4 Debt Forgiveness Programs Every Physician Needs to Know

FEBRUARY 04, 2015
Dave Denniston

State Sponsored Debt Forgiveness Programs
Besides, PSLF, there are some really exciting opportunities offered in every state.
Make sure to check out state sponsored programs at: https://services.aamc.org/fed_loan_pub/.
As of the time of this writing (January 2015), there were over 71 different programs available across the country!
Here is an example of a current program in Minnesota…
Minnesota Urban Physician Loan Forgiveness Program

Who? Applicants are primary care medical residents, which include Family Practice, Obstetrics and Gynecology, Pediatrics, Internal Medicine, and Psychiatry. You would apply July 1 to December 1 while completing medical residency training.

Requirements. Following completion of the residency, the participant must plan to practice for at least 30 hours per week, for at least 45 weeks per year, for a minimum of 3 years in an underserved urban community.

The Nitty-Gritty Payment Details. The state will re-pay up to $25,000 per year of service, not to exceed $100,000 or the balance of the designated loan, whichever is less.
Tax Consequences. These payments are exempt from state and federal income taxes. $25,000 is the taxable equivalent of $35,700 (assuming a 30% tax bracket).
Time Commitment. You must serve at least 3 years or otherwise must repay plus interest what they paid towards your loan.
Here’s another example of another state forgiveness program…

Oregon Partnership State Loan Repayment (SLRP)

Who? Applicants are primary care medical physicians and psychologists (among other non-physician positions).

Requirements. Must be a US citizen. The application period is normally open during October and November each year and awards are made in December.

The Nitty-Gritty Payment Details. Qualifying providers can receive a maximum award of $35,000 per year or 25% of total debt, whichever is smaller.

Tax Consequences. These payments are exempt from state and federal income taxes. $35,000 is the taxable equivalent of $50,000 (assuming a 30% tax bracket).
Time Commitment. Commit to service obligation of at least 2 years. A one-year extension may be awarded for up to 3 additional years, for a maximum service obligation of 5 years.

Native American Forgiveness Programs

Besides working for a private non-profit practice or a larger public entity or HMO, some physicians may want to consider another alternative- working with Native American Tribes.

You can learn more by going to: www.ihs.gov/loanrepayment/
Who? Applicants are physicians specializing in obstetrics/gynecology, psychiatry, internal medicine, family medicine, and pediatrics.
Requirements. Must serve at a location on a reservation or other specified place by the Indian Health Service. A few quirks to be aware of: IHS utilizes a ranking system to address the goal of filling staff vacancies in Indian health programs when granting LRP awards. This system assigns priority consideration to Indian health program sites with the greatest staffing needs in specific health profession disciplines. Also, IHS gives priority to applications of American Indians and Alaska Natives and to individuals recruited through the efforts of Indian Tribes and Tribal or Indian organizations.
The Nitty-Gritty Payment Details. Physicians are eligible to receive up to $20,000 per year in health professions educational loan repayment when working for the IHS.
Tax Consequences. These payments are subject to state and federal income taxes. IHS will pay an additional 20% to the IRS to offset increased tax liability.
Time Commitment. A 2-year service commitment is required.

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