created this session to address the nursing shortage. It is a forgivable loan program through which nursing students can obtain loans that they will not have to repay if they work in Mississippi for five years after graduation. Nursing students who do not meet their end of the bargain will have to pay back the loans with interest.

Lawmakers appropriated $6 million in American Rescue Plan funds for the program. The bill does not specify how many nurses can take out a loan each year, or the number of loans an individual nursing student will be able to receive.

Hospital officials say they desperately need more nurses now, but this program won’t put new nurses at patients’ beds for years; they will have to graduate first. And while the program was supposed to take effect July 1, the state agency charged with implementing it says it won’t be able to make loans until next year because of the complexity of managing forgivable loans.

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

The new program is similar to ones Mississippi already has on the books for nurses, but which lawmakers haven’t funded for years. All five of those The programs have better terms for student borrowers, as they generally require nurses to work in the state for one to two years after graduation for loan forgiveness, rather than five years.

Lawmakers, flush with stimulus dollars this session, funded those programs for the first time since 2015. Rogers told the Post-Secondary Board he’s concerned about offering the new student loan program considering it has worse terms.

“If it’s just one-time money, and we did year-long awards this year and then these students are committed to five years of service to the state, is that ethical, when we have these other programs?” She asked. “There are a lot of questions.”

OSFA wanted lawmakers to pass a different program, the Hospital Nurses and Respiratory Therapists Retention Loan Repayment Program, which was proposed in the Senate. That program, which was written in consultation with Rogers’ office, would have actually erased student debt in Mississippi by paying off existing loans on behalf of nursing students already working in the field. It was also intended to solve the shortage of nurses. But House lawmakers refused to negotiate in the closing weeks of the legislative session; the bill died at conference.

White, the House bill’s sponsor, did not respond to 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 the nursing shortage in the United States. Mississippi.

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

OSFA will likely propose rules for the program in September. Institutions of Higher Education are also checking to see if this program is an allowable use of ARPA dollars, which must be spent by the end of 2026.

Mississippi has used various loan programs since the 1940s to encourage people to go into teaching and nursing and other lower-paying health care 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 forgivable loan programs, states aim to do this by providing loans that students can repay by working in a particular industry for a period of time. These kinds 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 “whimpers,” said Mark Wiederspan, director of a state financial aid office in Iowa.

To manage the “groans”, the state essentially has to become a bank. Students sign a promissory note, and if they can’t repay the loans, the state sends them to collections. Even though Mississippi hasn’t made any new forgivable loans since 2015, OSFA is still collecting about $12 million in debt from 1,500 borrowers who have defaulted, according to its recent annual report.

With loan repayment programs, OSFA’s preferred program, the state doesn’t make new loans but instead tries to lure workers into an industry by promising to forgive their existing student debt. These programs aim to achieve a similar goal, but do not create new opportunities for students to acquire state-sponsored debt, which is one reason states are increasingly favoring this type of program.

“If you think student loans are a problem for students, giving them an additional loan that they may not be able to repay doesn’t seem like a solution,” said Sandy Baum, who studies higher education finance for the Urban Institute. . “The solution must be aimed 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 working in Mississippi. The bill would have provided loans to 150 new registered nursing applicants, 50 new practical nursing applicants and 25 respiratory therapists each year, Sen. Rita Potts-Parks, R-Corinth, explained at a committee hearing in early January.

“Their to try to address the shortage of healthcare professionals, particularly nurses, LPNs, RNs, respiratory therapists,” he said. “I think all of us get emails weekly or daily about the need from 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 take out the loans to pay for school. 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 is no strong evidence to suggest that people are drawn to choose a particular occupation or college because of financial support.”

What is clear is that loan programs don’t address the root cause of Mississippi’s nursing shortage, Baum said. Hospitals cannot compete with the high salaries offered by traveling nurse companies. Nursing schools, lacking capacity, have to turn away potential students.

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

A 2018 report from the Congressional Research Service backs up Baum’s point: It found that “although these programs provide a financial incentive for people to enter a specific field that pays relatively less…the amount received is generally much lower than the overall lifetime earnings gap.”

The report recommends that policymakers ask themselves three questions before implementing these types of loan programs: Will people enter a field or industry without the incentive of a loan program? Is student debt “the only or the most important impediment” to entering that industry? Do these programs encourage students to take on more student debt than they otherwise would?

“You’re asking people to make different life choices because of this and making it a little bit easier to go down the path that you want,” Baum said. “But it seems so obvious that as long as wages are low, it will have limited impact that something like this little Band-Aid.”

Instead of forgivable loan programs, states are increasingly moving toward loan repayment programs. Prior to this session, Mississippi appeared to be doing the same.

In 2014, Wiederspan found that the state had the most forgivable loan programs in the country. But last year, the state made the switch to teaching, another understaffed industry. Many teacher loan forgiveness programs were dissolved and replaced by the William Winter Teacher Loan Repayment Program.

These programs also don’t address the rising cost of higher education in Mississippi, said Tom Harnisch, vice president of government relations for the Association of State Higher Education Executives. He said lawmakers should pursue policies that make it easier for students to pay for college and not create more student debt.

“I don’t want to say that these programs don’t have benefits for the participants, I’m sure they do, but there are more systemic problems that legislators need to look at,” he said. “We need to refinance higher education as a public good.”

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