More than 40 physician and hospital organizations from California and Texas have joined the California Medical Association (CMA) in urging the U.S. Department of Education to correct an unjust denial of the Public Service Loan Forgiveness benefits to physicians in California and Texas because of conflicting state laws.

Congress enacted the Public Service Loan Forgiveness program in 2007 in an effort to improve access to care by encouraging physicians to pursue careers working in nonprofit settings. Under the program, individuals can have their education loans forgiven after making 120 qualifying monthly payments under a qualifying repayment plan while providing care in a non-profit hospital. 

It recently came to light that under the implementing regulations, the definition of "employed in a public service job” was written in conflict with the statute and requires direct employment. Because of California and Texas state laws that bar the employment of physicians, the regulation excludes most California and Texas physicians from the program, even if they are practicing in qualifying nonprofit hospitals.

As a result, physicians in these two states have been unfairly excluded from loan forgiveness, while their colleagues in the other 48 states are eligible. In California alone, there are up to 7,000 new physicians providing care in nearly 270 nonprofit hospitals and clinics who could be eligible for this program and whose loans start to become due in 2017.

“Without a swift regulatory correction, medical residents and new physicians will choose to practice in other states where their substantial medical student loan debt can be forgiven,” the organizations wrote in a letter to the U.S. Department of Education. “California and Texas will be at a severe disadvantage in recruiting physicians and the regulation will dramatically and unnecessarily harm access to care in both of our states. We urge you to ensure that there is equal treatment of physicians, hospitals and patients in all 50 states under the [Public Service Loan Forgiveness] program.”

U.S. House of Representatives Minority Leader Nancy Pelosi (D-SF, CA) and Congressman Xavier Becerra (D-LA, CA) personally met  with the Secretary of the U.S. Department of Education, John B. King, Jr. this week and urged him to fix  the  regulations as soon as possible. The entire California Congressional Delegation, along with both California Senators, Barbara Boxer and Dianne Feinstein, also sent a letter on this issue in March.

Contact: Elizabeth McNeil, (800) 786-4262 or emcneil@cmadocs.org.