The U.S. Department of Education has released the final rule on the national overhaul of the broken Public Service Loan Forgiveness Program (PSLF).

Included in the rule is the specific fix sought by the California Medical Association (CMA), allowing eligible California and Texas physicians to participate in the program, despite our state prohibitions on physician employment by private non-profit hospitals. The rule allows California and Texas physicians who work full-time in public or private non-profit hospitals, clinics or medical offices to be eligible for loan forgiveness, regardless of whether they are employed by a for-profit medical group.  Therefore, California and Texas physicians are now eligible if they provide services in a non-profit facility owned by a non-profit entity that is otherwise prohibited by state law from employing physicians, 

Physicians may begin applying to the new PSLF program on July 1, 2023.


Most important, physicians should be aware that to be eligible for the PSLF program and to have past time worked counted towards the program requirements, they must have a direct government loan or consolidate their loans into a direct loan by May 1, 2023. 

Physicians must convert any non-qualifying loans into direct loans so they can take advantage of the PSLF program, although some non-qualifying loans cannot be converted into direct loans. 

While it is not mandatory that physicians consolidate their loans, they cannot obtain loan forgiveness without a direct government loan. This is particularly important for physicians with older loans from the FFEL program.