August 18, 2022, 3:07 p.m. News Staff — With a pause on student loan repayments scheduled to end on Aug. 31, the AAFP recently urged Congress and the Department of Education to take action to help relieve the financial burden on physicians and medical students.
In an Aug. 11 letter to Education Secretary Miguel Cardona, the Academy urged the administration to extend the pause beyond its current expiration date. The letter, signed by AAFP Board Chair Ada Stewart, M.D., of Columbia, S.C., was in response to the Department of Education’s proposed rule regarding student loan programs that was published in the Federal Register July 13.
The AAFP applauded the pause on student loan payments but also stressed the need for long-term, comprehensive solutions.
The average student loan debt for four years of medical school, undergraduate studies and higher education is $200,000 to $250,000 — and is expected to rise, the Academy said. This is problematic given the nation’s projected shortage of up to 48,000 primary care physicians by 2034.
The Academy pointed out that the Public Service Loan Forgiveness program inadvertently excluded California and Texas 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. Thus, many physicians in both states who meet the spirit of the program cannot qualify for loan forgiveness due to laws unique to those states.
There are up to 7,000 new physicians working in nearly 270 nonprofit hospitals and clinics in California who could be eligible for the PSLF program. The AAFP said existing requirements place California and Texas at severe disadvantages in recruiting new physicians and hinder patient access to care. Both states are projected to have significant physician shortages during the next decade due to growing and aging populations as well as aging physician workforces.
“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),” the Academy wrote. “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.”
To combat rising student debt, the AAFP has advocated for expanded funding for federal loan forgiveness and scholarship programs that target primary care. The Academy also supports deferring interest and principal payments on medical student loans until after postgraduate training and recommends that medical student loan interest be deductible on federal tax returns.
That letter, which was sent to leadership of the U.S. House Committee on Education and Labor and the U.S. Senate Health, Education, Labor and Pensions Committee, urged Congress to “enact long-term solutions to ensure borrowers do not continue to be burdened with insurmountable student debt levels.”
The bipartisan REDI Act would allow borrowers to qualify for interest-free deferment on federal student loans while in medical or dental internships, or residency programs.
The joint letter acknowledged that residents often qualify for loan deferment or forbearance processes, but they continue to accrue interest that is added to their debt. It has been estimated that a typical resident pays more than $12,000 a year in interest alone and may spend up to 25% of their annual income covering interest payments.
“Passage of the REDI Act is an important part of student loan repayment reform,” the joint letter stated. “This bill would prevent medical and dental residents from being penalized during residency and save them thousands of dollars, in interest. Providing interest accrual relief during residency also would make the concepts of opening practices in underserved areas or entering faculty or research more attractive and affordable to residents.”