Public Service Loan Forgiveness & Residency

The average medical school graduate owes more than $250,000 in total student loan debt. If you’re a new resident or about to head into residency program, not only can that amount of debt be stressful to think about, but it can also affect the decisions you make about your professional trajectory and where you start your medical career.

Fortunately, for physicians interested in a career in public health, Public Service Loan Forgiveness (PSLF) is available to help ease the burden of high student loan debt. The program, which is available to doctors who work for the government or qualifying nonprofit organizations, forgives your remaining student loan balance after ten years (or 120 qualifying payments) of repayment in an Income-driven Repayment (IDR) plan.

Does time spent in residency count towards PSLF?

Payments made during your residency could count as qualifying payments towards PSLF, however, residents will need to make sure they:

• Consolidate all federal student loans into one Direct Loan. If you want to maximize your potential forgiveness amount and start qualifying payments as soon as possible, it may be smart to get this done during the grace period before repayment begins.
• Enroll in a PSLF eligible residency program. Don’t assume that working at a hospital means you’re automatically eligible for PSLF – use the employer search tool on studentaid.gov or schedule a free 30-minute consultation with our of our student loan specialists to understand what types of employers qualify for PSLF.
• Enroll in an IDR Plan. Enrolling in one of these four IDF plans helps to stabilize your monthly student loan payments and is a prerequisite for PSLF.

PSLF Waiver: short- and long-term changes

To help public service workers such as physicians get closer to forgiveness following the COVID-19 pandemic, the Department of Education (ED) announced in October 2021 limited-time changes to the Public Service Loan Forgiveness (PSLF) Program rules, referred to as the limited-time PSLF waiver.

The limited-time PSLF waiver allowed borrowers to receive credit for past periods of repayment that would otherwise not have qualified for PSLF. For many physicians, this meant that past monthly payments they made while working in public service (that would not have qualified previously) could now count toward PSLF.

Although the deadline for the limited-time PSLF waiver passed, you could still take advantage of other payment reduction and forgiveness opportunities, including the Income-driven Repayment Account Adjustment, a one-time payment count adjustment for eligible borrowers enrolled in an IDR program, which has a deadline at the end of 2023. You could be eligible for the one-time account adjustment if:

• You have FFEL, Perkins, or Health Education Assistance Program loans; or,
• You have past periods of forbearance; or,
• You have past periods of deferment; or,
• Your federal loans have been in repayment for 20 (undergrad loans) or 25 years (graduate loans)

To learn more, schedule a free call with one of our student loan specialists.

Steps residents should take to qualify for PSLF

As a resident interested in pursuing PSLF, there are several steps you should take:

Make sure loans are Direct Loans

Only Direct Loans are eligible for the PSLF program, however, if you have other federal loan types, such as FFEL, you could consolidate them into Direct Loans to become eligible.

Work for PSLF-eligible programs

Make sure you’re enrolled in a residency program that qualifies for PSLF. Residents working for several different employer types typically qualify for PSLF, including:

• Qualifying non-profit hospitals or organizations
• State hospital systems
• Federal hospitals
• Public schools, including universities and K-12 school systems

You can find the eligible employer search tool on studentaid.gov here and learn more about types of jobs that qualify for PSLF here.

Be sure to submit PSLF eligibility form each year & track progress

For each year you’re enrolled in PSLF, you should recertify your employment and family size. Submitting an employment certification form (ECF) each year creates a paper trail for compliance and makes it much easier to confirm your eligibility for forgiveness as you near 120 qualifying payments.

For guidance and help with compliance requirements once you’re enrolled, contact our student loan specialists here. We can help with annual recertification for PSLF and keep you up-to-date on any changing requirements.

Choose the right repayment plan

One of the requirements for PSLF is enrollment in an Income-driven Repayment Plan, which calculates repayment structures based on a borrower’s adjusted gross income and family size. Plan choices include Income-Based Repayment (IBR), Pay As You Earn (PAYE), Saving on a Valuable Education (SAVE) / Revised Pay As You Earn (REPAYE), and Income-Contingent Repayment (ICR).

Learn more about and compare IDR plan options here and schedule a free consultation with our student loan specialists to determine which plan is right for based on your financial profile and employment.

Pros and cons of Public Service Loan Forgiveness

Though PSLF comes with many upsides for medical residents interested in a career in public health, there are some potential downsides to consider as well. Our student loan specialists can help you weigh the pros and cons of the program based on your unique financial position.

Additionally, the different IDR plans you could enroll in as part of the PSLF program come with their own pros and cons as well. Learn more here.

Bottom line: PSLF and residency

For many residents passionate about pursuing a career in public health, PSLF is a financial lifeline that significantly eases the burden of student loan debt and makes it possible to actualize their career goals.

However, many medical professionals still find the process of applying for the program as well as the annual recertification required to be time-consuming and tricky to navigate. If you think you could qualify for federal student loan forgiveness, start off by to contacting your loan servicer and get an understanding of what types of federal student loans you have and if you need to consolidate them. You should also gather the following documentation:

• A verified FSA ID – the account username and password that allows students (and parents) to identify themselves electronically to access US Department of Education systems.
• Your financial information
• Your personal information
• Your spouse’s information (if applicable)

If you’re starting the PSLF application process ahead of or during your residency, some extra guidance can help save you time and give you peace of mind during this transitional time in your life and career. Schedule a free consultation with one of our student loan specialists to get your questions about PSLF answered from a knowledgeable guide.