Physicians who need to consolidate their loans must do so by December 31, 2023

Many California and Texas physicians are now eligible for the Public Service Loan Forgiveness (PSLF) program due to a rule change enacted by the U.S. Department of Education.

The PSLF program allows physicians who work full-time in public or private non-profit hospitals, clinics or medical offices to be eligible for loan forgiveness. However, due to state laws that prohibit physician employment by private non-profit hospitals, physicians in California and Texas had been excluded from the program.  

Since 2016, the California Medical Association (CMA), along with the California Hospital Association, the Texas Medical Association (TMA), and the Texas Hospital Association – representing more than 100,000 physicians and hundreds of hospitals – have been urging the Dept. of Education to fix the inadvertent exclusion of California and Texas physicians. The Dept. of Education released the final rule with the sought-after fix that provided an exception to allow more California and Texas physicians to participate in the program in the fall of 2022.

“I am proud we were able to ensure a more diverse physician workforce in California and Texas by expanding access to medical student loan forgiveness,” said CMA President Donaldo Hernandez, M.D. “Our goal is to build a physician workforce to improve access to medical care for marginalized patients in underserved communities.”   

“California and Texas are projected to have the two largest physician shortages in the nation over the next decade," said TMA President Rick W. Snyder II, M.D. "This program will allow us to retain and recruit new physicians to our states to address our growing physician shortages and access to care challenges for the patients who need us most."

Under the new rule, if physicians in California and Texas have student loans and provided services in a nonprofit hospital, clinic/office owned by a 1206(l) foundation or other nonprofit entity for an average of 30 hours per week, and make 120 qualifying payments, they may now qualify. Even if physicians worked for a for-profit sole proprietorship, partnership or were employed by a for-profit medical group, they may still qualify if the services they provided were in a facility owned by a nonprofit.

Physicians graduate medical school with a median debt level of $200,000.  Under the previous rules, physicians were discouraged from practicing in California and Texas because they couldn’t get their loans forgiven, as they could in other states. This rule change was vital as California and Texas are projected to have the two largest physician shortages over the next decade due to growing and aging populations, and an aging physician workforce (roughly one-third of physicians are over age 60, and half are over age 50).

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.

To provide information about the PSLF program and how apply, as well as answer questions, CMA along with the California Hospital Association (CHA), Texas Medical Association (TMA), and Texas Hospital Association (THA) recently co-hosting a free webinar on the new PSLF rules. The one-hour webinar is accessible on-demand for anyone interested.

CMA has also published a guide – “Public Service Loan Forgiveness: What California Physicians Need to Know”  – to help physicians determine whether they may qualify for hours worked back to 2007 or for future years of service.