4 Debt Forgiveness Programs Every Physician Needs to Know

FEBRUARY 04, 2015
Dave Denniston


National Health Service Corps Loan Repayment Program
 
In addition to the state programs, there are various other granting national programs and opportunities. For example, the NHSC Loan Repayment program provides loan repayment assistance to licensed medical providers who serve in communities with limited access to health care.

There are both full-time and half-time options for service commitment. The dollar amount of assistance and length of service depend on participation in either the full- or half-time and on the need on the Health Professional Shortage Area (HPSA) score of the site.

Essentially, they are looking to fill physicians in “underserved” areas across the country. If you have one right in your area, this could be your ticket!

You can learn more about this program by going here: http://nhsc.hrsa.gov/loanrepayment/
 
Who? Selection is based on the staffing needs of the NHSC. For physicians, priority for selection will be given to those who have completed residencies in the following: family medicine, obstetrics/gynecology, pediatrics, psychiatry, geriatrics, or internal medicine.
 
Requirements. In exchange for loan repayment, participants are obligated to serve full-time upon completion of training at a designated NHSC-LRP site of their choice. US citizenship required.
 
The Nitty-Gritty Payment Details. Physicians may receive repayment of up to $50,000 in health professions educational loans (depending on site). Primary care providers working full-time at an NHSC-approved site with a HPSA score of 14 or above can receive up to $50,000 in loan repayment for committing to serve at site for at least 2 years.

Primary care providers working full-time at an NHSC-approved site with a HPSA score of 13 or below can receive up to $30,000 in loan repayment for committing to serve at the site for at least 2 years.
 
Tax Consequences. The loan repayments are exempt from gross income and employment taxes. These funds are not included as wages when determining benefits under the Social Security Act.
 
Time Commitment. It is a minimum of 2 years, but the physician could choose to stay longer. At the end of 2 years, Corps members can apply to continue their service and receive additional loan repayment. With continued service, providers may be able to pay off all their student loans!
 

Final Thoughts
  
Consider for a moment… could you utilize one of the programs we have discussed?
 
Also, one other topic this isn’t discussed enough, what if you could COMBINE two of these programs simultaneously? 
 
For example, you could enroll in PSLF, work for a non-profit in an under-served area, and then at the SAME TIME, do a state forgiveness program for 2 or 3 or 4 years (whatever the minimum commitment is).
 
This could hedge the bet of the federal government taking away the punch bowl from the party. This way you have substantially less debt no matter what happens.
 
If, as a young physician, you focus on paying off your debts, save for a rainy day, live within your means and put money away for retirement, you can then do the things you’ve long dreamed of doing and be well down the road to financial independence.
 

Dave Denniston, Chartered Financial Analyst (CFA), is an author and authority for physicians providing a voice and an advocate for all of the financial issues that doctors deal with.  He is also the author of 5 Steps to Get out of Debt for Physicians, The Insurance Guide for DoctorsThe Tax Reduction Prescription, and his new book, The Freedom Formula for Physicians. He’s glad to answer any questions about debt-forgiveness programs. You can contact him at (800) 548-1820, at dave@daviddenniston.com, or visit his website at www.DoctorFreedomBook.com to get a copy of The Freedom Formula for Physicians.


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