By Dr. Charles Patterson, WCI ColumnistAmong the few useful educational tidbits I can bestow upon trainees and young physicians, I will on occasion deliver a lecture loosely titled, Everything a Young Physician Needs to Know About Finance. I’ve given the talk for years, so much that it's as canned now as my scripted pontifications on the alveolar gas equation; the dangers of alarm fatigue; and, of course, my advocacy for the liberal use of Ceftaroline (it's very effective and also tastes great on a cracker).
Recently, while delivering my remarks on financial literacy, our conversation took a turn to address the state of Public Service Loan Forgiveness (PSLF). Debt management is foundational to financial planning, but this portion of the talk is typically quick with maybe a question or two devoted to the same. However, on this occasion, with rapid change at the forefront of the news, the worry among residents, fellows, and early attendings was particularly acute. One trainee shared through tears that she and her husband (both physicians) had just delivered their first child. Their combined debt (including their mortgage) exceeded $1 million. PSLF was the backbone of their debt management plan, and without it, life looked a whole lot different. Sadly, this was not the first time I had heard this or a similar story. It's impossible to feel much else but empathy for such a dire situation. The sacrifice necessary to arrive at attendinghood notwithstanding, the financial burden is incredible. The interest alone on those payments must be obscene.
The counterargument to PSLF is every bit as important to borrowers, and it reads something like this: the masses don’t care about rich doctors and their loans. Why should an elementary school teacher be forced to pay the student debt of a professional who makes 20x their salary? You and I may understand an answer that is complex and nuanced, but the average American probably doesn’t. Certainly, I do not foresee this trainee successfully explaining her plight to her patients and their families (almost all of whom make a sliver of her income and are affected by terrible illness).
Other professionals without PSLF access, those who have already repaid their loans, and especially those who did not benefit from today’s generous forgiveness policies may share a similar sentiment: a borrower signed the terms, and they must now live up to their obligations. A relatively narrow (and quiet) population of high-income borrowers coupled with an unforgiving, debt-focused political arena has created an environment in which PSLF could be tethered or worse.
In the following paragraphs, I will review a brief history of the efforts to rein in PSLF and the threat of the current tenor, and I will provide a rudimentary framework for navigating the uncertainty of the times.
Those Who Don’t Understand the History of PSLF Are Doomed to Repeat It
The roller coaster of PSLF policy over the last two decades has been breathtaking. Spanning five presidencies and different compositions of the courts and Congress, the federal government’s approach to education subsidization has been dynamic and generous. Since the College Cost and Reduction Act of 2007, which effectively put no limits on how much could be forgiven, the question of “how much” and “to whom” has been debated without a clear trajectory.
In the early 2010s, the Obama administration initially expanded the PSLF program, though it put forth a proposal to cap PSLF at $57,000 by the end of the second term. This would become a theme: while many proposals have been drafted, few have resulted in Congressional action—and almost all have expanded PSLF programming. Through threats (such as Trump’s first budget proposal to curtail PSLF in 2018), PSLF has endured.
Benefits expanded again while rules were relaxed under the Biden Administration and the early post-COVID era. And now, early in Trump's second term, executive orders flow and courts review, and the state of PSLF is as undetermined as it ever was. The latest report is that Congress will try to strip the ability of future medical and dental residents to have PSLF count during those residency years (though those who are already in PSLF would likely be grandfathered in). For a much more thorough review, I highly recommend StudentLoanAdvice.com's Andrew Paulson’s excellent commentary and resources.
More information here:
Nervous About the Government Taking Away PSLF? Start a PSLF Side Fund
Student Loan Repayment and PSLF in the Trump Era
One Message Away
We need to understand the argument that politicians are making for ending PSLF for high-income professionals. Moreover, we should also be self-aware enough to appreciate that we occupy an upper echelon of earners in America. In an era of remarkable populism, the basis for limiting PSLF is the simple fact that high earners (even trainees) represent an “elite otherness” that attracts no sympathy. This is apparent even among families: if I had a dollar for every time a well-intentioned but ignorant family member sounded off on my income (or, as a medical student, my potential income), I would have many dollars. Public opinion of physicians hasn’t exactly been sterling, either. Of the approximately $1.6 trillion of student loan debt in America today, physicians represent a small minority of the 43 million borrowers. When “government efficiency” becomes the flavor of the week, ending PSLF for high earners seems, on paper, to be politically riskless.
The optics surrounding physician finance wouldn’t help with the PR battle. We, the readers of this blog, are as much to blame for this as anyone. While our content and discussion are aimed at the financial literacy of folks who are historically at risk of mismanagement, targeting, and failure, so often we share in public domains the questions that betray unrelatable champagne problems. Few tradespeople or service workers are going to spend a single neuron’s discharge wondering about the Backdoor Roth, tax strategies for rental properties, or even contribution limits for retirement accounts.
This isn’t just an optics issue; it's a practical matter for those who are relying on PSLF. The electorate to whom I am referring is large. Voters are impassioned, and their elected officials are listening. These same officials will have zero qualms about limiting PSLF for high-income professionals, no matter what stage of life you are in or what kind of mortgage you have. It will take one New Yorker article to highlight this fact: the gauche PSLF successes published in heretofore limited forums could be the difference between discharging your debt or working for an extra decade. Tales of anesthesiologists having $300,000 in loans forgiven aren’t exactly a PR win for PSLF administrators. Imaging isn’t always everything, but I could see how it might be in this case.
I am not sure that a piece of legislation (or an executive order) limiting PSLF for high earners will actually occur. But I can appreciate the vulnerability of those potentially affected. Still, it doesn’t take a particularly savvy politician to see that giving money to people who have a means to earn massive amounts of it is a calculus easily upended.
What You Should Do About It
If you are reading this and thinking that the outlook is bleak, then you are probably in the same mindset as my young trainee friend. But banter is not policy, and conjecture is not foreshadowing. And blessedly, we have a prefrontal cortex to counter our amygdala. In an effort to regain even the semblance of control, I offered the following advice:
- Make a plan: Every debt needs a discharge plan and preferably one that moves faster than the amortization schedule. If you are a medical student or pre-med, this plan should be in place prior to the start of training. Ideally, it would dovetail with a budget and written financial plan. If PSLF is your one and only pathway for paying off student loans, I would suggest you fight [like hell] for its continuation and pray that the trend to liberalization continues. I would also advocate for contingency planning, which looks something like the following.
- Prepare a student loan side fund: If I were on the path to PSLF, I would do my best to set aside an additional 50% of the monthly premium into a high-yield savings account or a money market fund. The savings vehicle really doesn’t matter; it's the act of saving extra to defray future costs that keeps the onus of the debt on you and not on an unreliable payor (in this case, the government). Should you reach the promised land after 120 qualified payments, you would also find yourself with a slush fund to celebrate.
- Consider alternatives: There are alternatives to PSLF: private (non-qualified) employers with student loan forgiveness incentives, state and local grants, and military service (to name but a few). Side gigs to bolster the student loan side fund also fit here.
- Encourage advocacy: If someone were to tell you that Congress had the power to control an unlimited amount of your debt, would you not be motivated to hold them accountable? I can hear your eyes rolling, and I know that the voice of one crying in the wilderness of Capitol Hill is rarely heard. Fortunately, there are deep-pocketed organizations with pre-positioned lobbyists there to do the yelling for you.
- AMA: Yes, that AMA. Believe it or not, the American Medical Association is more than just the flyers spamming your mailbox. As the self-proclaimed Voice of American Physicians, it should be in the vanguard of advocates burning the ears of policymakers. I would prod the organization.
- Professional organizations: Every entity that proposes to develop, maintain, and represent physicians has a responsibility to ensure that their financial health is considered in the wider ecosystem of healthcare. This is especially true of medical schools that hold a central role in the cost of education. Here’s looking at you, AAMC!
- Talk with an advisor: If a significant portion of my net worth was predicated on the inner workings of a convoluted system like PSLF, I would probably be enlisting the help of a professional. Andrew Paulson over at StudentLoanAdvice.com would be a pretty good place to start.
While this list is by no means exhaustive, it's a pretty solid start.
More information here:
The AMA Has Thoughts About Student Loans — Here’s What I Like and What I Really, Really Don’t
The Moral Hazard of Federal Student Loan Policy
The Bottom Line
Inevitably, there will be readers and observers who will point out the obvious: that debt is optional, and that we make the beds that we lie in. It's also true that unless one comes from money or cannot entertain alternatives, loans are a necessary evil. But the decision to attend a private medical school or not to pursue every scholarship imaginable or to buy a house (mortgage) or a car on credit or to opt for a lower-paying specialty are also important. It cannot be “medicine at all costs” but rather “medicine at xx costs and with xx discharge plan.” This is, obviously, no consolation to those whose crushing debt is the source of immense mental anguish. For the sake of transparency: my loans are paid with time, not dollars. Strangely, no one is advocating for the forgiveness of my contract. That said, I am disturbed by the financial burden that physicians (especially young ones) carry, and I am equally moved by the palpable stress that this causes them.
It's not evident to me that PSLF is going to end tomorrow, but this issue is front and center for those who attended my financial literacy chalk talk. I strongly suspect that they are not outliers. Should the program die for physicians, it's also unclear to me that there will be any fewer medical school applicants or students who choose lower-paying specialties. In my observation, the factors that drive the selection of a primary care career are more often representative of a person’s disposition and interest than the ability to receive loan forgiveness. I believe that medicine, in general, will continue to enjoy a greater number of prospects than positions to educate them. I also believe that medical schools, in general, will continue to charge as much as the market will allow. As importantly, there will be lenders to hound and fund those willing to sign the terms. If I am correct (it would be the first time), ending PSLF for physicians would be painful for those affected but harmless to those with the power and will to shape the program.
Student loan forgiveness is a hot-button issue, and this is unlikely to change anytime soon. It is popular in fields outside of medicine, so much so that it became a talking point in the 2024 elections. But high-income professionals who are banking on PSLF should be careful when considering its future. No one knows where it is going or if it's going anywhere at all. This uncertainty can be a nidus for toxic stress and burnout; it certainly was for the physicians in my lecture who expressed the same. To that end, I say minimize your debt load and optimize a career pathway that balances longevity factors with income potential. Above all, implement a robust plan to discharge your debt as soon as possible with contingency plans should it fail.
If you're not currently seeking loan forgiveness and you're thinking about refinancing your student loans, there's no better place to do it than through one of our partners.
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Do you think PSLF will stick around? What happens if it goes away? If you're counting on PSLF in the future, what will you do?
well written Charles. dude, you had me at “we have a prefrontal cortex to counter our amygdala.” 🙂
Do you know if the AMA or AAMC has officially lobbied to keep PSLF? I find the AMA is so huge, with many docs without student loan debt or ones that are already paid off, that I can see the AMA not agreeing to supoort PSLF. also, there is a huge financial illiteracy problem within the AMA. they don’t seem to have a Jim Dahle like ACEP has, and a retirement article from the AMA mentions SEP-IRA, no mention of solo 401k and backdoor Roth: https://www.ama-assn.org/practice-management/career-development/know-these-terms-start-planning-physician-retirement
btw, did you really give a “chalk” talk? we old man this younger generation thinks chalk is something you use to draw on the sidewalk!
Great breakdown of the current situation, Charles. I believe physicians already enrolled in PSLF can still leverage it as a viable strategy. However, those starting med school this fall or later may face significant challenges if residency no longer qualifies. I’m a strong advocate for pursuing PSLF while maintaining a PSLF side fund. This approach keeps the door open for forgiveness while providing a safety net if things don’t pan out.
I also just published a detailed post on StudentLoanAdvice.com analyzing the latest proposals for the upcoming Republican reconciliation bill. Check it out!
you know that teachers qualify for the same program, right? teachers often have to take out loans for mandatory post grad. Sure, higher income earners can benefit if they’re eligible for pslf, but so do teachers. your “elementary teacher” example I think can be reworded…as they often benefit the most from the program because they make often less in income.
The part I can’t get past is the ability to change the goalpost long after my MPN and years and years of PSLF certification were completed during my residency. Will these changes apply retroactively?
Without PSLF, I would have refinanced into a lower interest consolidated private loan when I graduated. Now, I’m 3 years away from being done with PSLF after 7 years in residency. I’m committed to paying my fair share but changing it all after the fact just seems quite unfair when I’ve planned for over a decade around the prior terms (also beyond frustrating for a cautious financial planner like myself).
# 1 There are no changes to PSLF yet. Don’t do anything until whatever changes, if any, have actually occurred.
# 2 Since there are no changes, nobody knows if they will apply retroactively or not. In the past, most people in student loan programs have been grandfathered in to the prior terms most of the time, but that doesn’t seem to be occurring with SAVE. But SAVE was put in place with executive fiat, not an act of Congress, unlike PSLF.
# 3 I agree it feels not only unfair but stupid to be constantly changing student loan policy every month, especially for a field like medicine, where someone might start borrowing as an undergrad, not even start repaying loans for 8+ years, and then really only start making significant payments after 14+ years and qualifying for PSLF after 18+ years. I guess that’s what we get when student loan policy becomes a political football.
Glad you have your loans handled and can wax poetic about PSLF as if it is just a political football or a fun financial thought experiment. But for the majority of PSLF participants, this program is not a maybe. It is the only reason they can survive working in underpaid, overworked public service jobs that keep society running. Do you care much about that?
You talk about optics like that is the real problem, not the fact that people made life decisions based on a government promise that politicians now want to torch. You casually lump everyone together as high income earners with backup plans and side funds. That might be your reality, but it is not everyone’s. What about those teachers who need this program? What about the nurses? Most do not have the luxury of building PSLF side funds because they are already maxed out trying to serve communities that barely get by.
I did not take on debt to chase wealth. I took it on to do meaningful work, and PSLF was the tradeoff. If it gets stripped away now, that is not politics. That is betrayal. So maybe instead of reminding us how unrelatable our struggles are, you could aim your attention at the institutions that created this debt trap in the first place. Or better yet, sit this one out, because a physician with a paid off contract is not exactly the voice we need leading this conversation.
Matthew Smith,
This is really a tough pill to swallow for many borrowers if PSLF is phased out. I’m still positive on those who already borrowed, but less hopeful for those who have yet to borrow for grad or professional programs. Perhaps less will pursue expensive graduate/professional programs or more will end up pursuing positions more lucrative in the private sector. It’s really to early to say. What I do know is anyone borrowing these days should not 100% hitch their wagon to PSLF or assume the gov’t will pay off all their loans. You always need to have a backup plan. Whether it’s through a PSLF side fund, geographic arbitrage for some years where they will pay you more per hour, by taking more call, etc.
Andrew SLA
Hey Matthew,
To clarify: I am in no way advocating for the cessation of PSLF for high earners. But we absolutely need to understand the argument for it and why complacency in addressing it could be very difficult for borrowers. This includes steelmanning, which, by virtue of the response, this article has accomplished. Again, I don’t prescribe to a line of thinking that would lead to deleterious changes to this program. Quite the opposite. However, I do think it would be foolish to pretend that it doesn’t exist and “hope for the best.” If, as a result of reading this piece, current and future PSLF participants are prompted to rethink their contingency plans and/or make their voices heard to organizations and people in positions of influence, then it would be a success. As far as fighting this battle is concerned: I have no plans to remain silent while this issue threatens the mental and financial health of my friends and colleagues who are affected. That includes reminding us all that if PSLF is somehow curtailed for high earners, there will be little public sympathy. The time to be impassioned and respond is now.
All the best,
Chuck
20 physician organizations are out there advocating:
https://www.acep.org/siteassets/sites/acep/media/latest-news/final-physician-letter-on-student-loan-proposals-in-house-reconciliation-package-5.13.25.pdf
As the population in the United States continues to grow and age, demand is greater than
ever for physicians in every corner of the country. Yet, according to a recent report from the
Association of American Medical Colleges (AAMC), the United States will face a shortage of
up to 86,000 physicians by 2036. To address this shortage, we must not only sustain but
grow the number of students graduating from medical school.
The Education and Workforce Committee’s legislation, while well-intended, will have the
opposite effect. The bill proposes borrowing caps on federal student loans of $50,000 for
undergraduate programs, $100,000 for graduate student programs and $150,000 for
professional programs. The goal of these caps is to force universities to lower tuition,
making higher education more affordable for all students. However, the average medical
school graduate is graduating with approximately $235,000 in medical school debt alone,
or $265,000 of combined medical and premedical education debt. Medical schools,
especially public institutions, will not be able to make these drastic reductions to their
tuition structures by July 1, 2026, when the loan caps go into effect. As a result, far fewer
students will be able to afford medical school, exacerbating the existing physician
shortages across the country, especially in rural areas.
We ask the Committee to reconsider its approach to federal loans for medical and dental students to ensure this country can continue to produce much-needed physicians and dentists to care for our growing population, young and old. Our physicians stand ready to assist you in this important endeavor, and we appreciate your consideration.
Chucks side hustle for pslf was mom/dad/and “deployments”.
I have several colleagues earning well into the 7 figures who are nonetheless banking on PSLF to subsidize their lifestyles. Coming from someone who managed to pay back his student loans within 3 years of graduation, I have zero support for the PSLF program. It only encourages people to live outside their means and leaves the burden of student loans to the tax payer.
Hi Nick M,
I understand your concern that it might encourage some to live beyond their means, and that’s a valid point. At the same time, for new attending physicians, PSLF can be a valuable tool to manage financial priorities like maxing out retirement accounts, paying off other debts, or saving for a home. For docs employed at a PSLF-eligible organization, I encourage you to explore applying for the program. It’s about making the most of the opportunities available to you. If you don’t agree with PSLF you don’t have to pursue it. However, it’s usually the optimal loan strategy if you qualify.
Andrew SLA
You’re not alone either. How much forgiveness for public service is the right amount is a very political question (meaning reasonable people can disagree on it.) The tact I’ve taken over the years is to simply explain how the program works as written rather than advocating for or against it. But if I were king I’d probably set it up so there is a maximum amount that can be forgiven. Perhaps something like $100K, but I could be convinced of more. That way the teachers, cops, firefighters, public defenders etc could get most or all of their loans forgiven and docs would still get a very nice bonus but there wouldn’t be all these crazy incentives to borrow as much as possible even when your family has the money to just pay for school. I mean, who can blame students for taking out the maximum federal loan amount if there’s something like a 50% chance they’ll end up in a PSLF qualifying job? I can’t.
Teachers qualify for PSLF as do childcare workers. It might be harder for an electrician as they don’t really have loans, so maybe the example you are looking for is trade worker.
Most of my family works in the trades. They are carpenters, hair stylists, factory workers, HVAC repairmen, and electricians. They haven’t mentioned money or my income to me once. They are generally more interested in my advice. I noticed during COVID that many of them distrusted the public discourse on vaccines.
Military service isn’t for everyone, but it is disproportionately for the middle class. If your parents make enough that you do not receive need based financial aid, and you are not an Olympic athlete, you have an option to avoid financing education (assuming you are able bodied and qualify.)
A nice perk of military service is that you also get the GI bill which you can pass to offspring to pay for their college. The downside of course is that you have very little control over where you live and work, and that you could end up in dangerous areas providing medicine in wars that have no end or purpose.
All that considered, your best option is to be born either rich or in a country or state where medical school is cheap (my state school was $50K/year) Good luck next time (assuming you believe in reincarnation).
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Some of these comments are absolutely wild to me. He is by no means saying that teachers, electricians, “blue collar workers” etc should NOT have PSLF. This is targeted at physicians and the understanding it may no longer be an option. All this is to say, not all physicians are your stereotypical “high earners.” Living in a place where the median income and poverty line are well above everywhere else in the country, certain specialties are making pennies on the dollar and PSLF may be one of the only viable options for them.
Consider this – some of us have likely accrued debt since we started our journey to becoming a physician (ie an undergraduate degree). So, assuming you go straight through from undergrad to medical school (which is becoming far less common due to the increasing number of applicants and lack of new openings), you already have accrued 4 years of interest on the initial loans you took out as a first year college student. Then, you have the additional 4 years of medical school loans, which is likely more $ than your debt accrued as an undergrad. So now, at the end of medical school, you’re sitting in 2 piles of debt, both of which have been quickly accruing interest. Then, you get to go to residency for anywhere between 3 to 7+ years where you are paid pennies on the dollar when you think about the salary and the hours worked (let alone the emotional and moral distress many physicians face).
So, by the time you start residency, you could have 600K or more of debt, such as one friend of mine who took one year off in between undergrad and medical school. He also lives in a place with a relatively low COL, so his resident salary is essentially the lowest legally allowed. And had there not been COVID (which is another story entirely), those loans would have continued to accrue interest. Let’s then assume, given his abysmal salary, that he is only making the minimum payment.
His residency is 7 years. He has now accrued 15+ years of interest on his initial loans taken out as a undergrad… Now, you could do math and guesstimate etc, but let’s assume he is going to be closing in on anywhere between 800K to 1m in student loan debt by the time he is an attending (and this is assuming he doesn’t do fellowship). Oh, and he will be 35 when he finishes. Is he in a specialty with higher earning potential? Yes. Does that justify him not deserving any PSLF? Does it have ANYTHING to do with every other single person who is eligible currently for PSLF?
The answer to all these questions, frankly, is no. Physicians take on some of the longest training possible and have a massive amount of opportunity cost lost compared to those who have an bachelor’s or master’s degree even. Moreover, their life expectancy is lower, their suicide rates are higher, and many say they wouldn’t do medical training again.
And now you all are saying they should go screw themselves and they don’t deserve PSLF because they make more money at the end of a very long f***** road? Yeah, okay. Think about that again. Just make have a little empathy or perspective. Recognize there are physicians like pediatricians or family medicine physicians who are making less than the banker down the road or even some nurses. And they’ve accrued that amount of debt.
Not asking for pity, but asking for everyone to maybe think and have some empathy before talking out of their ass.
I’m not sure you’re using the phrase “pennies on the dollar” the way most of us do. Not your main point of course. Which is an argument for continuing PSLF.
Given how PSLF fared this summer (i.e. no real changes) it looks like those pursuing it dodged a bullet. A smaller percentage of loans will be PSLF eligible going forward for new students but I don’t know that’s necessarily bad policy.
APKTUTI,
PSLF still makes a lot of sense for those already enrolled into it. But it’s a good idea to have a backup plan or side fund.
https://www.whitecoatinvestor.com/pslf-side-fund/
Andrew SLA