Nursing student Kailey Scott is looking forward to graduating from Grand View College now that she knows part of her college loans will be paid off for her.

Scott is one of 233 people Iowa Student Loan Liquidity Corp. selected last fall to have part of their student loans repaid through its Nursing Education Loan Forgiveness Program. This program was designed to address Iowa’s shortage of nurses by repaying the student loans of nursing professionals who agree to work in Iowa upon graduation.

“Personally, it’s very important so that when I get out of college, I don’t have to worry so much about being in debt, and I can get out and really enjoy being a nurse,” said

Scott, a Grand View senior who will graduate next December as a registered nurse with a bachelor of science in nursing.

Although she has lived in Greater Des Moines her whole life, until Scott was accepted for the loan forgiveness program, she considered leaving Iowa after graduation. But she said this incentive to stay changed her mind.

Over the course of four years, Scott will have $15,000 of debt removed from her account with Iowa Student Loan. Her loan forgiveness is contingent on her working in Iowa for four years following graduation, at a long-term-care facility.

Five-year program

When Iowa Student Loan announced the loan forgiveness program in February 2004, it said it intended to approve 200-300 applicants each year for five years, with a total loan forgiveness of $8 million. Last year, 685 students applied for the program, and another 600 applied this year by the Sept. 1 deadline, according to Steve McCullough, president and CEO of the non-profit loan administrator.

“In Iowa, we noticed a disturbing trend in our health-care fields, where far too many nursing professionals leave the state after receiving training through one of Iowa’s many institutions,” McCullough said. “As an organization, we saw this need and thought it was very important for us to try to contribute, since we are here to serve the state of Iowa.”

Iowa Student Loan consulted with several health-care organizations to create the program, including the Iowa Nurses Association, the Iowa Council on Nurses, the Iowa Hospital Association, the Iowa Board of Nursing and the Iowa Department of Public Health and its Center for Health Care Workforce Planning.

The loan forgiveness program has a “pecking order” for awards, McCullough said, basing its awards on where the nursing professional intends to work following graduation. A nurse educator is eligible to receive a maximum of $20,000. Registered nurses may receive up to $15,000 if they intend to work in a long-term-care facility, $10,000 if they intend to work in a rural county and $5,000 if they intend to work in an urban county. McCullough said he’s heard of similar loan forgiveness programs for nurses in other states experiencing nursing shortages, including Pennsylvania, Tennessee and Florida.

The loan forgiveness takes effect in installments, with 15 percent applied after the first year of full-time employment, followed by 25 percent the second year and 30 percent after years three and four. The Iowa College Student Aid Commission helps administer the program.

‘Significant shortage’ by 2010

Eileen Gloor, executive officer of the Iowa Department of Public Health’s Center for Health Workforce Planning, said Iowa Student Loan’s loan forgiveness program couldn’t have come at a better time.

“The average age of our nurses in Iowa is 46, and we are finding that we just don’t have enough nurses entering the field to replace those that will be retiring soon,” Gloor said. “The need for nurses is only going to grow, as our population continues to age and our immigrant population grows.”

Gloor said Iowa will experience “a significant shortage” of nurses by 2008-2010 unless more students enter that profession or accommodations are made to allow older nurses to remain on the job longer. According to a 2004 report from the Center for Health Workforce Planning, the state’s shortage of nurses will increase from 8 percent in 2005 to 27 percent in 2020.

One strike against Iowa for nursing retention is the wages it pays its nurses, Gloor said.

“When we compare ourselves with other states, some of the issues we need to be concerned with is that comparatively, nursing wages in Iowa are low,” she said. “That is tied to the low Medicaid and Medicare reimbursement rates. Graduates can go to other states and make more money.”

According to data compiled by the U.S. Department of Labor’s Bureau of Labor Statistics in 2002, registered nurses in Iowa ranked 52nd on a list showing median hourly and annual earnings for nurses in all 50 states, the District of Columbia and the territories of Guam and the U.S. Virgin Islands.

Another challenge to increasing the number of nurses in Iowa is a shortage of nurse educators, which causes many nursing programs to keep their enrollments small.

“We are seeing a huge shortage of skilled nurse educators to teach nursing students, so we can’t produce more nurses,” Iowa Student Loan’s McCullough said.

During the 2004-2005 academic year, Iowa’s nursing programs were estimated to have 128 faculty vacancies, according to the Iowa Department of Public Health. When nurses receive their master’s degree and become eligible to teach, Gloor said, some decide against it because “their first inclination is to practice,” and they can make significantly more money practicing than by teaching.

More help still needed

Although Iowa Student Loan’s program is designed to accept applications for only three more years, McCullough said his organization will review the earnings it has made on the sale of tax-exempt bonds to finance the program, and see whether sufficient funding is available to extend the program.

Gloor hopes that the Iowa Legislature will step up its funding of programs to address the nursing shortage to create a sustainable program to address the problem. In the meantime, her agency is using federal funding the Department of Public Health has earmarked for grants to support the recruitment and retention of nurses.

“There was some funding allocated by the Legislature during this past session,” Gloor said. “It wasn’t much, but it was a start.”