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AAFP urges withdrawal of proposed PSLF rule
Sept. 15, 2025, News Staff—The AAFP is calling on the Department of Education to withdraw a proposed rule imposing constraints on the Public Service Loan Forgiveness (PSLF) program that would worsen the physician workforce shortage and hinder patients’ access to essential care.
“Studies show that more than 40% of physicians rely on PSLF, and family physicians are among the most reliant,” the Academy said. The letter warned that the proposed rule would lead to “fewer primary care physicians, fewer clinics and fewer options for patients” if it were finalized as written.
‘Overly broad’ definitions threaten workforce, autonomy, public health
The proposed rule would redefine how PSLF codifies “qualifying employer,” introduce ambiguous criteria for disqualifying participation in the program and set no clear appeals process. These “overly broad” parameters, the Academy cautioned, would have a chilling effect on the health care workforce, interfere with the physician-patient relationship and disproportionately harm rural and underserved communities.
The AAFP warned that the proposed rule’s broad definitions of “unlawful” and “substantial illegal purpose” as disqualification criteria allow political interpretations that could jeopardize patient care. In particular, the Academy objected to provisions that would
- hinder the growth of a diverse clinician workforce,
- undermine patient autonomy and shared medical decision-making by imposing nonclinical or rigid diagnostic standards,
- interfere with the physician-patient relationship and
- criminalize medical care.
Join the push to protect the Public Service Loan Forgiveness program
The AAFP emphasized that the proposed rule’s mechanism for removing employers from PSLF “based on vague and undefined standards of ‘substantial illegal purpose,’ even without a criminal conviction or due process,” would be especially problematic for large health systems.
“A single office’s alleged violation could jeopardize PSLF eligibility for thousands of physicians who had no involvement in the matter,” the letter said. “Family physicians working in community health centers, rural health clinics, nonprofit hospitals and other safety-net institutions would be particularly vulnerable.”
Fewer physicians in such settings would “disproportionately harm rural and underserved communities,” the letter added. “PSLF has enabled many primary care physicians to return to practice in their rural hometowns, choosing public service careers they love. Without it, many would have been forced to leave public service for the private sector, leaving critical health needs unmet. If employer eligibility for PSLF becomes uncertain or arbitrary, these communities will lose access to essential care.”
Regardless of setting, the rule as written is cause for concern among employed physicians. AAFP members working under contract with hospitals and health systems and enrolled in PSLF face the risk that their employer could be disqualified from the program. The rule sets no process for recourse in such cases.
Limits to Department of Education’s power is cited
The Academy’s letter challenged the Department of Education’s authority to enforce its “substantial illegal purpose” criterion.
“Only Congress has the authority to substantively alter PSLF eligibility criteria,” the letter said. “The department’s effort to redefine qualifying employment through regulation exceeds its delegated authority and would set a concerning precedent.”
Student loans and other financial assistance—including, since the program’s 2007 inception, PSLF—are governed by Title IV of the Higher Education Act (HEA) of 1965. Across HEA’s 50-year history, amendments and reauthorizations of the law have generally expanded, rather than limited, opportunities for students to spend and owe less on higher education.
The AAFP argued that the proposed rule’s push beyond the statute’s boundaries “could destabilize the PSLF program and jeopardize access to loan forgiveness for physicians serving in public service roles.”
The Academy also pushed back against the proposed rule’s application of the IRS’ “Illegality Doctrine” as the basis for how it would disqualify a PSLF employer. That framework, the AAFP wrote, “introduces ambiguity and undermines the legal clarity required for effective administration of federal programs.”
The AAFP added that the proposed rule’s lack of a defined appeals process and its broad definition of “substantial illegal purpose” would also complicate the process by which an employer deemed ineligible would challenge such a ruling.
“The AAFP urges the department to establish transparent review, appeal and corrective action plan processes to ensure fairness and due process, including developing robust resources to support employers navigating appeals and corrective action plan processes,” the letter said.
Final PSLF rule is expected in weeks
The department closes public comment on its PSLF proposal Sept. 17, 30 days after it was published. Officials have said the final rule will emerge by Nov. 1 and go into effect July 1, 2026.
Absent the proposed rule’s withdrawal, the Academy called for it to be “substantially revised to protect physicians—particularly family physicians—whose ability to serve patients in rural and underserved communities often depends on their employers’ eligibility for the PSLF program.”
The letter said that such an overhaul should
- remove provisions allowing employers to be determined ineligible without due process;
- narrow and clarify eligibility criteria for employers, especially the definition of “substantial illegal purpose”;
- preserve PSLF eligibility for physicians working in nonprofit and government health systems, regardless of unrelated actions by other departments within the same organization; and
- establish clear and fair appeals and corrective action plan processes for employers, as well as robust educational resources for employers.
PSLF is vital to AAFP members
The Academy reminded the department that family physicians and their patients benefit from a robust PSLF program.
Citing this year’s member survey about medical student debt, in which some 68% of respondents reported participation in a loan repayment program, the letter said 75% of those participants were enrolled in PSLF. Overall, about 80% of all physicians carry student debt, with medical education debt averaging $200,000 to $250,000.
“PSLF is especially important for residents and new family physician recruitment in rural and underserved areas,” the letter said. “Recent data from the American Board of Family Medicine shows that PSLF participation among early-career family physicians tripled between 2016 and 2020, highlighting the number of new primary care physicians who want to serve the public.
“Restricting PSLF employer eligibility could discourage medical graduates from entering family medicine or accepting positions in high-need areas, exacerbating existing workforce shortages, limiting communities’ access to essential care and compromising public health outcomes,” the AAFP added. The letter said rulemaking should “view the PSLF program as the important tool it is in building a strong primary care workforce.”
Academy’s medical student debt advocacy continues
The Academy’s Sept. 15 letter to the department is the latest effort in an ongoing advocacy campaign to ease family physicians’ medical student debt burden. The AAFP opposed H.R. 1’s elimination of Grad PLUS loans as well as the law’s $200,000 lifetime cap on unsubsidized professional borrowing, changes that threaten to stymie the primary care workforce. The Academy successfully pressed Congress to remove from the sweeping H.R. 1 a provision that would have excluded medical and dental residents from participating in the PSLF program.