By Devin Watts
Many of our new attending physician clients question whether or not they’re on track for receiving Public Service Loan Forgiveness (PSLF). We’ve all heard stories of doctors who thought they were on track, but found out they were doing it wrong and had to take extra measures to certify their time, possibly pushing back their forgiveness date. That’s a fate that no doctor wants to be on the receiving end of. Accordingly, this article will help you understand the five steps you need to take to ensure you’re tracking for PSLF.
Step 1: Make on-time payments on the right repayment plan
Payments must be made on time. If your payment is due on the 15th of every month, then your payment towards your federal student loans must be made by the 15th. No grace periods. Automatic payment processing is your friend for making sure payments are made on time.
In addition, your loans must either be in the standard repayment plan or an Income-driven repayment (IDR) plan. Our young attending physician clients tend to be best off with an IDR plan so that they can minimize their monthly payments. You’ll want to figure out which IDR plan is best for you. Here is a loan simulator studentaid.gov that can help calculate the different IDR plans.
Step 2: Have the right type of student loans
Federal Direct student loans are the “Right kind of loans”. Technically anything other than Federal Direct student loans does not qualify for PSLF. If you are uncertain what kind of federal loans you have, you can login to studentaid.gov to confirm. If the loan(s) has “direct” in the title, then you have the right kind of loan.
If you have a Federal Family Education Loan (also known as a FFEL loan) or a Perkins loan, these are not considered to be direct federal loans, and therefore do not qualify for PSLF. You will need to consolidate these into a direct consolidation loan for those balances to be PSLF eligible. Most physicians recently out of training will not likely have FFEL loans, as that program ended back in 2010. Perkins loans ended in 2017, so there is a chance that a recent new attending could have a loan like this, which needs to be consolidated into a direct loan.
Step 3: Work in the right kind of job
Working the right kind of job is often a focal point when talking about PSLF. The most well-known jobs that qualify are those under the government or military umbrella, as well as 501(c)3s (non-profits). Because the program is designed to aid public servants (hence the public service part to PSLF), private jobs do not qualify for PSLF credit.
Most residency & fellowship programs qualify because the GME program is usually a qualifying employer. Check with your HR department or search online to determine if your employment qualifies. BUT remember, steps 1 & 2 are still necessary. Steps 1 & 2 were required during your time in training, in addition to working at a qualifying program.
The definition of “right kind of job” thankfully expanded in 2022 for some California and Texas physicians, which has aided in their pursuit of PSLF. Previously, these physicians did not qualify because California and Texas have rules preventing physicians from working directly for non-profit hospitals. These hospitals could only contract with physician groups to perform their services. As a result, these physicians were classified as employees of private businesses, and not the non-profit hospital. The same was true for physicians working for Kaiser, as Kaiser’s organizational structure is viewed as being for-profit. That’s not the case any more. You can read more about this here.
Step 4: Repeat above steps 120 times
This doesn’t have to be a consecutive 120 (or 10 years). But you will still need to complete steps 1-3 every time you want a payment to qualify. If you decided to work a private job for a few years after training, but go back into a qualifying job, you will again start to further accrue PSLF credits.
Something unique transpired due to the COVID forbearance period that started in March 2020 and continued through September 2023; this forbearance period is allowed to count toward your PSLF count, even if payments weren’t made! However, steps 2 & 3 still need to have been followed.
Step 5: Prove you completed the steps
You can use PSLF Help Tool as you file for your PSLF credit; this also allows you to complete the form electronically. It’s a good practice to routinely submit for PSLF (the “prove it” part) so that you can see your progress. Because in the end, it’s up to you to make sure your work is accounted for.
We encourage residents and fellows to submit a PSLF form at least once, at the end of each training program. For our clients that are new attendings, we encourage them to submit for PSLF annually. This allows our clients to confirm they remain on track for PSLF and see the progress they’re making towards forgiveness.
You’re on your way!
If you are fulfilling all 5 of these steps, then you should be on your way to seeing your federal student loans eventually forgiven. It’s an incredible feeling when your balance gets wiped away, and you no longer need to make monthly payments on your federal student loans. Forgiveness goes a long way in helping you achieve financial independence, and helps free up your cash flow so that you can be putting away towards other goals.
We have witnessed many of our clients receive complete forgiveness of their federal student loans via PSLF. Because the student loan landscape is constantly evolving, we always encourage young physicians to consult an experienced student loan advisor, which we can connect you to. We have helped hundreds of physicians’ plan for and integrate their student loan plan into their path towards financial independence. If you’d like to schedule a complimentary consultation to learn more about how we can help you, please click “Work with Us” at the top.
