The Case for Ending PSLF — And What You Should Do

Among the few useful educational tidbits I can bestow upon trainees and young physicians, I will on occasion deliver a lecture loosely titled, Everything a Young Physician Needs to Know About Finance. I’ve given the talk for years, so much that it's as canned now as my scripted pontifications on the alveolar gas equation; the dangers of alarm fatigue; and, of course, my advocacy for the liberal use of Ceftaroline (it's very effective and also tastes great on a cracker).

Recently, while delivering my remarks on financial literacy, our conversation took a turn to address the state of Public Service Loan Forgiveness (PSLF). Debt management is foundational to financial planning, but this portion of the talk is typically quick with maybe a question or two devoted to the same. However, on this occasion, with rapid change at the forefront of the news, the worry among residents, fellows, and early attendings was particularly acute. One trainee shared through tears that she and her husband (both physicians) had just delivered their first child. Their combined debt (including their mortgage) exceeded $1 million. PSLF was the backbone of their debt management plan, and without it, life looked a whole lot different. Sadly, this was not the first time I had heard this or a similar story. It's impossible to feel much else but empathy for such a dire situation. The sacrifice necessary to arrive at attendinghood notwithstanding, the financial burden is incredible. The interest alone on those payments must be obscene.

The counterargument to PSLF is every bit as important to borrowers, and it reads something like this: the masses don’t care about rich doctors and their loans. Why should an elementary school teacher be forced to pay the student debt of a professional who makes 20x their salary? You and I may understand an answer that is complex and nuanced, but the average American probably doesn’t. Certainly, I do not foresee this trainee successfully explaining her plight to her patients and their families (almost all of whom make a sliver of her income and are affected by terrible illness).

Other professionals without PSLF access, those who have already repaid their loans, and especially those who did not benefit from today’s generous forgiveness policies may share a similar sentiment: a borrower signed the terms, and they must now live up to their obligations. A relatively narrow (and quiet) population of high-income borrowers coupled with an unforgiving, debt-focused political arena has created an environment in which PSLF could be tethered or worse.

In the following paragraphs, I will review a brief history of the efforts to rein in PSLF and the threat of the current tenor, and I will provide a rudimentary framework for navigating the uncertainty of the times.

Those Who Don’t Understand the History of PSLF Are Doomed to Repeat It

The roller coaster of PSLF policy over the last two decades has been breathtaking. Spanning five presidencies and different compositions of the courts and Congress, the federal government’s approach to education subsidization has been dynamic and generous. Since the College Cost and Reduction Act of 2007, which effectively put no limits on how much could be forgiven, the question of “how much” and “to whom” has been debated without a clear trajectory.

In the early 2010s, the Obama administration initially expanded the PSLF program, though it put forth a proposal to cap PSLF at $57,000 by the end of the second term. This would become a theme: while many proposals have been drafted, few have resulted in Congressional action—and almost all have expanded PSLF programming. Through threats (such as Trump’s first budget proposal to curtail PSLF in 2018), PSLF has endured.

Benefits expanded again while rules were relaxed under the Biden Administration and the early post-COVID era. And now, early in Trump's second term, executive orders flow and courts review, and the state of PSLF is as undetermined as it ever was. The latest report is that Congress will try to strip the ability of future medical and dental residents to have PSLF count during those residency years (though those who are already in PSLF would likely be grandfathered in). For a much more thorough review, I highly recommend StudentLoanAdvice.com's Andrew Paulson’s excellent commentary and resources.

More information here:

Nervous About the Government Taking Away PSLF? Start a PSLF Side Fund

Student Loan Repayment and PSLF in the Trump Era

One Message Away

We need to understand the argument that politicians are making for ending PSLF for high-income professionals. Moreover, we should also be self-aware enough to appreciate that we occupy an upper echelon of earners in America. In an era of remarkable populism, the basis for limiting PSLF is the simple fact that high earners (even trainees) represent an “elite otherness” that attracts no sympathy. This is apparent even among families: if I had a dollar for every time a well-intentioned but ignorant family member sounded off on my income (or, as a medical student, my potential income), I would have many dollars. Public opinion of physicians hasn’t exactly been sterling, either. Of the approximately $1.6 trillion of student loan debt in America today, physicians represent a small minority of the 43 million borrowers. When “government efficiency” becomes the flavor of the week, ending PSLF for high earners seems, on paper, to be politically riskless.

The optics surrounding physician finance wouldn’t help with the PR battle. We, the readers of this blog, are as much to blame for this as anyone. While our content and discussion are aimed at the financial literacy of folks who are historically at risk of mismanagement, targeting, and failure, so often we share in public domains the questions that betray unrelatable champagne problems. Few tradespeople or service workers are going to spend a single neuron’s discharge wondering about the Backdoor Roth, tax strategies for rental properties, or even contribution limits for retirement accounts.

This isn’t just an optics issue; it's a practical matter for those who are relying on PSLF. The electorate to whom I am referring is large. Voters are impassioned, and their elected officials are listening. These same officials will have zero qualms about limiting PSLF for high-income professionals, no matter what stage of life you are in or what kind of mortgage you have. It will take one New Yorker article to highlight this fact: the gauche PSLF successes published in heretofore limited forums could be the difference between discharging your debt or working for an extra decade. Tales of anesthesiologists having $300,000 in loans forgiven aren’t exactly a PR win for PSLF administrators. Imaging isn’t always everything, but I could see how it might be in this case.

I am not sure that a piece of legislation (or an executive order) limiting PSLF for high earners will actually occur. But I can appreciate the vulnerability of those potentially affected. Still, it doesn’t take a particularly savvy politician to see that giving money to people who have a means to earn massive amounts of it is a calculus easily upended.

What You Should Do About It

If you are reading this and thinking that the outlook is bleak, then you are probably in the same mindset as my young trainee friend. But banter is not policy, and conjecture is not foreshadowing. And blessedly, we have a prefrontal cortex to counter our amygdala. In an effort to regain even the semblance of control, I offered the following advice:

Make a plan: Every debt needs a discharge plan and preferably one that moves faster than the amortization schedule. If you are a medical student or pre-med, this plan should be in place prior to the start of training. Ideally, it would dovetail with a budget and written financial plan. If PSLF is your one and only pathway for paying off student loans, I would suggest you fight [like hell] for its continuation and pray that the trend to liberalization continues. I would also advocate for contingency planning, which looks something like the following. Prepare a student loan side fund: If I were on the path to PSLF, I would do my best to set aside an additional 50% of the monthly premium into a high-yield savings account or a money market fund. The savings vehicle really doesn’t matter; it's the act of saving extra to defray future costs that keeps the onus of the debt on you and not on an unreliable payor (in this case, the government). Should you reach the promised land after 120 qualified payments, you would also find yourself with a slush fund to celebrate. Consider alternatives: There are alternatives to PSLF: private (non-qualified) employers with student loan forgiveness incentives, state and local grants, and military service (to name but a few). Side gigs to bolster the student loan side fund also fit here. Encourage advocacy: If someone were to tell you that Congress had the power to control an unlimited amount of your debt, would you not be motivated to hold them accountable? I can hear your eyes rolling, and I know that the voice of one crying in the wilderness of Capitol Hill is rarely heard. Fortunately, there are deep-pocketed organizations with pre-positioned lobbyists there to do the yelling for you. AMA: Yes, that AMA. Believe it or not, the American Medical Association is more than just the flyers spamming your mailbox. As the self-proclaimed Voice of American Physicians, it should be in the vanguard of advocates burning the ears of policymakers. I would prod the organization. Professional organizations: Every entity that proposes to develop, maintain, and represent physicians has a responsibility to ensure that their financial health is considered in the wider ecosystem of healthcare. This is especially true of medical schools that hold a central role in the cost of education. Here’s looking at you, AAMC! Talk with an advisor: If a significant portion of my net worth was predicated on the inner workings of a convoluted system like PSLF, I would probably be enlisting the help of a professional. Andrew Paulson over at StudentLoanAdvice.com would be a pretty good place to start.

While this list is by no means exhaustive, it's a pretty solid start.

More information here:

The AMA Has Thoughts About Student Loans — Here’s What I Like and What I Really, Really Don’t

The Moral Hazard of Federal Student Loan Policy

The Bottom Line

Inevitably, there will be readers and observers who will point out the obvious: that debt is optional, and that we make the beds that we lie in. It's also true that unless one comes from money or cannot entertain alternatives, loans are a necessary evil. But the decision to attend a private medical school or not to pursue every scholarship imaginable or to buy a house (mortgage) or a car on credit or to opt for a lower-paying specialty are also important. It cannot be “medicine at all costs” but rather “medicine at xx costs and with xx discharge plan.” This is, obviously, no consolation to those whose crushing debt is the source of immense mental anguish. For the sake of transparency: my loans are paid with time, not dollars. Strangely, no one is advocating for the forgiveness of my contract. That said, I am disturbed by the financial burden that physicians (especially young ones) carry, and I am equally moved by the palpable stress that this causes them.

It's not evident to me that PSLF is going to end tomorrow, but this issue is front and center for those who attended my financial literacy chalk talk. I strongly suspect that they are not outliers. Should the program die for physicians, it's also unclear to me that there will be any fewer medical school applicants or students who choose lower-paying specialties. In my observation, the factors that drive the selection of a primary care career are more often representative of a person’s disposition and interest than the ability to receive loan forgiveness. I believe that medicine, in general, will continue to enjoy a greater number of prospects than positions to educate them. I also believe that medical schools, in general, will continue to charge as much as the market will allow. As importantly, there will be lenders to hound and fund those willing to sign the terms. If I am correct (it would be the first time), ending PSLF for physicians would be painful for those affected but harmless to those with the power and will to shape the program.

Student loan forgiveness is a hot-button issue, and this is unlikely to change anytime soon. It is popular in fields outside of medicine, so much so that it became a talking point in the 2024 elections. But high-income professionals who are banking on PSLF should be careful when considering its future. No one knows where it is going or if it's going anywhere at all. This uncertainty can be a nidus for toxic stress and burnout; it certainly was for the physicians in my lecture who expressed the same. To that end, I say minimize your debt load and optimize a career pathway that balances longevity factors with income potential. Above all, implement a robust plan to discharge your debt as soon as possible with contingency plans should it fail.

Do you think PSLF will stick around? What happens if it goes away? If you're counting on PSLF in the future, what will you do?

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