Many medical students rely heavily on financial assistance to complete their education. In fact, 70% of medical school graduates in 2025 carried student loan debt, with a median medical education debt of $200,000 according to a report from the Association of American Medical Colleges (AAMC).
A poll of Sermo members found that student loans were the most common (25%) type of loan members have taken out, followed by physician mortgage loans (11%) and personal loans (11%).
Medical students can seek ways to minimize this heavy burden, as noted by a general practitioner on Sermo, “My advice is to carefully review loan details, interest rates, and repayment options”.
“When taking out a loan, it is necessary to understand the interest rates, repayment terms and, if any, restructuring options,” echoes another general practitioner and Sermo member.
If you’re considering the loan forgiveness route, you have multiple options to explore. Here’s an overview of the forgiveness and repayment assistance programs available to physicians, with details on how the One Big Beautiful Bill Act (OBBB) has changed the student loan forgiveness landscape.
Disclaimer: This article is for informational purposes only and does not constitute legal, tax, or financial advice. Consult a qualified financial advisor or CPA for advice regarding your specific situation.
How the One Big Beautiful Bill Act changes student loan forgiveness
OBBB’s approach to loan forgiveness has received criticism from some medical organizations. For example, the AAMC warns that these changes could discourage students from entering medicine and worsen physician shortages in underserved areas. Before the bill was passed, the American Medical Association (AMA) wrote a letter opposing its proposed changes to federal student loans.
The criticism is a response to several major adjustments. Starting July 1, 2026, Grad PLUS loans are eliminated for new borrowers, with a new federal borrowing cap of $50,000 annually, with a $200,000 lifetime limit for professional degrees. This falls far short of the median medical school cost of attendance, which sits at $297,745 for public schools and $408,150 for private schools, according to the AAMC.
OBBB also introduces a new Repayment Assistance Plan (RAP) launching on July 1, 2026. Payments under RAP are based on 1% to 10% of adjusted gross income (AGI) for up to 30 years. There is no financial hardship requirement, and it includes provisions intended to limit unpaid interest growth. Meanwhile, the popular SAVE plan will be eliminated by July 2028, and borrowers will transition to RAP unless they select another plan. The Income-Based Repayment (IBR) plan remains available, but only for borrowers who do not take out new loans after July 1, 2026. For borrowers with existing loans who take out any new Direct Loan on or after July 1, 2026, RAP becomes the only available IDR plan for all of their loans — including the pre-existing ones.
Physicians currently in repayment are largely grandfathered under existing rules. The most significant changes primarily affect future borrowers in the class of 2026 and beyond.
Sermo members have shared their opinions on the burdens of student loans. “Education and training should be free and not involve debt,” writes one general practitioner. An ophthalmologist highlighted common frustrations: “loan interest rates and specifics are so challenging to navigate in the US, extremely confusing for a young medical student.”
Public Service Loan Forgiveness for physicians explained
Public Service Loan Forgiveness (PSLF) is a program that forgives the remaining balance on federal Direct Loans after 120 qualifying monthly payments. One internist on Sermo plans to take this route: “I have not taken out a physician loan, I just have student loans and plan on using public service loan forgiveness for them.”
You must work full-time (at least 30 hours per week) for a qualifying employer. Eligible employers include 501(c)(3) nonprofits, government agencies, VA hospitals and academic medical centers. To confirm that your employment qualifies, you can submit a PSLF form each year.
A massive benefit of PSLF is that the forgiven amount is federally tax-free. This contrasts with income-driven repayment (IDR) forgiveness, which is taxable after 2025. A PSLF Buyback Program allows you to buy back months that don’t count as qualifying payments from when you had an ineligible deferment or forbearance status but were working for a qualifying employer.
If you leave qualifying employment before reaching 120 payments, you stop accruing qualifying PSLF payments unless you return to qualifying employment. Your previous payments are not refunded, though they still count toward standard IDR forgiveness.
NHSC and service-based loan repayment programs for doctors
Federal and military service-based programs offer direct loan repayment in exchange for service commitments. These options provide alternatives or supplements for doctors willing to work in specific geographic areas or specialized fields.
NHSC Loan Repayment Program
The National Health Service Corps (NHSC) offers up to $75,000 for primary care participants and up to $50,000 for non-primary care participants who commit to two years of full-time service at an NHSC-approved site in a Health Professional Shortage Area (HPSA). Part-time participants can receive up to $37,500 (primary care) or up to $25,000 (non-primary care). After the initial term, continuation contracts are available for additional tax-free repayment. A 2026 enhancement includes a $5,000 language bonus for providers with Spanish-language proficiency.
NHSC Students to Service
The NHSC Students to Service (S2S) program provides up to $120,000 for final-year medical students. In return, you commit to three years of full-time service post-residency in a Health Professional Shortage Area (HPSA).
State Loan Repayment Programs
Many states manage their own physician student loan repayment programs through the NHSC State Loan Repayment (LRP) framework. Award amounts and service requirements vary by state, but these can be used alongside PSLF.
Military programs
The Navy and Army Health Professions Loan Repayment programs (HPLRP) offer up to $40,000 per year (minus 22% for taxes) in exchange for a service commitment. Alternatively, the VA Education Debt Reduction Program provides up to $40,000 annually, with a maximum cap of $200,000. The programs add an additional four to six years of service to your original navy contract.
NIH Loan Repayment Programs
Physicians committed to conducting research relevant to the mission of the National Institutes of Health (NIH) can receive up to $50,000 annually. Programs exist for researchers employed inside NIH as well as researchers employed elsewhere (including trainees and fellows).
Income-driven repayment plans and long-term loan forgiveness
Income-driven repayment (IDR) plans are federal student loan repayment programs that base your monthly payment on your income and family size rather than the size of your loan balance. For physicians with large student debt loads, IDR serves two major purposes: keeping monthly payments manageable during residency and fellowship training, and providing a potential long-term loan forgiveness pathway for borrowers who are not pursuing PSLF.
Under IDR plans, monthly payments are capped at a percentage of your discretionary income instead of following the standard fixed-payment schedule. After 20 or 25 years of qualifying payments (or 30 years under the new RAP plan), any remaining federal student loan balance is forgiven. The main IDR plans relevant to physicians in 2026 include IBR, PAYE, and the upcoming RAP plan, while the SAVE and ICR plans are expected to be eliminated by July 2028. If you utilize SAVE or ICR and move to IBR or PAYE before they are eliminated, this can ensure continued PSLF-qualifying payments.
As mentioned, under RAP, borrowers generally pay between 1% and 10% of their AGI. Unlike some older repayment plans, RAP does not cap monthly payments, but the government does subsidize unpaid interest to help prevent balances from ballooning over time.
A critical distinction exists between PSLF and standard IDR forgiveness. Under current federal law, non-PSLF forgiveness may be treated as taxable income after the temporary tax exemption expires. This rule can create a significant tax bill on the forgiven amount. For doctors planning a long career in private practice, IDR alone is often not the most efficient path. High attending salaries usually mean monthly IDR payments quickly approach or exceed standard 10-year repayment amounts, which can significantly reduce or eliminate the financial advantage.
When physicians should refinance instead of pursuing loan forgiveness
Refinancing student loans is the right move for some doctors and a mistake for others. Refinancing converts federal loans into private loans. This action permanently disqualifies those loans from PSLF and IDR benefits.
Refinancing makes sense when you plan to work strictly in private practice without a PSLF-qualifying employer. It often makes more sense if your debt-to-income ratio is below 1.0 and you can secure an interest rate significantly lower than your current federal rate.
It’s unwise to refinance during your residency if you are even slightly considering PSLF. Instead, you can keep your federal options open until your attending position and employer status are officially confirmed. The same goes if you have any possibility of working for a nonprofit or government employer in the future. Physicians who start in private practice occasionally move to academic or VA settings later in their careers.
Remember that doctors who refinance lose access to essential federal protections, including forbearance, deferment, IDR and Total and Permanent Disability (TPD) discharge. Refinancing existing private loans, however, is worth evaluating since private loans carry no federal benefits to lose.
Several Sermo members have found success with this route. “I refinanced to a lower interest rate and was able to pay my student loans off faster,” writes a family medicine physician. “I also have taken out a physician loan for mortgage, and it was very helpful.”
An emergency medicine doctor shared a similar outcome: “I took a physician loan out to consolidate my debt as well as give me enough money to move out of state. I was able to pay all of it off within a couple of years and change my job situation which was significantly better.”
Evaluate the right path for your financial future
Physician student loan forgiveness is not a one-size-fits-all scenario. The right strategy depends on your total loan balance, employer type and long-term career plans. You also have to consider exactly how the OBBB affects your specific graduating class; physicians currently in repayment have more options than those entering medical school after 2026. Managing your medical school loan forgiveness strategically can mean the difference between hundreds of thousands of dollars forgiven or hundreds of thousands paid unnecessarily.On Sermo, you can connect with peers who are navigating PSLF timelines, comparing repayment strategies and sharing real-world outcomes. Make the financial decisions that define your career with peer input from doctors who understand what you are going through.
