How President Biden’s Student Loan Forgiveness Plans Affect Medical School Debt
In August, President Joe Biden announced his long awaited plan on forgiving student loan debt.
The big takeaway was that some borrowers are eligible for $20,000 worth of student loan forgiveness. Which is likely leaving many physicians with both undergraduate and medical school debt wondering if they can qualify for this new forgiveness option.
Keep reading to learn more about how this announcement may affect your student loan debt.
How to Qualify for the New Student Loan Forgiveness Program
Unlike most student loan forgiveness programs, you don’t have to commit to any type of professional service in order to qualify for having up to $20,000 worth of your student loans forgiven. However, there are requirements that have to be met.
To start, you must earn less than $125,000 annually if you’re single or $250,000 if you’re married. Pell Grant recipients stand to receive the most forgiveness and can qualify for up to $20,000 in debt cancellation. If you didn’t receive a Pell Grant in college, you can still be eligible for up to $10,000 in debt cancellation.
What this Means for Physicians
Physicians can qualify for this forgiveness, but because of the high incomes that many physicians earn, it’s not as likely that many will qualify. The Medscape Physician Compensation Report 2022 found that physicians in every specialty tend to earn well over the $125,000 per year individual income threshold.
That being said, married physicians may have an easier time qualifying as the household income threshold is much higher at $250,000. This isn’t to say that some single physicians won’t qualify for forgiveness, especially if they have yet to start working or are newer in their careers, but many will find their income immediately disqualifies them. Current medical students who aren’t in loan repayment also won’t qualify for forgiveness.
Residents and fellows are the most likely to qualify for forgiveness as a 2020–2021 AAMC report found that average salaries for first-year residents are slightly less than $59,000 per year, with residents and fellows entering their eighth year of graduate medical training earning only as much as $78,000.
Other Student Loan Forgiveness Options for Physicians
While this forgiveness opportunity may not work out for many physicians, they do have the option of pursuing student loan forgiveness through the Public Service Loan Forgiveness (PSLF) program. Through this program, qualifying participants can have all of their student loan debt forgiven, as long as they make 120 qualifying monthly payments under a qualifying repayment plan and work full-time for a qualifying employer.
Right now, there is a unique opportunity to have former payments that wouldn’t have counted towards the 120 qualifying monthly payments apply to the PSLF program. Borrowers have until Oct. 31, 2022 to apply to have non-qualifying payments count.
If you need assistance determining how you can pay off your student loans most efficiently, we can help you come up with a plan to pay down your debt!