CMA has won a significant victory in expanding the Federal Public Service Student Loan Forgiveness Program (PSFL) for California physicians who were previously blocked from participating in the program. The new program started on July 1, 2023, and provides loan forgiveness for physicians who work in nonprofit hospitals, foundations, clinics, or other healthcare entities 30 hours/week for approximately 10 years.
Only Direct Loan Program loans that are not in default are eligible for PSLF. If a physician has qualifying loans, the physician does not need to consolidate their loans for PSLF. If a physician does not have the correct qualifying loans, they need to consolidate their loans by December 31, 2023, to be eligible for PSLF.
It is important to note that some qualifying payments made on loans going back to the beginning of the PSLF program after October 1, 2007, will qualify for the new PSLF program, including loan payments made by California and Texas physicians who were previously not eligible under the old rules. However, some loan payments may not qualify depending on the types of acquired loans. For instance, loan payments made on the FFEL Program or Perkins Loan Program before consolidation do not count as eligible PSLF payment.
However, if a physician made eligible payments on a direct loan and then consolidated it into a Direct Consolidation loan, the eligible payments made on the original Direct Loan(s) will be added as eligible payments to the new Direction Consolidation Loan based on a weighted average of the loans that were consolidated. See the Direct Loan Section below.
Click Here to access CMA's guide to help physicians navigate the program.
