House passes partial forgiveness for medical student loans

The measure, which still faces hurdles, would excuse up to $10,000 of debt for graduates serving areas of need but may exclude primary care specialties.

By Dave Hansen — Posted March 10, 2008

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Becoming a doctor isn't cheap. The average debt for medical school graduates is approximately $140,000, according to the American Medical Association. But the burden could get a little lighter for some medical students under a bill passed last month by the House.

A provision inserted into legislation reauthorizing the federal government's student loan programs would allow medical specialists with five or more years of graduate medical education to qualify for up to $2,000 in loan forgiveness annually for serving in areas of need. The maximum amount would be $10,000 for five years of service.

"At first, it might seem like a drop in the bucket, but it signifies at least Congress recognizes this is a problem," said AMA Trustee Chris DeRienzo, a fourth-year student at Duke University School of Medicine in Durham, N.C. DeRienzo has $170,000 in student debt.

"When you're talking about physicians making career decisions and serving in underserved areas, these are the things giving medical students hope that in the coming years Congress and the federal government will provide relief for those who provide that service," he said.

Measure called small step

The American Medical Student Assn. is thankful for the provision, but it is only a small step in solving a very large problem, said Michael J. Ehlert, MD, AMSA president and a recent graduate of Case Western Reserve University School of Medicine in Cleveland. Dr. Ehlert is working for the AMSA full time for a year.

"Ten thousand dollars is good but won't compel people to enter the field of medicine," he said.

A more effective program would use scholarships rather than loan forgiveness as incentives, Dr. Ehlert said. Loan repayments only help students who can afford to start medical school. It's also more economical to pay scholarships up front instead of loan interest over time. "Money gets more expensive every year," he explained.

The AMA fought for the provision but is concerned that it may exclude primary care specialties, such as general internal medicine and family medicine, which require three years of graduate medical education. It is working with the American College of Physicians to expand the bill.

The College Opportunity and Affordability Act of 2007 includes several other AMA-supported provisions that aim to help medical students. They include:

  • New disclosure requirements for private lenders to improve student loan transparency.
  • Disclosure rules for federal lenders to ensure that applicants receive notice about terms for consolidating their debt.
  • A Government Accountability Office study analyzing the impact of debt on medical school graduates.

Negotiations ahead

The House bill passed on Feb. 7 by an overwhelming 354-58 vote. But despite that action, the legislation may not become law.

The Senate passed its version of a student loan bill, the Higher Education Amendments Act, last July without the AMA-backed provisions. As a result, a conference committee composed of House and Senate lawmakers must hammer out a compromise and pass it in each chamber before it can reach the president's desk.

The law authorizing current higher education aid programs expires on March 31. The AMA's goal is to have a final bill signed by President Bush by then.

The Bush administration issued a Statement of Administration Policy on Feb. 6 announcing that it "strongly opposes" the House bill on grounds other than the AMA-supported provisions. But the administration stopped short of a veto threat.

Separately, the AMA is lobbying the Dept. of Education and Congress to reinstate permanent medical student loan deferments of up to three years during residency. Congress eliminated the deferment program, known as the 20/220 pathway, when it passed the College Cost Reduction and Access Act in October 2007. The AMA negotiated a temporary reinstatement until the Dept. of Education issues final regulations implementing the law. The final rules are expected this fall.

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