Student Loan Forgiveness & How it Might Impact Physicians


Under an executive order signed by President Joe Biden, any individual student-loan borrowers who earn less than $125,000 annually and married couples with earnings under $250,000 are eligible for $10,000 in federal student-loan debt forgiveness. Borrowers who qualified for the Pell Grant program, aimed at helping students from lower-income backgrounds, would be eligible for another $10,000 in loan forgiveness— meaning those borrowers could receive up to $20,000 in loan forgiveness.

We break down how this might impact ACMS members:

Full-time Clinical Practice Physicians: This executive order is likely to mean very little for full-time clinical practice physicians. “According to “Medscape Physician Compensation Report 2022” data, physicians in every specialty earn well over the $125,000 per year individual income threshold. However, some physicians with a spouse with very low or no income may be eligible under the $250,000 family earnings threshold for the $10,000 in loan forgiveness under the Biden plan.”

Medical Students: The president’s action is not going to affect current medical students, who are not in loan repayment.

Residents and Fellows: According to the AMA, the average first-year resident makes around $60,000, putting them under the eligibility threshold.[1] Those working toward PSLF could see their monthly payments reduced, and cancellation of $10,000–$20,000 of their qualifying undergraduate loans. Additionally, people on income-driven repayment plans—which likely includes many residents—will see monthly payments for their federal loans capped at 5% of discretionary income for undergraduate loans, down from 10%.

We connected with the team at Axias Wealth Advisors for some additional clarifications on some of the terms of student loan forgiveness:

  • Borrowers with privately held federal student loans, such as through the FFEL, Perkins, and HEAL programs, can receive this relief by consolidating these loans into the Direct Loan program.
  • “FFEL Joint Consolidation Loans, often referred to as spousal consolidation loans, are not eligible for consolidation into the Direct Loan program under current law”.
  • Direct Consolidation loans were known to count, but the guidance said only loans before 6/30/22 and it wasn’t originally clear if that was based on underlying loan dates or not. Now its clear… “Consolidation loans are included, as long as all of the underlying loans that were consolidated were first disbursed on or before June 30, 2022”.

The Department of Education recently released their FAQ page and an online form to apply for forgiveness will be available by early October. In the meantime, the ACMS will be hosting a series of events with Axias Wealth Advisors to help educate physicians on student loan forgiveness and student loan repayment strategies.

Thank you to those who joined us on September 7th at the Foundry for part 1 of the series “Navigating Your Career in Medicine“. In October, the team from Axias Wealth Advisors will do a deeper dive into student loan repayment strategies in a session titled: ” Understanding Unique Financial Planning Decisions for Physicians”. Registration coming soon.