The U.S. Department of Education’s updated Public Service Loan Forgiveness (PSLF) program launched on July 1, 2023, and will now allow eligible California physicians to participate in the program, despite our state prohibitions on physician employment by private non-profit hospitals, clinics, foundations and other health care entities.

To help physicians navigate the new application form and its new definitions, the California Medical Association (CMA) has updated its guide, “Public Service Loan Forgiveness What California Physicians Need to Know.”

Interested physicians are urged to carefully read the FAQs included in the document, which have been approved by the Dept of Education, and will provide important clarification for California physicians. Also included in the CMA guide is a link to the new application form, answers to frequently asked questions and the department’s PSLF application help tool.

It is important to understand that for purposes of the PSLF program, the department has developed  special definitions of an “employee” and a “qualifying employer” that are specifically intended to provide exceptions for California and Texas physicians who are prohibited by state law from being directly employed by hospitals, 1206(l) foundations, clinics, and other nonprofit health care organizations.

CMA along with the California Hospital Association, Texas Medical Association and Texas Hospital Association are urging the Dept. of Education to make additional clarifying changes to the instructions and definitions in the application materials to clarify physician borrower eligibility and ensure conformity with the amendments to “employee or employed” made through the Final Rule.

Physicians should also be aware that loan payments made as early as 2008 will qualify. To be eligible for the PSLF program and to have past time worked counted towards the program requirements, physicians must have a direct government loan or consolidate their loans into a direct loan by December 31, 2023.

While it is not mandatory that physicians consolidate their loans, they cannot obtain loan forgiveness without a direct government loan. 

For more information, see CMA’s guide, “Public Service Loan Forgiveness: What California Physicians Need to Know.”