Answers to Your Medical School Loan Forgiveness Questions

If you’re considering going to medical school, already in med school, or have been in the field for years, you may have heard of a little something called student loan forgiveness.

The concept is an easy one for medical students and professionals to get on board with — what’s not to like about not paying your entire student loan bill, especially with the cost of medical school?

However, you’ve probably also heard about all the hoops you need to jump through to be eligible. That may have reduced student loan forgiveness to something you roll your eyes at more than something you’d actually consider pursuing.

But before you write it off as a pipe dream, let’s get you the straight answers you’re looking for. Then you can decide if the student loan forgiveness program is something you might be eligible for in the future.

Here’s the formal definition, according to the U.S. Department of Education:

The Public Service Loan Forgiveness (PSLF) Program forgives the remaining balance on your Direct Loans after you’ve made 120 (10 years) qualifying payments under a qualifying repayment plan while working full-time for a qualifying employer. However, your loan will only be forgiven if you meet all PSLF Program eligibility conditions.

OK, there’s a lot to unpack there, so let’s get to every part of that definition so you know what you need to do to qualify for loan forgiveness.

The PSLF Program is a way for doctors to reduce the financial burden of their student loans.

Let’s tackle that first piece of the puzzle:

The Public Service Loan Forgiveness (PSLF) forgives the remaining balance on your Direct Loans…

Only federal student loans qualify for the PSLF Program. That makes sense since it’s a program provided by the U.S. Department of Education. However, not all federal student loans qualify. Here’s the exact list of federal student loans that are eligible for forgiveness:

• Direct Subsidized Loans
• Direct Unsubsidized Loans
• Direct Parent PLUS Loans
• Direct Grad PLUS Loans
• Direct Consolidation Loans
• Direct PLUS Consolidation Loans

Here are the student loans that are not eligible for loan forgiveness under the PSLF Program:

• Federal Family Education Loan
• Federal Perkins Loan Program
• Any private student loan

That last one is very important to remember. Private loans — whether they were taken out when you went into undergrad or medical school, or if it’s a refinance loan — are not eligible for student loan forgiveness. Remember this before you refinance your federal student loans.

It might be worth refinancing some of your federal student loans and leaving the rest eligible for loan forgiveness.

Now, that doesn’t mean you shouldn’t refinance your loans; refinancing could reduce your interest rate, lower your monthly payment, help you pay off your loan faster, and a lot of other perks. But if you’re hoping to qualify for the PSLF Program, you’ll want to:

1. Avoid refinancing your federal student loans entirely,
2. Only refinance your existing private student loans, or
3. Refinance some of your federal student loans instead of all of them

For example, you might choose to refinance your undergrad federal student loan and leave the federal loan you took out to cover a medical school as is. In that case, your medical school federal loan would be eligible for the PSLF Program.

OK, now for the second piece of the puzzle…

…after you’ve made 120 (10 years) qualifying payments…

A qualifying payment is one that pays your monthly bill in full. It must be paid no later than 15 days after your monthly bill’s due date. How much that payment is will depend on which qualifying repayment plan you’ve chosen (see next section).

Missing a payment or making one 16 days beyond your bill’s due date would not be considered 1 of the 120 qualifying payments you need to make to be eligible for the student loan forgiveness program. That would mean delaying when your loan(s) would be forgiven.

Note: The 120 payments don’t need to be consecutive, so if you miss a single payment, then the day your loans are forgiven would only be delayed a month.

Enrolling in an income-driven repayment plan maximizes the benefit of the PSLF Program since it will control the amount of your qualified monthly payments.

Next up:

…under a qualifying repayment plan…

The PSLF Program defines a qualifying repayment plan as any income-driven repayment (IDR) plan or the 10-year standard repayment plan.

However, an IDR plan is the only type of repayment plan in which you’d benefit from the PSLF Program; the standard 10-year program would have your federal student loan paid off entirely after 10 years, which is when you’d be eligible for loan forgiveness. So, in order to maximize the benefit of the PSLF Program, you’d want to be on an IDR plan for as much of that 10-year repayment plan as you can. That way, you’re not paying more each month than you need to; you could pay less each month and still qualify for the program.

Here are the IDR plans that qualify for the PSLF Program:

• The Revised Pay As You Earn (REPAYE) Plan
• The Pay As You Earn (PAYE) Plan
• The Income-Based Repayment (IBR) Plan
• The Income-Contingent Repayment (ICR) Plan

Onto the next piece of the puzzle:

…while working full-time…

The definition of “full-time employment” varies from one place to the next. You must meet your employer’s hourly requirements to be eligible for the PSLF Program. However, you must work a minimum of 30 hours per week in order to remain eligible for student loan forgiveness. That means if your employer defines “full-time employment” as working under 30 hours per week, then you need to continually hit that 30-hour target in order to remain eligible.

And if you work at multiple hospitals or medical offices? You may still be eligible for student loan forgiveness as long as the work you do each week averages to 30 hours over the course of the month.

You must work full-time while making your qualified payments in order to qualify for the PSLF Program.

Without further ado, the last piece of the student loan forgiveness puzzle:

…for a qualifying employer.

You can’t just work at any hospital or medical office and expect to qualify for the PSLF Program. You need to work at one of the following types of employers while making your qualified payments in order to remain eligible for student loan forgiveness:

• Government organization
• 501(c)(3) organization
• Not-for-profit organization [that is not a 501(c)(3) organization]

The employer must also provide a qualifying public service as its primary purpose. In addition, the employer “never includes a partisan political organization, a labor union, or a for-profit organization,” according to the U.S. Department of Education. Volunteering for AmeriCorps or the Peace Corps is considered qualified.

Now that you know all the hoops you need to jump through, are you still considering trying to qualify for the PSLF Program?

If so, let’s fast forward to your 120th and final month of making qualified payments under a qualified repayment while working full-time for a qualified employer. Do your federal student loans magically disappear on their own?

Nope, it takes a little more effort than that.

Once you feel you’re eligible for the PSLF Program, you’ll need to submit the PSLF application in order to have your remaining balance forgiven. You’ll also need to be working for a qualified employer at the time of your application.

You can send the completed application — with your employer’s certification — to FedLoan Servicing at the following mailing address:

U.S. Department of Education
FedLoan Servicing
P.O. Box 69184
Harrisburg, PA 17106-9184

Or, if you prefer to send the application by fax, the fax number is 717-720-1628.

There have been rumblings that the PSLF Program could be eliminated as part of the 2020 fiscal budget. What would that mean for you?

The answer to that is still to be determined since the elimination of the program isn’t final. But it’s possible that if the program is eliminated, it would only impact federal student loans taken out after July 1, 2020. That would essentially “legacy” any current medical student or graduate into the PSLF Program, assuming you still fulfill all of the requirements outlined above.

This was probably a lot to digest. So, take a minute to look away from your phone or computer to reset.

OK, welcome back.

Are there a lot of requirements to qualify for the PSLF Program? Certainly. Does that mean you shouldn’t pursue it? No.

Making your remaining federal student loan balance disappear would be a huge financial accomplishment. Are there sacrifices? Absolutely. There’s a lot to keep track of, and working only for qualified employers will limit where you can work and maybe limit your earning potential. But think of the savings you’d be realizing — not only in those 10 years of payments in your income-driven repayment plan, but also in the years that follow.

Good luck!

Maybe you’d prefer not to chase all the PSLF Program requirements. Or, perhaps you want some of your federal loans to remain eligible but not all. That’s where refinancing can help. A Citizens Education Refinance Loan would combine any and all your student loans into one, and could lower your interest rate, reduce your monthly payment, fix a variable rate, or even remove a cosigner.