Proposed Loan Forgiveness Changes Could Heighten Primary Care Shortage

Jun. 27, 2016

student loanA new study led by URMC neurology resident Ben George, M.D., M.P.H. appearing in the Journal of General Internal Medicine argues that the a proposed cap in federal loan forgiveness program could have the unintended consequence of dissuading medical students from pursuing careers in primary care.  

Becoming a physician in the U.S. is an increasingly expensive proposition – more than half of the medical school class of 2013 report student debts in excess of $150,000.  While not specifically designed for physicians, the federal Public Service Loan Forgiveness (PSLF) program has become increasingly popular among medical graduates.  Established under the College Cost Reduction and Access Act of 2007, PSLF forgives participant’s student loans after they have made 120 months’ worth of payments while employed at a public or nonprofit institution.  This includes payments made by physicians during their residency.  

The program is widely available to physicians since approximately 75 percent of U.S. hospitals are either non-profit or public entities.   It is estimated that 95 percent of medical school loans from 2010 to 2013 are eligible for forgiveness under PSLF.

Responding to concerns that PSLF will heavily subsidize lawyers, doctors, and other high paid professionals, and that current policies do not sufficiently compel academic institutions to control tuition costs, legislators have proposed limiting maximum loan forgiveness, or potentially eliminating the program entirely.  Currently, PSLF represents a potential of $150,000 in savings for the average primary care physician compared to standard repayment programs.

Analyzing data from the Association of American Medical College Graduate Questionnaire, an annual census of more than 70,000 medical students who graduated from 2010 to 2014, the researchers found that 40 percent of medical school graduates intended to pursue loan forgiveness, with PSLF being the most preferred option.

The authors estimate program expenditures for medical graduates in PSLF could exceed $300 million annually by 2024, an amount that would far exceed expenditures from the National Health Service Corp, which provides loan forgiveness to primary care physicians and other select specialties in exchange for service in underserved communities.

The researchers found that changes to PSLF in the form of a cap, could have a significant negative effect on physicians in lower paying fields such as primary care and those that provide care to underserved populations, where the impact on their lifetime earnings would be more substantial.    

The authors propose that if a blanket cap on PSLF forgiveness were implemented, the funds liberated by the cap be used for an alternative program to alleviate physician debt in exchange for service in medical practices that society needs most – such as care to underserved populations, veterans, Native Americans, or areas with physician shortages. 

Additional authors of the study include Ray Dorsey, and Justin Grischkan with URMC and Ari Friedman with the University of Pennsylvania.