By Jonathan Nelson
The U.S. Department of Education has updated its eligibility criteria for the Public Service Loan Forgiveness Program so that physicians in Texas and California are now eligible to apply, a change that should attract more physicians to practice in safety net hospitals and specialize in primary care. The program is designed to discharge the remaining federal student loan balance for professionals working in public service for governmental and nonprofit organizations after they have made 120 payments on their loans.
The existing PSFL regulations inadvertently excluded Texas and California physicians who treat patients in private, nonprofit community hospitals, children’s hospitals, and rural hospitals from participating because state laws prohibit private nonprofit hospitals from directly employing physicians. In an August 2022 letter, AAFP urged the Department to modify existing PSLF eligibility requirements to support the inclusion of all physicians providing patient care at nonprofit hospitals regardless of employment type — direct employee or contract employee.
The average student loan debt for four years of medical school, undergraduate studies, and higher education is on average between $200,000 and $250,000, according to AAFP. “This number will only continue to increase as the cost of medical school continues to rise. In fact, for first-year students in 2020-21, the average cost of attendance increased from the prior year for public medical schools by 10.3%, making it likely that medical students will have to carry even larger student loans to graduate,” the Academy said in the letter.
The current PSLF program eligibility places Texas and California at a severe disadvantage in recruiting new physicians, particularly minority physicians who are more likely to need loan forgiveness assistance, and harms patient access to care in our most marginalized communities, the Academy argued.
“We urge the Department to modify existing PSLF eligibility requirements to support the inclusion of all physicians providing patient care at nonprofit hospitals regardless of employment type (direct employee or contract employee). … “Ensuring equitable participation in the PSLF program will help attract more physicians to practice in safety net hospitals, make it more financially viable for them to specialize in primary care, and creates more pathways for students from low-income backgrounds to become physicians. This in turn will improve access to health care in underserved communities, diversify the health care workforce, and advance health equity,” AAFP wrote.
In its final rule, published in the November 1, 2022 Federal Register, the department announced a change that would remedy the oversight, stating: “For the reasons expressed by the commenters, the Department has decided to address this unequal treatment by allowing borrowers in the narrow and specific situation of a borrower who works as a contractor for a qualifying employer in a position or providing services which, under applicable state law, cannot be filled or provided by an employee of the qualifying employer to qualify for PSLF.”
To learn more about the Public Service Loan Forgiveness Program, visit the Federal Student Aid website of the U.S. Department of Education.