Planning in Uncertainty: Examining the Future of Federal Loan Repayment
For all student borrowers, including medical students, any unpredictability in addressing student loan repayment amplifies the challenges of a difficult (and sometimes unclear) situation. When considering the future of federal debt repayment programs under the current US Administration, it’s important to follow the current and future climate concerning student loan repayment programs.
There is no crystal ball to predict the future of the various loan repayment programs. The good news for practitioners with student debt, however, is that even if federally funded loan repayment programs change, they won’t change overnight. Ultimately, the importance of remaining informed and participating when given the opportunity to comment during the federal rulemaking process is imperative.
Here’s what you need to know about the status of the loan repayment programs:
Let’s start off by understanding where the funding for your student loan repayment comes from.
Federally funded loan repayment in the field of healthcare comes from HRSA: the Health Resources and Services Administration. HRSA is an Agency of the U.S. Department of Health and Human Services and is the primary Federal agency for improving access to health care – specifically the underserved.
The Department’s mission is to enhance the health and well-being of Americans by providing effective health and human services… Specifically (as articulated in its Strategic Plan, 2016-2018): To improve health and achieve health equity through access to quality services, a skilled health workforce and innovative programs.
In alignment with that mission, HRSA is the principal Federal agency charged with increasing access to effective and efficient health care for individuals and families who are medically underserved due to barriers faced in obtaining appropriate health care.
To eliminate various geographic, economic, and linguistic barriers in underserved areas, HRSA selects and ranks various Health Professional Shortage Areas (HPSAs). To incentivize providers to work with the medically underserved in areas with high HPSA scores, the Government assists with repayment of educational loans. In exchange for loan repayment, these clinicians agree to provide primary health services to those of greatest need – mostly in various rural and urban communities across the nation.
HRSA’s budget in a fiscal year prioritizes funding for health workforce activities – meaning a large portion of the budget is set aside to provide scholarships and loan repayment in exchange for service at HPSAs. The 2018 Budget provides $9.9 billion, including $4.4 billion in mandatory funding, to invest in programs that provide health care services to individuals who are medically underserved or face barriers to health care.
So, there’s no reason to be concerned with imminent change in the status of federally funded loan repayment. The HRSA Fiscal Year 2018 Budget supports the current US Administration’s commitment to prioritize direct health care services. It aligns with the Administration’s promise to “put American families first” while improving the efficiency and effectiveness of the Federal Government.
However, there is never a guarantee for future funding.
Even recently, in efforts to reduce US debt, there have been several calls to cut spending by the Administration. The 2018 White House budget called for eliminating spending on similar loan forgiveness programs, such as the Public Service Loan Forgiveness program. That program is similar to HRSA because it offers to relieve the pressures of high student loan debt for educated individuals who want to work in public service, where pay is often lower than in the private sector.
While this may be the case, officials have said changes to the budget would only affect people taking out loans on or after July 1, 2018 – if the program was even subject to change at all.
Congress would still have to act on a proposal, either in its current form or with modifications (like a cap). The good news is: making modifications would require full congressional action, a process that takes over a full year. Medical professionals would know well in advance if changes were afoot.
It also bears noting that rules for student loan repayment generally do not change retroactively – meaning that even if a forgiveness plan is discontinued, it would not affect borrowers already participating in the program. Perhaps most important to remember is that, while nothing is certain, you can justifiably remain optimistic about HRSA’s funding and loan forgiveness, as these programs generally have bipartisan support and popularity among a wide spectrum of constituencies and are essential to healthcare in our country.
Regardless of what changes may be on the horizon, it is important to remain informed and proactive as this will prepare you for whatever the future holds. As the saying goes, knowledge is power.
Whether you are a Physician or an Advanced Practice Professional, if student debt is a factor in your search, MedSource Consultants stays in front of regulatory winds and will educate and guide you to a place of comfort. If there are options for relief through HRSA, HPSA, HIS, SLRP or a hospital sponsored loan repayment program, our team will shepherd you through the dynamics of this important consideration.