Background
While medical education remains an excellent investment for students, federal programs are essential to ensuring financial access to all who seek to become physicians. Thanks to income-driven repayment plans, medical school graduates can repay their student loan debt on an affordable schedule. Medical student debt and income expectations have relatively little influence on specialty choice.
In the 116th Congress, leaders of the Senate Health, Education, Labor and Pensions Committee and the House Education and Labor Committee have announced their intentions to reauthorize the Health Education Act (HEA), which authorizes Department of Education programs, including federal student loans.
Nearly half of medical students currently rely on GradPLUS to cover the gap between other federal loans and the full cost of attendance for medical school. There is no evidence that cost of attendance borrowing has led significant increases in graduate and professional school tuition. GradPLUS recipients tend to be disadvantaged borrowers. Eliminating GradPLUS and establishing federal loan limits lower than cost of attendance would force students to take out private student loans with less favorable terms to fully finance their education. This would have a disproportionate impact on these borrowers and non-traditional students who may not have access to private loans. While GradPLUS has some of the highest interest rates and it also has lowest default rates compared to other federal loans. It has proven to be a mutually beneficial use of limited federal resources for both students and taxpayers.
The PSLF program forgives federal student loan debt after a physician makes 120 monthly payments (approximately 10 years) while practicing in a government or nonprofit setting. Approximately one-third of graduating medical students have reported that they plan to participate in PSLF.
Recommendations
To help ensure medical education financing remains accessible for students from all backgrounds, Congress must retain GradPLUS Loans or establish health professions loan limits that cover the full cost of attendance. Congress also must retain the Public Service Loan Forgiveness (PSLF) program and physician eligibility for this program. The AAMC also supports eliminating student loan origination fees, reducing graduate and professional interest rates, and reinstating the graduate and professional in-school interest subsidy.