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Blog » Guest Blog: Preserving Your Options for Retiring Your Debt: The Importance of Keeping Federal Loan and Repayment Programs Intact

Guest Blog: Preserving Your Options for Retiring Your Debt: The Importance of Keeping Federal Loan and Repayment Programs Intact

September 6, 2019

By Paul S. Garrard, Founder and President, PGPresents, LLC, Independent Student Loan Consulting

While it is ultimately your choice whether to borrow federal or private loans for medical school, there are reasons why keeping your student loan portfolio federal is likely the better way to go. Federal Grad PLUS loans allow graduate students to borrow up to their annual cost of attendance, minus other aid, and like other federal loans, offer far greater repayment flexibility than private loans, even with some noticeable improvements in private loan offerings. This repayment flexibility is extremely important to many medical school graduates when their salaries (stipends) are low relative to their debt, which is often the case during training.

However, perhaps the biggest reason to borrow from federal programs during medical school is to help preserve your options for retiring your debt after training when you become an attending physician.

Here’s how it works. While some residents postpone their payments during training, clearly the majority start making payments, many with Income Driven Repayment plans like Pay As You Earn (PAYE) or Revised Pay As You Earn (REPAYE), since these repayment plans provide affordable payments based on your income, not the size of your student loan debt. When you consider that these payments with income plans are being made on loans the federal government made (Direct Loans) and that over 95% of teaching hospitals are non-profit entities, these borrowers actually start qualifying for Public Service Loan Forgiveness (PSLF) during training simply by making regularly scheduled payments on their debt. In other words, they are preserving the option to retire their federal debt tax free if they happen to land in the public non-profit sector after training. 

With regard to the PSLF Program, remember how you qualify, and ensure you are doing the following to obtain forgiveness:

  1. Make 120 timely, scheduled payments with an income plan like PAYE or REPAYE …
  2. On federal Direct Loans …
  3. While working full time for an eligible non-profit public sector employer.

Notice there is no mention of private loans with PSLF, because they do not qualify.

So, by keeping your loans federal in medical school, including the option for Grad PLUS, you are preserving the following options for retiring your debt when you come out of training:

  • First, as mentioned above, if you land in the public non-profit sector as an attending physician, simply continue making minimum payments with your income plan and ultimately retire your debt tax free with PSLF.   
  • Second, if you land in the private sector, either a) stay in your income plan where payments are always affordable and aggressively pay if and when you want to in whatever amount you want to or b) refinance your federal student loans at a lower rate at that time with a private lender.

In short, in order to keep the above options available for you and your medical school colleagues, it is extremely important that Congress preserve these federal programs by not only keeping PSLF and the Grad PLUS loan programs intact but also allowing students to continue to borrow up to their full cost of attendance with Grad PLUS.

Remember that while Grad PLUS allows you to borrow up to your full cost of attendance, that doesn’t mean you have to if you really don’t need that much money.  Always borrow responsibly, as that helps lead to responsible repayment later.

For more information on PSLF, including updates on the program, please see or

The views and opinions expressed are those of the author(s) and do not imply endorsement by AACOM.