A Physician's Guide to Student Loan Forgiveness

what physicians need to know about CPT codes

A Physician’s Guide to Student Loan Forgiveness

Each year, thousands of physicians decide to pursue a loan forgiveness or assistance program to ease the burden of their student debt. While the appeal of these programs is obvious, many of the requirements, restrictions, and fine print are not nearly as transparent. For doctors who are counting on loan forgiveness, it can be devastating to learn that they have accidentally disqualified themself from eligibility, and instead must repay the full amount of their student debt. Before you decide to pursue a certain loan forgiveness program, read through our step-by-step guide to loan forgiveness for physicians.

Step 1: Consider available loan forgiveness opportunities

There are a wide variety of loan forgiveness programs available to physicians depending on their specialty, region, and professional goals:

Public Service Loan Forgiveness (PSLF)

Public Service Loan Forgiveness is a program created by the Federal Department of Education to incentivize physicians and other professionals to pursue careers in public service. Physicians who work for a qualifying government or non-profit institution can receive forgiveness for all remaining federal direct loans, after making 120 qualifying payments over a ten year period. Better yet, PSLF is tax-free. 

However, there is an important caveat to bear in mind. Any physicians considering PSLF should closely follow the most recent updates and statistics related to the PSLF program. In past years, a very low low-percentage of borrowers who applied for PSLF were approved. Future policy changes could either improve the success rate for PSLF applicants or jeopardize the program altogether, so stay up-to-date on the latest news relating to this federal program.

National Health Service Corps (NHSC) 

NHSC offers a variety of loan repayment opportunities for physicians, including: 

  • NHSC Loan Repayment Program: Primary care physicians who work for a minimum of two years in a designated Health Professional Shortage Area (HPSA) can receive up to $50,000 in tax-free loan repayment assistance. Qualifying specialties include: family medicine, internal medicine, pediatrics, OB-GYN, geriatrics, and psychiatry. Check out the full-list of eligible and non-eligible loan-types.
  • NHSC Students to Service Program is geared towards medical students. The Students to Service program offers up to $120,000 in loan forgiveness over the course of four years to fourth-year medical students who commit to working full-time in HPSA for at least three years. Most primary care specialties are eligible for this opportunity. 
  • Substance Use Disorder Workforce Program was introduced to help combat the national opioid crisis. This program can provide up to $75,000 in student loan repayment for doctors who work full-time in substance use disorder sites. To qualify, physicians must work at an approved site for a minimum of three years.
  • NHSC State Loan Repayment Program (SLRP): NHSC also offers state-based programs to encourage physicians to work in HPSAs. Read more about opportunities in your area.

National Institutes of Health (NIH) Loan Repayment Programs

The National Institutes of Health offer a variety of loan repayment opportunities that may be ideal for physicians interested in biomedical or behavioral research. In total, NIH has eight loan repayment programs available to physicians who conduct at least 2 years of research funded by a U.S. university, non-profit, or government organization in the following fields:

  • Clinical research (additional opportunities are available for clinical researchers from “disadvantaged backgrounds”)
  • Pediatric research
  • Health disparities research
  • Contraception and infertility research

NIH also offers internal loan assistance to physicians directly employed by the NIH who conduct general research or AIDS specific research.  Each NIH program offers up to $35,000 in student loan repayment each year. Awards are provided based on the potential the candidate shows for a successful career in research. Refinanced loans are not eligible, nor are loans consolidated with another person’s loans. Read more about qualification criteria. 

Indian Health Service Loan Repayment Program

This federal program can provide up to $40,000 in student loan repayment for doctors who commit to work for 2 or more years at a site that serves American Indian or Alaska Native populations. Specifically, the physician must be employed at a health facility administered directly by IHS (Indian Health Service), a Tribal organization, or an Urban Indian program.

Physicians who work more than two years may be able to extend their contract and receive additional repayment assistance. Refinanced loans are not eligible, nor are loans consolidated with another person’s loans. Learn more about IHS LRP. 

Military Loan Repayment Programs

Medical and dental doctors who are active or reserve U.S. military members can receive a variety of benefits including loan forgiveness and repayment. Contact your specific military branch to learn more about available opportunities. Here are a few to consider: 

Other State-Specific Programs

Most states offer their own loan-repayment assistance or forgiveness programs to attract physicians to work in high-need areas. Review the AAMC database to explore programs in your area.

Step 2: Verify your eligibility

As you weigh different options of loan forgiveness and repayment, pay careful attention to which loan types qualify for forgiveness under each program. For example, PSLF is only available for direct federal loans, while other programs will offer repayment for private educational loans. Many programs restrict loans that have been refinanced or consolidated. If you’re interested in a loan forgiveness opportunity, make sure you research which loan types qualify, as this information can help you decide if and when to refinance your student debt (See step 4).

Step 3: Find a qualifying employer

As you may have noticed, most loan forgiveness programs are designed to attract physicians to work in a specific field or region, whether it’s indigenous communities, substance use disorder, rural areas, or otherwise underserved populations. Depending on your program of choice, your employer must meet specific criteria to qualify you for loan repayment or forgiveness. Some programs may allow physicians to work in any medically underserved area, while others will define a requirement for a specific HPSA score. 

Never just assume that an employer meets the qualifications. You should confirm the qualification of any employer with your program of interest before accepting a position. Additionally, pay close attention to the protocol maintaining eligibility in the event that you change employers during your service period. 

Step 4: Develop a repayment strategy

New doctors are constantly targeted for offers and information about student loan refinancing. Depending on your loan forgiveness program, refinancing may or may not be an appropriate option. Once you have researched programs and fully understood the eligibility requirements, you will want to determine a repayment approach that maximizes your loan forgiveness. 

For programs that are specific to federal loans, income-driven repayment plans can reduce required monthly payments before the debt becomes eligible for forgiveness. For example, if you plan to pursue Public Service Loan Forgiveness (PSLF),  you will need to make 120 qualifying payments over ten years before your remaining debt can be forgiven. As a result, prospective PSLF applicants should enroll in an income-driven repayment plan to ensure that they are paying the minimum amount in their 120 payments. Otherwise, according to the terms of a standard 10 year plan, they will have already paid off most of their loan balance by the time their ten years of service is completed.

If the program repays or forgives private loans, check the rules relating to refinanced and consolidated loans. Many, but not all, programs disqualify student debt that has been refinanced. If you are allowed to refinance your loans and remain eligible, you may be able to minimize interest with medical school loan refinancing. Many loan assistance programs place a cap on their financial assistance, which means doctors will still have to repay a portion of their debt. Strategic refinancing can help you pay down your remaining principal faster, but always make sure that refinancing will not jeopardize your eligibility for forgiveness or repayment assistance.

If you have a mix of federal and private loans, it is also possible to refinance only the private loans while leaving the option for income-driven repayment or loan forgiveness on the table for the federal loans. 

Step 5: Stay organized and be proactive

The “set it and forget it” approach to planning is the downfall of many physicians who aspire to qualify for student loan forgiveness. The detailed research, planning, and documentation required to successfully qualify for loan forgiveness does not stop once you start working. It is critical to stay on top of any on-going requirements that may affect your eligibility for your program of choice. For example: 

Does your program require annual employment certification to verify that you work at a qualifying facility? 

What documentation is required if you need to change employers during your service period?

What qualifying payments should you make before you are eligible for loan forgiveness? 

Too often, doctors neglect to submit an annual certification or miss qualifying payments that are required by their program. Imagine the shock, frustration and disappointment of realizing you have inadvertently disqualified yourself from loan forgiveness after years of work. As you decide whether to pursue a loan forgiveness program, you should study the exact requirements and consult with a representative from the program. A physician-specific financial professional can also help you stay on top of your on-going eligibility requirements to ensure you have the best possible chance of receiving maximum loan assistance.

Conclusion  

The rewards of a loan forgiveness program can be enormous, both financially and professionally. However, be prepared for a lot of red tape and fine print as you navigate the loan forgiveness process. If you are considering or pursuing a loan forgiveness or repayment program, talk with a financial professional to determine which options can help you get the most value while also helping you reach your long-term financial goals. Schedule a talk with an advisor today. 

Get Physician Specific Financial Planning

Work with advisors that know physicians.

Need help with something else?