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What Biden's student debt forgiveness plan means for physicians

The president’s student loan initiative only covers a portion of the average debt of medical school, but the Association of American Medical Colleges says it still does some good.

For doctors and prospective physicians paying off their heavy student debt, President Biden’s loan forgiveness move will offer almost all medical residents and students at least some relief.

Biden has moved to ease the student debt burden on millions of Americans. The Biden administration said last week it will forgive up to $10,000 in federal student loan debt for borrowers who earn less than $125,000 annually, or $250,000 for married couples. Those with Pell Grants could see up to $20,000 in loan forgiveness.

The White House estimates the loan forgiveness plan will wipe out the debt for 20 million borrowers, and provide at least some relief for 43 million borrowers.

Recent medical school graduates will still be looking at some hefty debt, but the Biden administration’s assistance is welcome, said Matthew Shick, senior director of government relations and regulatory affairs for the Association of American Medical Colleges.

“This news is a positive step to ensuring that medical education remains affordable and accessible for students from all backgrounds,” Shick said in an email.

“We are supportive of this effort and encourage Congress, the administration, and medical schools to continue working together on this issue to simplify federal loan repayment. Given the parameters the Biden administration has laid out, almost all medical residents and most current medical students should qualify for the student debt cancellation,” Shick said. “While the amount may only be a fraction of a student’s debt, every bit helps, and receiving this financial relief early in a student’s career will save them significantly more in interest over the course of repayment.”

To be sure, doctors will be paying off plenty of medical school debt, even with the help from the Biden administration. The average debt for medical students in the class of 2021 was $203,062, according to the AAMC.

Many carry substantial debt from their education before medical school. Nearly a third (30%) of medical school graduates in 2021 had premedical education debt, with the median debt of $27,000, the AAMC said.

The average medical resident earns about $64,000 annually, according to the Medscape Residents Salary and Debt Report, released in July. So as AAMC notes, medical residents should be able to secure some debt relief.

Healthcare leaders have said the heavy debt burden is a barrier for many pursuing careers in healthcare, especially those from underrepresented groups. The AAMC and others have pointed to a national shortage of doctors and said the nation needs a larger and more diverse physician workforce.

The National Consumer Law Center, which has pushed for student debt relief, hailed the Biden administration’s effort but said more must be done, particularly for borrowers from minority groups.

“This relief is huge for the roughly 20 million people whose student loan debt may be wiped out completely, but we also know that many borrowers, including Black women who carry the heaviest student debt burdens, will continue to struggle with their remaining debt until the student loan system is fixed,” Alpha Taylor, staff attorney at the National Consumer Law Center, said in a statement.

“We will continue to lift borrowers’ voices and to work with the Administration to reform the student loan system—and particularly the broken income-driven repayment plans and punishing default policies—so that all borrowers can make meaningful progress toward being debt free.”

The Biden administration took another step to help those with medical debt. The federal Office of Management and Budget issued a directive to federal lending agencies to stop factoring medical debt in the loan decision process.

“The Administration is committed to taking actions to mitigate the burden of medical debt on American families and in particular preventing medical debt from unfairly limiting Americans’ access to Federal loans and loan guarantee programs,” Shalanda Young, director of the Office of Management and Budget, wrote in the directive.

Berneta Haynes, an attorney with the National Consumer Loan Center, said the step will help people obtain loans.

“Medical debt is a crisis that takes an even greater toll on Black families, Latine families, and people with disabilities,” Haynes said in a statement. “Medical debt is not predictive of creditworthiness, and we appreciate the Administration’s efforts around eliminating medical debt as a barrier to credit.”

The AAMC remains concerned about the difficulty students from underrepresented communities face in paying for medical school, Shick said. He pointed to the AAMC’s resources to offer guidance for students to pay for medical school and repay debt.

This article was published by our sister publication Medical Economics.