[Editor's Note: Today's guest post about alternatives to PSLF was submitted by Chad Chubb, CFP®, CSLP of WealthKeel LLC. There are lots of ways in which student loans can be forgiven or paid off. Today's post will discuss some of the lesser-known ones. Although this is not a sponsored posts, Chad is one of our advertisers and recommended fiduciary financial advisors.]
The average debt balance for physicians in America is $196,520 — a 3% increase since 2017. However, a large percentage of physicians are currently saddled with even more debt. 26% of physicians carry between $200,00-$300,000 in debt, and 19% have $300,000+ as an outstanding balance. These numbers are daunting, and there isn’t any sign of the debt burden that physicians face lessening in the near future.
With ⅓ of all physicians under the age of 45, and the cost of higher education continuing to climb, more and more physicians are looking for debt forgiveness options to help lighten their load as they kick off their careers.
PSLF Forgiveness Program
Public Service Loan Forgiveness (PSLF), one of the more popular debt forgiveness options available, can be challenging to qualify for, especially if you did not start the process early in your training. Additionally, the required 120 qualifying payments can pose a frustrating problem for young physicians.
Carrying a large amount of student debt for 10+ years after graduating from medical school can put a damper on other financial goals, and cause a lot of unnecessary stress for physicians and their families. The average physician’s salary is just $299,000/year, and some physicians in the high cost of living areas make even less.
For example, Washington D.C. has one of the highest costs of living in the United States, yet the average salary for physicians in the same area is only $229,000. Coping with high student debt, while still trying to free up enough cash flow for your day-to-day lifestyle and other financial goals can be challenging. Although salaries are steadily increasing for primary care and specialty physicians alike, they aren’t keeping pace with the inflated cost of higher education and medical school.
Luckily, there are other, less common, debt forgiveness options available for physicians. Let’s explore a few options to consider outside of the traditional PSLF path.
5 Alternatives to PSLF to Consider
#1 National Health Service Corp (NHSC)
The National Health Service Corps offers a variety of loan repayment, and repayment assistance programs. They each have different application processes and requirements but are worth looking into.
Students to Service Loan Repayment Program
The S2S LRP (Students to Service Loan Repayment Program) is available to all medical and dental students in their senior year. To qualify, you must serve three years in a Health Professional Shortage Area. Other requirements include:
1. You must be a United States Citizen or U.S. National
2. Pursuing an M.D., D.O., D.D.S., or D.M.D. at:
A school of allopathic medicine accredited by the Liaison Committee on Medical Education (sponsored by the American Medical Association and the Association of American Medical Colleges)
or
A school of osteopathic medicine accredited by the American Osteopathic Association Commission on Osteopathic College Accreditation
or
A school of dentistry accredited by the American Dental Association Commission on Dental Accreditation
- Enrolled as a full-time student within the last year, with a graduation date before July 1st of the year you apply
- Eligible for federal employment
Participants of this program (as of 2020) receive up to $120,000 toward their student debt – paid out in four annual installments of $30,000. Once participants meet the three-year required service period, they can apply for additional loan repayment through continued one-year service contracts.
NHSC LRP
Participants in the NHSC Loan Repayment Program receive loan repayment assistance after a two-year service period in a Health Professional Shortage Area. This program is for eligible-to-serve medical professionals (not students). Award amounts in this program differ based on the term of your service, and the score of the area you’ve served in:
Full-time service:
Award Amount | Service Commitment | Site HPSA Score |
Up to $50,000 | 2-year initial term | ≥ 14 |
Up to $30,000 | 2-year initial term | ≤ 13 |
Half-time service:
Award Amount | Service Commitment | Site HPSA Score |
Up to $25,000 | 2-year initial term | ≥ 14 |
Up to $15,000 | 2-year initial term | ≤ 13 |
Once your initial service period is complete, you may be eligible for complete repayment of qualifying loans. You can learn more about additional requirements by clicking here.
NHSC Substance Use Disorder Workforce Loan Repayment Program
Through SUD LRP, you may receive up to $75,000 to repay qualifying educational loans in return for service. To qualify, you must work for three years at SUD site with a Health Professional Shortage Area low enough to disqualify the site from NHSC funding. If you’re a trained provider, this could be an exceptional loan repayment program option.
NHSC State Loan Repayment Programs
In addition to their many national programs for students and trained providers, NHSC also offers a variety of state-based loan repayment programs. Eligibility, service commitment, and repayment awards vary by state, but they are worth exploring.
#2 Military Programs for Loan Forgiveness
Each branch of the military offers its own loan forgiveness programs for physicians. Depending on the branch you’re interested in, this could be an opportunity to serve and reduce your student debt.
Army
AMEDD participants have access to a wide range of benefits including, but certainly not limited to, loan forgiveness. Here’s the breakdown of loan forgiveness:
- Active Duty dental and medical providers receive up to $120,000 toward their loan forgiveness made in 3 annual payments of $40,000
- Reserve dental and medical providers receive up to $50,000 over three years – with a $20,000 payment in the first two years, and a $10,000 payment in your third year of service.
Additionally, AMEDD professionals receive assistance with ongoing training and continuing education.
Navy
The Navy’s HPLRP (Health Professionals Loan Repayment Program) offers similar benefits. They offer up to $40,000/year (before 25% income tax) toward any qualifying lender. To be eligible for HPLRP, you must meet the following requirements (per med.navy.mil):
- Must be qualified for, or hold an appointment as a commissioned officer in one of the health professions and sign a written agreement to serve on active duty for a prescribed time period.
- Be fully qualified in a health profession that the Secretary of the Navy has determined to be necessary to meet identified skill shortages.
- Must not be a current HPSP or FAP participant.
- Be enrolled as a full-time student in the final year of a course of study at an accredited educational institution leading to a degree in a health profession other than medicine, dentistry, or osteopathic medicine.
- Be enrolled in the final year of an approved residency program leading to specialty qualification in medicine, dentistry, or osteopathic medicine.
- Participants must be Active Duty.
Airforce
The Air Force Active Duty Health Professions Loan Repayment Program (ADHPLRP) mirrors the Navy’s HPLRP. Participants receive up to $40,000, less taxability, paid toward student loan principal or interest. Participants must be Active Duty for a minimum of two years to qualify.
#3 NIH Loan Repayment Programs
The National Institutes of Health (NIH) offer loan repayment programs for physicians across the United States. These programs, designed by Congress, are intended to continuously support the recruitment and retention of quality medical professionals focused on research careers. These repayment programs cover up to $50,000 of educational debt expenses each year for qualifying research program participants.
To be eligible for the NIH LRPs, you must meet the following criteria:
- United States citizen or national
- Possess an M.D., Ph.D., Pharm.D., Psy.D., D.O., D.D.S., D.M.D., D.P.M., D.C., N.D., O.D., D.V.M., or equivalent doctoral degree from an accredited institution
- Have educational debt that is equal to, or more than, 20% of your base salary
- Agree to conduct qualifying research only (for extramural programs)
- Be an NIH employee (for intramural programs)
If you receive research funding, or a salary, from a for-profit institution, you are ineligible for these programs.
Qualifying research outside of NIH includes:
- Clinical
- Pediatric
- Healthy disparities
- Contraception and infertility
- Clinical research for individuals from disadvantaged backgrounds
Qualifying research within NIH includes:
- AIDS (2-year program)
- Clinical research for individuals from disadvantaged backgrounds (2-year program)
- General research (3-year program) or General Research for ACGME (Non-Competitive) (3-year program)
#4 Indian Health Services (National Health Services Corp)
The Federal Health Program for American Indians and Alaskan Natives offers loan assistance programs, powered by the National Health Services Corp. To qualify, you must practice in areas of the country with too few medical professionals to serve the current population. These programs have a focus on regions where there’s a higher population of Native Americans and Alaskan Natives. Support from NHSC for physicians serving in IHS communities include:
- $50,000 (max) in tax-free loan repayment for two years of service, $140,000 (max) for a total of five years of service
- $120,000 (max) to medical students (both M.D. and D.O.) who are in their last year at medical school, in return for a commitment to provide primary health care services in eligible areas for a minimum of three years
- Additional funding and grants at the state level
#5 AAMC State-Based Programs
The AAMC (Association of American Medical Colleges) offers a wide range of state-based programs. They list all available grants, scholarships, and loan repayment or assistance programs across the country on their website. For example, the California State Loan Repayment Program offers up to $50,000 for a two-year service contract.
Other states with repayment programs include:
- New Mexico
- Alabama
- Colorado
- Arkansas
- District of Columbia
- Maryland
- Wisconsin
- Maine
- Delaware
- Indiana
- Iowa
- Kansas
- Kentucky
- Louisiana
- Massachusetts
- West Virginia
- Michigan
- Minnesota
- Montana
- Nebraska
- New Jersey
- North Dakota
- Ohio
- Oklahoma
- Oregon
- Texas
- Missouri
- Rhode Island
- Utah
- South Dakota
- Tennessee
- Georgia
- Vermont
- Virginia
- Wyoming
Some states even have multiple programs available. Minnesota, for example, offers six different repayment programs for dentists, nurses, and physicians depending on your field of specialty, practice location, and other eligibility requirements.
You can start by looking for repayment programs in your state. However, many programs may offer a higher repayment benefit in states that are underserved. Don’t be afraid to look for out of state options with a limited contract scope. Getting a large amount of loan assistance in a short period of time may be financially worthwhile — especially if the area you’re relocating to has a low cost of living.
Be Persistent Pursuing Student Loan Debt Forgiveness
Don’t let negative headlines or someone else's opinions get you down. You worked hard to become a physician, and there are numerous legitimate ways to lower and/or reduce your student loan balance.
Although pursuing debt forgiveness may feel like an overwhelming task, it pays to be persistent. Open yourself up to the different opportunities available in your state and nationwide, and stay organized throughout your application process. If you’re coming up against a wall, it may also be useful to speak with your current employer, medical school aid counselors, or a financial planner to make sure you’re looking at all the available options.
[Editor's Note: There are obviously a ton of ways to pay for medical or dental school. Some are true scholarships. Some are contracts. Some are true forgiveness programs (including the federal PSLF and IDR forgiveness programs. And of course, there is always “old reliable,” refinancing them and paying them off over 2-5 years by living like a resident. If that's your best option, make sure you refinance early and often using the WCI negotiated deals found in this chart.]
† Bonus includes cash rebates and value of free course. Borrowers who refinance more than $60,000 in student loans using the WCI links will be enrolled in The White Coat Investor’s flagship course, Fire Your Financial Advisor for free ($799 value). Borrowers will still receive the amazing cash rebates that WCI has negotiated with each lender. Offer valid for loan applications submitted from May 1, 2021 through October 31, 2023. Free course must be claimed within 90 days of loan disbursement. To claim free course enrollment, visit https://www.whitecoatinvestor.com/RefiBonus.
Student Loan Refinancing Disclosures
What do you think? Have you received forgiveness from a program other than PSLF? Comment below!
Quickly glancing thru your post. I think the military is offering more for dentist and doctors when it comes to loan repayment.
https://www.nationalguard.com/healthcare-bonuses-and-loans
This is the Army national guard, but i believe it applies to reserve also. Not sure about the other active/reserve branch’s.
Interesting, we will have to look into that. Not sure if the different branches (NG vs. Reserves) have different limits.
Thanks Tam!
Great information. I believe NHSC is only for primary care though, which includes OB/GYN and Psych.
Thanks AMPHORA!
Here was the most recent reference we used: https://nhsc.hrsa.gov/scholarships/eligibility-requirements.html
I received the Kansas Medical Student Loan. It is a forgivable loan that pays your entire tuition at the University of Kansas plus a living stipend if you practice primary care in Kansas for 4 years. Amazing program.
Sounds like a contract, but if you WANT to do primary care and WANT to stay in Kansas, the contract essentially costs you nothing.
Sure, but how is the military any different? Trade loans for service.
KMSL (as it’s called for short) is one of the greatest programs out there for people willing to practice in Kansas and are in medical school at the University of Kansas (currently the only medical school in the state). $2000 stipend for each month you’re ‘in-school’, which varies by academic year (9,10,11,10 months respectively I believe), plus school is paid for. The only limitations are you can’t work in 5 of the most populous counties, but you can work around that by working at the VA or a Federally Qualified Health center, or faculty. I am currently a 3rd year resident who will be doing family medicine in one of those 5 counties at a FQHC, and this has been an amazing program. Peds, IM, Family, Emergency Medicine, and now even Psychiatry all count as specialties. Yes, even EM! The catch? If you back out or change your mind, you owe the state 15% interest on all loans you’ve taken out so far. Those loans then can go to other kids who later on in medical school decide they want to do primary care and can apply for them, as there’s only a limited amount of loans (somewhere in the 30-ish people per year I believe). It’s not a guarantee you’ll get it, but it’s sure nice knowing you’ll have your ‘loans’ paid off 4 years out in practice. You even have 9 months before you have to start practicing, and I’ll be taking a nice 3-month break before I start.
Probably a good option once you are absolutely sure of your specialty choice. But when is that for most folks? Late 3rd year or early 4th?
That is very interesting, thanks for sharing Alicia. I will certainly keep this program in mind going forward.
Cooper- thanks for the additional details too!
One NHSC program to add: the Rural Community LRP. It’s basically the same as the substance use disorder workforce program but you have to be in a rural area and the repayment amount is increased to $100,000 for a 3 year commitment.
Also, I believe the NHSC program listed as an IHS program is just the same basic NHSC program already mentioned. The IHS just highlights the program on their website. Though worth mentioning that one benefit of doing NHSC at an IHS site is that you’re allowed to do hospital work in addition to primary care.
There is a separate IHS LRP but it only pays $40,000 for a two year commitment and the award is taxable, unlike the NHSC program.
For American Indians and Alaska Natives (IHS’ terms) there are also scholarships similar to the NHSC students to service program but they can pay for undergrad as well as professional school and they provide a living stipend in addition to tuition. You have to commit to working at an IHS or tribal site for a certain amount of time afterward.
Thanks for sharing.
Another great addition, thanks Braden!
Also, thanks for the additional notes on NHSC & IHS. We will look into the overlap.
The Navy program you list is not for physicians because of this sentence:
“Be enrolled as a full-time student in the final year of a course of study at an accredited educational institution leading to a degree in a health profession other than medicine, dentistry, or osteopathic medicine.”
Plus, my people are telling me it is no longer funded.
Thanks for the correction, although to be fair I do have readers that are not MDs, DOs, DDSs, or DMDs.
Thanks Joel. Truthfully, we never walked through that program with any clients in the past, so it was one we were reading from the book. I appreciate the correction and I will see if I can find more details on the funding.
I chose the Nebraska loan repayment program when I started med school in the 1990s; they were calling it scholarship/loan forgiveness or something like that. They gave me a lump sum for each year of med school and it covered tuition pretty much. I owed a year of practice in an underserved area for each year I got assistance. After two years of practicing in rural Nebraska, we were debt free (including mortgage on our $90K house, for which we paid 20% down). In the end, I served five years. Nebraska still has a similar program as I understand. It was a freedom for which I will always thank the state of Nebraska.
Sounds pretty good to me.
Pretty nice program, I will have to look into this one further. Thanks NE Walker!
I believe this is the spot for those interested: http://dhhs.ne.gov/Pages/Rural-Health-Nebraska-Loan-Repayment-Programs.aspx
Also if you work for the VA or thinking about working there, make sure you ask about qualifying for their program. EDRP. Up to 200k over 5 years. Tax free reimbursement.
https://news.va.gov/80815/pay-off-school-debt-quickly-va-program/