Create your very own Auto Publish News/Blog Site and Earn Passive Income in Just 4 Easy Steps
- Expanded PSLF Eligibility for Physicians in California and Texas: The new rule specifically addresses the unique legal barriers in these states that previously excluded many physicians from participating in the PSLF program, as state laws prohibit direct employment by nonprofit hospitals and other healthcare facilities.
- Important deadlines for loan forgiveness: Physicians with older FFEL loans must take action by April 30, 2024 to consolidate their loans for eligibility. Additionally, some payments on loans made before the rule change may now be eligible for forgiveness, benefiting those who were previously ineligible under the old rules.
Previously, physicians in California and Texas were unable to take advantage of the Public Service Loan Forgiveness Program (PSLF) because state laws prevented direct employment by nonprofit hospitals and other healthcare facilities.
As a result, thousands of physicians who should have been eligible for loan forgiveness were blocked. However, the U.S. Department of Education has approved a rule overhauling the PSLF program that provides these physicians with a path to loan forgiveness.
For some physicians with older FFEL loans (from before 2007) They must consolidate their student loans by April 30, 2024 to be eligible.
PSLF for physicians in California and Texas
Public Service Loan Forgiveness offers student loan forgiveness for individuals who work in public service and meet certain criteria for 10 years or 120 student loan payments.
The definition of “public service work” is very broad and includes anyone who works for federal, state or local government, education, public health, and most nonprofit organizations. Since many physicians and health care professionals work for nonprofit organizations or public health providers, they should be eligible.
However, California and Texas have strange laws that prohibit doctors from being employed directly by nonprofit hospitals and other public health care providers. Instead, they must be contract workers or work for a provider where the provider is paid directly by the hospital. These laws excluded doctors and other health care workers from eligibility.
The updated PSLF rules, effective July 1, 2023, expand PSLF eligibility to a broader group of health care professionals. Eligible participants are physicians who have contracted with nonprofit hospitals or have medical staff privileges. This takes into account the special employment structures required by state law in California and Texas.
April 30, 2024 deadline for consolidation
Physicians who want to benefit from the updated PSLF program must ensure that their loans are Direct Student Loans. For physicians with older FFEL student loans, you must consolidate your loans by April 30, 2024 to be eligible.
If you miss this deadline, you will miss the opportunity to qualify for PSLF on this loan.
Over 8 million Americans still have these older FFEL loans, so it is important that you review your loans and eligibility for this one-time adjustment.
What doctors should know
PSLF requires you to meet three main criteria for 120 loan payments:
- Qualified Loans
- Qualified repayment plan
- Qualifying employment
The qualifying loan type must be a direct loan. You must consolidate this by April 30, 2024 if you do not have a direct loan.
Qualified repayment plans must be an income-driven repayment plan, such as the new SAVE plan.
And skilled employment is what has been solved with this new regulation. However, when completing your PSLF application, medical borrowers in California and Texas should provide the nonprofit entity's EIN (hospital,
clinic, 1206(l) foundation or other entity) where you provide services, not your individual's EIN
direct employer (sole proprietorship, partnership, medical center or professional association).
This is key to ensuring your hire is qualified. The California Medical Association has a guide for physicians here.
Don't miss these other stories:
Graduate School Student Loan Forgiveness Programs Best Medical School Student Loan Refinancing Student Loan Forgiveness for Doctors: A Step-by-Step Guide
Create your very own Auto Publish News/Blog Site and Earn Passive Income in Just 4 Easy Steps
