There are a lot of rumors out there regarding the Public Student Loan Forgiveness (PSLF). I’ve heard anywhere from “99.9% get denied PSLF” all the way to “it won’t exist in a few years.” As a recent medical school graduate with a pretty uncomfortable sum of debt with an interest rate nearing 7%, I knew that I needed to figure out a plan and I needed to figure it out now. Over the past several months, I’ve spent considerable time researching PSLF and other forms of loan repayment. Additionally, I hired a student loan consultant (best decision of my life). Here are some key points that I learned while trying to navigate the scary world of finance.

PSLF actually exists and you CAN get ALL of your medical student loans forgiven in 10 years

If you open up the master promissory notes for each one of your student loans, you will see a paragraph that states: “A Public Service Loan Forgiveness (PSLF) program is also available. Under this program, we will forgive the remaining balance due on your eligible Direct Loan Program loans after you have made 120 payments on those loans (after October 1, 2007) under certain repayment plans while you are employed full-time in certain public service jobs.”

The Master Promissory Note (MPN) is a contract not to be taken likely. If PSLF is mentioned in your MPN, it will be very difficult for you to be denied PSLF assuming you fulfill all the requirements. There is government debate regarding the PSLF because it is a very costly program. However, it is far more likely that PSLF will be grandfathered out. Meaning, if you currently have taken out Grad PLUS loans for medical school, you’re in the clear.

How do I qualify for PSLF as a doctor or medical student?

To qualify for PSLF, you must be employed by a non-profit organization, specifically a 501(c)(3) employer for a minimum of 10 years.

• As long as your residency program is at a non-profit, 501(c)(3) institution, the 3-5 years of residency you complete will count towards these 10 years. Fellowship years count as well.
• If you’re applying for residency this cycle, you should check to make sure that all the programs you apply to are considered non-profit under 501(c)(3). Only a small percentage of programs do not have this designation.

You must begin paying back your student loans after medical school through some form of federal loan repayment program

• The two popular choices are PAYE and REPAYE. Both take a percentage of your discretionary income each month. It is wise to look into the differences between these two and decide which is best for you. A student loan consultant can help you make this determination.
• You must make your payments ON TIME each month.
• Fill out the Public Service Loan Forgiveness (PSLF): Employment Certification Form annually
  • This will keep FedLoan updated with your employer information each year so that there is no confusion when you’re ready to apply for PSLF 10 years down the road
  • Many people skip this step and then have issues contacting their old employers. Save yourself the headache and fill this form out each year.

Why you shouldn’t refinance your medical student loans if your debt is significant

When you refinance your loans, you are essentially having a private loan servicing company pay off your loan and start a new loan contract with you. They may try to lure you in by offering you a very low interest rate or presenting you with some silly ideas why PSLF won’t work. Do not be fooled. These loan-servicing companies make a lot of money when you decide to refinance your loans with them. Just remember, if you do refinance your loans then you WILL NOT QUALIFY FOR PSLF. You must be in a federal repayment program such as PAYE or REPAYE in order to qualify for PSLF. Refinancing is a great option if you have private loans around 50k with a high interest rate, however, it is not ideal for medical student debt >150k when programs like PSLF exist.

Further reading:

How to Pay for Medical School in the Real World

How to Change Financial Education in Med School

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