Doctors’ Repayment Assistance Program Needs Changes, Advocates Advocate

This week, a student loan advocacy group and several medical professionals filed a rulemaking petition with a federal agency, calling for sweeping changes to a controversial student loan repayment assistance program for medical workers.

Background: Student loan repayment assistance for doctors and medical workers

The National Health Service Corps (NHSC)’s Loan Repayment Program (LRP) is a repayment assistance program for borrowers in certain medical professions. Unlike federal student loan forgiveness programs — which simply wipe out a borrower’s debt — repayment assistance takes the form of monetary compensation that the borrower must put towards their student loan balance.

Repayment assistance programs typically have strict requirements, and the NHSC LRP is no exception. Geared towards providing assistance for licensed primary care providers who make a commitment to work in underserved communities, the program can provide up to $50,000 in student loan repayment assistance. Borrowers must commit to working at an NHSC-approved site for at least two years to qualify for the maximum award. Medical doctors, physician assistants, nurse practitioners, and dentists are potentially eligible, among others.

As long as the borrower completes their service obligation and complies with all other program requirements, the repayment assistance award does not have to be repaid.

NHSC’s student loan repayment program can become a nightmare for borrowers

But student loan borrowers can encounter serious problems if something goes wrong during the course of their service obligation. If their worksite closes, if they are laid off, or if they become unable to continue working for any number of reasons, not only can they lose their LRP award, but they may have to pay it back with significant financial penalties.

The National Student Legal Defense Network (also known as “Student Defense”) highlighted several examples of the NHSC LRP going wrong. In one example, a nurse practitioner’s $25,000 NHSC LRP award allegedly turned into an $85,000 debt after she was laid off at her approved worksite due to the coronavirus pandemic and was unable to find another qualifying NHSC-approved job. In another example, Student Defense cited a nurse who was issued an award of $8,300 and is now being threatened with a $270,000 penalty following her voluntary transfer to a different worksite, which she said was initially approved by an NHSC agent.

The Wall Street Journal published an expose on the NHSC program earlier this year, highlighting the repayment assistance program’s rigid rules and crippling financial penalties that it imposes on borrowers.

Group files rulemaking petition to reform NHSC student loan repayment assistance program

This week, Student Defense and three medical professionals filed a rulemaking petition with the U.S. Department of Health and Human Services (HHS), the federal agency that oversees the NHSC LRP.

The petition seeks reforms to the program’s rules to remove financial penalties imposed on borrowers in certain circumstances outside of their control, such as when a participant’s position is terminated by the approved site and the borrower is unable to find another position within a reasonable timeframe and within a reasonable distance from their residence.

“The Department’s continued assessment of severe penalties on participants who are unable to complete their service obligations through no fault of their own, even in the unprecedented circumstances created by the COVID19 pandemic, deters new participants from joining the Program and jeopardizes healthcare for underserved communities,” wrote the organization in its petition.

“HHS’s decision to apply massive penalties in such a rigid way has been devastating for many medical professionals and to the reputation of this very important program,” said Student Defense Vice President Alex Elson in a statement.

“Congress never intended for the penalty provisions to push medical professionals who have done nothing wrong to the brink of financial ruin. Through the regulatory fixes proposed in our petition, HHS can swiftly remedy this injustice and ensure that it is never repeated.”

Under Section 553(e) of the Administrative Procedures Act, a federal agency “shall give an interested person the right to petition for the issuance, amendment, or repeal of a rule.” A 553(e) petition can trigger a rulemaking process to reform underlying federal regulations — a sometimes tedious process that can ultimately result in significant changes to programs.

Other student loan forgiveness opportunities for medical providers

The NHSC loan repayment assistance program is not the only student loan relief potentially available for medical providers. Many such borrowers would also qualify for Public Service Loan Forgiveness (PSLF), a federal student loan forgiveness program.

While the PSLF program takes far longer to obtain relief — borrowers must work in qualifying employment for at least 10 years to qualify for student loan forgiveness under PSLF — there is no cap on relief, unlike the NHSC LRP.

Furthermore, the employment requirements for PSLF are far broader than for the NHSC LRP; borrowers must simply work as a full-time, W-2 employee for a domestic public entity or a 501(c)(3) nonprofit organization, or part-time for multiple qualifying PSLF organizations if their combined hours are at least 30 hours/week. There is no requirement that the employment be at specific worksites or in a designated underserved area.

The loan eligibility and repayment requirements for PSLF have historically been tricky for borrowers to navigate.

However, last year the Biden administration implemented the Limited PSLF Waiver, which temporarily relaxed the loan eligibility and repayment rules for PSLF, allowing many past periods to potentially count towards PSLF if the borrower was working in qualifying employment. The waiver opportunity ended on October 31, 2022.

However, the IDR waiver offers many of the same benefits. Borrowers can learn more about the IDR Waiver here.