Nurse Practitioner Salary: Is Becoming a Nurse Worth the Cost?
Nurse Practitioner Salary: Nurse practitioners are extremely valuable to the medical community and patients. NPs are not physicians, but they know their stuff. The education requirements to become a nurse practitioner (a.k.a. Advanced Practice Registered Nurse) have gotten even more robust. That means nurse practitioners are even more skilled than before and can handle more complex medical cases.
The practice would not be able to accommodate all the sick visits we have to make without the help of the FNPs on staff. Calling the kids ‘ clinic, getting in quickly and helping our kids get on the mend is nice. It’s a win. We can get quality care for our babies, and the doctors can handle the check-ups and more complicated visits.
But there is more student debt with more education. The good news is that NPs are in high demand and have a relatively low cost of completing their education compared to the average nurse practitioner salary. Moreover, many of them, like Public Service Loan Forgiveness (PSLF), are eligible for favorable loan repayment. So is the nurse practitioner salary worth the student debt?
Nurse practitioners graduate with more student loans than anticipated
Not too long ago, after two years, NPs were able to obtain a Master’s Degree in Science in Nursing (M.S.N.) costing them between $20,000 and $40,000. Then they could earn nearly $100,000.
Through their Doctor of Nursing Practice (D.N.P.) degree, employers are now pursuing NPs. The four-year plan is doubling school years and more than doubling the cost of becoming an NP. As I said before though, everyone benefits from more-skilled NPs.
A nurse practitioner who takes the online program at Baylor University (based in Texas) could expect to spend $82,500 for the 75 credit hours it takes to go from their bachelor’s degree — a Bachelor’s of Science in Nursing (B.S.N.) — to their D.N.P. An Iowa resident could attend the University of Iowa with an estimated cost of $86,047.
The actual cost, however, ends up being more than that. Higher living expenses, higher tuition rises each year, interest on loans and leftover undergraduate loans push the cost of earning a D.N.P. well beyond what is expected.
The Student Loan Planner’s average NP we’ve worked with here has about $149,000 in student loans. This is on the rise because of the hikes in the tuition.
So is it worth it financially?
Nurse practitioner salary comparison
The average NP earnings is around $110,000 each year. With a D.N.P., the typical NP beginning earnings is about $96,000, which is about $10,000 more than a nurse with associate M.S.N. and about $36,000 more than a nurse with a B.S.N., according to a Payscale survey.
The earnings will vary by state too, according to ZipRecruiter. The NP earnings in New York, which is the highest followed by Massachusetts, Maryland, Calif. etc.
The average NP salary in Texas is about $92,000, which is surprisingly near the bottom. Florida is the second lowest average salary for nurse practitioners, about 23% less than New York. Yet even the lowest nurse practitioner salary may be worth the extra cost to obtain a D.N.P. compared to the average college graduate.
So becoming a nurse practitioner leads to an extra $44,000 in earnings per year by the averages. Let’s assume that $44,000 in extra income sustains throughout the entire 40-year career of a NP. That works out to an extra $1,760,000 in lifetime earnings for a D.N.P. compared to someone with a bachelor’s degree. That’s huge.
Taking out $149,000 in loans to make an extra $1,760,000 tends to make financial sense on the surface, but remember those extra earnings will be taxed. We also have to factor in the cost to repay the student loans.
Nurse practitioner student loan repayment options
There are two optimal ways for DNPs to pay off student loans:
Aggressive Pay Back: For people who owe 1.5 times their income or less (e.g. a nurse practitioner who makes $100,000 with loans at $150,000 or less), their best bet could be to throw every dollar they can find into paying back their loans as fast as possible, in 10 years or less. NPs should be sure to look at their PSLF options before refinancing. Often this includes refinancing student loans to get a better interest rate.
Pay the least amount possible: For nurse practitioners who owe more than twice their income (e.g., $100,000 salary and $200,000 or more in student loans), the goal is to get on an income-driven repayment plan that will keep payments low and maximize loan forgiveness, whether it’s through PSLF or taxable loan forgiveness.
The nurse practitioner employer (nonprofit or private practice) could be the biggest factor in choosing between either option.
PSLF versus refinancing for nurse practitioners
Let’s say Sarah has $150,000 in student loans at 6.8% interest. She’s been a nurse practitioner in Texas for three years and was paying on the graduated plan to keep her payments low.
Right now, she’s making $100,000 at an employer that would qualify for PSLF with projected 3% salary increases for the foreseeable future. She’s not married.
In almost all circumstances, the graduated plan is going to end up costing a nurse practitioner more money than they’d otherwise have to spend when paying back their loans.
The graduated plan is neither option 1 nor option 2 listed above and is much more costly. Melissa will end up paying off a 6.8% loan in full over 30 years with increasing payments every 2 years.
It sounds like a good idea to help with monthly cash flow, but 99 out of 100 times, it’s one of the worst repayment options. Choosing PSLF or refinancing to a 10-year fixed rate will both cost less than that.
Remember the graduated plan is not a repayment program that qualifies for PSLF
So let’s compare starting on the PSLF path now versus refinancing to a 10-year fixed rate.
It’s important to see the difference in going for PSLF on Pay As You Earn (PAYE) versus Income-Based Repayment (IBR). You can see being on IBR would cost Melissa about 50% more to pay back her loans compared to PAYE. Nurse practitioners with student debt who are eligible for PAYE should almost never be on IBR.
As for PSLF with PAYE versus refinancing, PSLF is the clear winner. It’s projected to cost about $100,000 less then refinancing — $94,210 versus $195,118.
When is it okay for a nurse practitioner to forgo PSLF?
Sandra likes her job as a non-profit hospital worker. But she got an offer for a job where she would earn $125,000 for a private practice. This is an above-average salary for nurse practitioners in Texas.
Would staying where she is and getting PSLF make more financial sense? Or to take up the new career, give up PSLF and make more money, but have to pay off all their loans?
The change to work would mean that the repayment of her student loan would cost $100,000 more over 10 years. That’s charging $10,000 annually.
In other words, it would have to increase her take-home pay for the year by more than $10,000. To break even with PSLF, all that extra money would have to go towards paying back the refinanced loan.
But in private practice, Sandra will make an additional $25,000 and take home an additional $15,000 a year. Unless she charges an extra $10,000 each year for her mortgage, she would still have an additional $5,000 in compensation for taking-home. That’s financially sensible now!
Refinancing means giving up PSLF for good in this situation, for Sandra. So we could talk about taking the position but keeping her loans in the federal program until she’s sure she’s going to live in the private arena. She would want to refinance her loans if she is 100 percent certain to bring the interest rate down from 6.8 percent to 5 percent.
Is becoming a nurse practitioner worth the cost?
The pure financial answer is yes, as a nurse practitioner’s estimated lifetime earnings versus the average college grade after taxes are $1,056,000. This is opposed to the approximate $195,000 cost of paying back the more expensive road to student loans.
If they refinance and pay it off in full or go for PSLF and save vigorously on the side, most nurse practitioners should have a target to be student-free in 10 years or less.
Like any career, applicants from the D.N.P. can follow this path only if they are all in and student loans will not make them regret their decision.
Having a good understanding of how loan repayment works and how to mitigate both the financial and psychological aspects of carrying that amount of debt are a must before entering school.