graduating from medical school in the United States often comes with a significant financial burden. Physicians typically carry the highest student debt of any profession, averaging over $230,000 for medical school alone. Many medical students rely on the US Public Service Loan forgiveness (PSLF) Program to manage this debt.

The PSLF program offers debt relief to those who work in qualifying hospitals or clinics for 10 years,making 120 monthly loan repayments.After fulfilling these requirements, the remaining debt is forgiven. The forgiven amount varies based on salary and loan repayment amounts. Approximately one-third of medical students plan to utilize this program.

Potential Changes to PSLF Eligibility

Proposed changes to the PSLF program are causing alarm among some students and physicians. Language in a Republican budget bill currently under debate in Congress would exclude residency years from counting toward PSLF. Residencies can last from three to seven years, depending on the medical specialty.

At a time when our country urgently needs more doctors, especially in underserved areas, this bill would create new financial and logistical barriers that disproportionately harm low-income students.
Shannon Udovic-Constant, president of the california Medical Association

The Department of education is also holding public hearings to discuss potential limitations on which hospitals and clinics qualify for PSLF. As of now, rural and community hospitals, Veteran Affairs health services, and most nonprofit and academic medical institutions are eligible, allowing graduates to begin their 10-year countdown during residency.

Concerns About Access to care

Critics argue that making it harder for new doctors to use PSLF could discourage them from choosing lower-paid specialties, such as primary care or pediatrics. This could also reduce access to care in rural or underserved regions.

I went into pediatric endocrinology knowing that I would work for an academic non-profit hospital, and as such, would qualify for Public Service Loan Forgiveness. If I thought I would have to pay back my $200k of loans on my own… I may have made a different choice.
Brittany Bruggerman,a pediatric endocrinologist at the University of Florida,in a Facebook post

the “Doctors’ Loophole” and Proposed Solutions

these proposed changes are not the first attempts to reform PSLF. While the program provides crucial support, it faces bureaucratic challenges and a lack of clarity, according to Dimitri Koustas, an assistant professor at the Harris School of Public Policy, University of Chicago.

Some argue that the program’s rules, including income thresholds and employer eligibility, can seem arbitrary. Audra McGeorge, communications director of the Republican-controlled House Committee on Education & the Workforce, explained that the proposed changes aim to address what is referred to as the “doctors’ loophole.” This refers to the benefit doctors receive from making loan repayments on a low salary during residency, followed by a significant salary increase once they become attending physicians.

Supporters of the changes argue that residency years should be considered part of doctors’ education, not employment. The proposed budget bill would allow physicians and dentists to defer loan payments during residency without accruing interest,based on this premise. McGeorge stated that this would benefit residents earning lower salaries,as currently,interest can accrue during deferment.

Potential Repercussions for Healthcare

Medical organizations and students are concerned that these changes could have lasting effects on doctors’ careers and the healthcare system. Jim Dahle, an emergency physician and founder of The White Coat Investor, a personal finance site for doctors, believes that reducing PSLF’s benefits could push indebted medical students away from academic practise and lower-paying specialties. Some low-income students may even decide not to pursue medicine at all.

PSLF was one of the few incentives encouraging new doctors to work in underserved or rural areas that often pay considerably less.
Santoshi Billakota, a neurologist and epileptologist at Wyckoff Heights in Brooklyn, NY, and co-host of Be Empowered, a podcast offering financial advice for doctors

doctors and students also point out that the residency matching process limits their control over where they end up. Those in lower-paying positions would be penalized if they couldn’t offset the loss of income by participating in PSLF. The National Resident Matching Program did not respond to requests for comment.

the Incentive of Forgiveness

Dimitri Koustas explains that the PSLF program aims to encourage professionals, like doctors, to take on roles they might otherwise avoid due to financial constraints, incentivized by the promise of debt forgiveness.

His research indicates that when this incentive is removed, people tend to leave their positions for higher-paying opportunities. Koustas noted that during the Biden governance’s one-time adjustment, which allowed payments made outside of qualifying employment to count toward debt forgiveness, we did see that people switched out of public service and the not-for-profit sectors when they got forgiveness.

It saddens me that other people from my background will not be able to access higher education to make our country better. I would not be where I am today if it were not for federal student loans.
Mary Flaherty, a neurologist and PSLF participant

Koustas’ research also suggests that first-generation students and those from lower-income backgrounds are more debt-averse and may be less likely to pursue expensive educational paths without early debt relief opportunities.

The PSLF program has been the only realistic path forward to both manage [my] debt and serve in a lower-paying but essential public sector role, such as practicing at the VA after residency.
Austin Miller,an incoming resident in Physical Medicine and Rehabilitation at Sinai Hospital of Baltimore,in a comment to the Department of Education