With costs of medical school continuing to rise at unprecedented rates, and a widening income gap, the federal government offers numerous student loan repayment assistance options for loan forgiveness, repayment and deferment.
Over a span of two decades, the average cost to attend medical school has almost tripled for public schools, while doubling for private schools (for in-state residents). With average annual costs of public and private medical schools sitting at about $31,000 and $52,000, respectively, many new medical school graduates are facing thousands of dollars in student loans.1 In 2016, about 74% of medical school graduates had educational debt.2
Financial Stress Makes Physician Burnout Likely
With a crippling amount of debt and a modest initial income, physicians and their families feel financial stress as they begin their medical careers. As a result of this added stress, physician burnout is more likely, quality of care can be compromised and the primary care shortage worsens as general practitioner hopefuls forgo primary care for higher paying specialties.3,4 This may be of particular concern for medical school graduates from low-income backgrounds. A 2017 study focusing on the distribution of medical education debt found that, though more medical students are graduating with no student loans, debts are disproportionately rising for low-income medical students.
“There is a concern that the cost of medical school will deter otherwise qualified and underrepresented candidates. We’ve got to get to people younger, earlier; we’ve got to help them understand that they can afford a career in medicine.” –Julie Fresne, MS, Association of American Medical Colleges2
The following student loan repayment assistance programs offer loan forgiveness, repayment and deferment options to help reduce the burden of medical school debt.
Public Service Loan Forgiveness (PSLF)
The Public Service Loan Forgiveness Program is designed to encourage physicians and other community workers to work in public service. The compensation for public service positions may be considerably less than competitors in the private sector. This program helps offset this disparity by giving public servants monetary relief on student loan repayment. To ease the financial burden of college graduates, the PSLF Program forgives a portion of student loans after a minimum number of years.
Determining eligibility for the PSLF program can be complicated and federal student loan servicers do not always provide accurate information. Complicating matters, the proposed 2018 federal budget would eliminate the Public Service Loan Forgiveness program if passed by Congress.
Start the enrollment process as early as possible in your employment, and keep careful documentation about your employment and payments. The Federal Student Aid program recommends that borrowers complete and submit the Employment Certification for Public Service Loan Forgiveness form (Employment Certification form) annually or when you change employers, beginning as early as possible after starting qualified employment.
- Forgiveness after 120 qualifying income-based payments (10 years minimum)
- Applies to Direct Loans
- Non-direct loans may become eligible if you consolidate them into a Direct Consolidation Loan
- Log in to "My Federal Student Aid" and look for the loan type of Direct.
- Loans forgiven by PSLF are not taxable
- Qualifying employers include:
- Governmental organizations at the local, tribal, state or federal level
- Not-for-profit organizations tax exempt under Section 501(c)(3) of the Internal Revenue Code
- Not-for-profit organizations that are not tax-exempt under Section 501(c)(3) but that primarily provide qualifying public services†
- AmeriCorps and Peace Corps
Income-Based Repayment (IBR)/Pay As You Earn (PAYE)
In some cases, monthly payments under a standard repayment plan may make up a portion of monthly income exceeding 10 to 15 percent for low-income borrowers. For cases like these, an income-based repayment or pay-as-you-earn payment program may be beneficial. IBR and PAYE are programs designed to allow borrowers to pay an amount based on monthly income.
- Allows medical residents and physicians to cap monthly loan payments at 10 to 15 percent of their income
- After 20 years of PAYE and 25 years of IBR, any remaining debt is forgiven
- Most direct loans qualify
- Find out if your loans qualify and apply to the program at the Office of Federal Student Aid.
The Federal Student Aid website has additional IBR and PAYE information.
Deferments and Forbearance
If you are unable to afford monthly loan payments, you may be eligible to defer or forbear payments temporarily.
- Deferments vs forbearance
- Deferments do not hold borrowers responsible for most accumulated interest
- Forbearance does hold borrowers responsible for accumulated interest
- Medical residents might qualify for mandatory forbearance
- If eligible, loan servicers are required by law to grant forbearance
- Forbearance can defer payments in 12 month increments
National Health Service Corps
The National Health Service Corps Loan Repayment Program is designed to “recruit and retain medical, nursing, dental, and behavioral/mental health clinicians in eligible communities of need designated as health professional shortage areas.”
- Eligible primary care and behavioral health practitioners receive loan repayment for a minimum of 2 years of service in a high-need, underserved area.
- Eligibility requirements include:
- U.S. citizens or U.S. nationals
- Eligible to participate in Medicare, Medicaid, and the State Children’s Health Insurance Program
- Trained and licensed to practice in the National Health Service Corps field you apply for
- Unpaid federal, state, local or commercial institution loans
- Available relief includes up to to $50,000 of debt forgiveness for 2 years.
- Loan repayments increase in higher need areas.
- Following a 2-year commitment, a continued service option is available to receive further loan repayment.
Additional programs
Many loan repayment and loan providing programs exist based on financial need, geographical location and cultural background. Additionally, some clinics or hospitals in need of physicians will offer loan forgiveness as part of a new hire package.
Check The Association of American Medical Colleges website for more financial aid programs.
† Qualifying public services include, but are not limited to, emergency management, military service, public safety, public service for individuals with disabilities, public service for the elderly, public health, public education and other school-based services.
References
1. Association of American Medical Colleges. “Tuition and Student Fees.” 2017. (accessed 12/15/17)
2. Brin, D. “Taking the Sting Out of Medical School.” 2017. (accessed 12/13/17)
3. Grayson, M. S., Newton, D. A. and Thompson, L. F. “Payback time: the associations of debt and income with medical student career choice.” Medical Education, 46: 983–991. 2012. (accessed 8/9/17)
4. West C., Shanafelt T., Kolars J. “Quality of Life, Burnout, Educational Debt, and Medical Knowledge Among Internal Medicine Residents.” 2011. (accessed 12/12/17)
