New PSLF changes July 2023: what physician employers need to know

Starting July 1, 2023, more physicians practicing in California and Texas will become eligible for Public Service Loan Forgiveness (PSLF) due to a change in the definition of employment. For physician recruiters, the news presents a hiring incentive.

What is it?

Public Service Loan Forgiveness is a free federal program that can save physicians thousands of dollars on student loans.

Who benefits?

Physicians contracted by for-profit groups who practice full time at nonprofit hospitals and clinics will become eligible for PSLF.

Where does it apply? The new definition of employment applies only in the states of California and Texas.

Why?

Physicians in California and Texas are forbidden, by state law, from serving as employees at hospitals; they must, instead, be hired as contractors. While this previously disqualified them for PSLF, new regulations (starting July 1, 2023) from the Department of Education allow nonprofit hospitals “to certify employment for a contractor if that individual is providing services that by state law cannot be filled or provided by an employee of that organization.” This means physicians in California and Texas will be able to apply for PSLF, and - if they’ve been making payments on federal student loans for 10 years while working in a nonprofit hospital or health care system - they will be eligible for loan forgiveness.

When?

New regulations start on July 1, 2023.

How can physician recruiters get ready?

• Assess your organization’s eligibility. Physicians contracted by for-profit companies who work in nonprofit hospitals and clinics are newly eligible for PSLF. To assess whether your candidates will be eligible, use the PSLF Employer Search Tool. Place into the tool the Employer Identification Number (EIN) of the nonprofit hospital or clinic. Click "Search." The results will indicate eligibility.

• Anticipate the change by incorporating the new incentive into your recruitment.
  • Update job postings to indicate the position qualifies for PSLF.
  • Select someone within the organization to verify PSLF employment.
    1. Make your HR department aware of the changes to PSLF that make your physicians eligible.
  • Consider adding loan counseling to support physicians. PSLF has a 5% success rate. That means that 95% of applicants fail to receive forgiveness. Your physician will save time and money with student loan counseling support to assure they receive forgiveness.
  • Your organization may be able to dramatically reduce loan incentive expenses by leveraging the free federal dollars of PSLF.
• Alert your colleagues to the changes.
  • Your recruiting team will want to become familiar with PSLF and the benefits it offers candidates.
  • Your leadership will wish to revisit existing loan incentive programs to determine if they are redundant with PSLF.
  • Your physicians, both your candidates and existing physicians, will need to hear from you about the news.

How do physicians apply for PSLF?

The PSLF application is being updated to reflect the changes. When released, it will be available at studentaid.gov/pslf.

Questions?

Reach out to Joy Sorensen Navarre, President, Navigate Student Loans, at joy@navigatestudentloans.com.

Read the California Medical Association’s Guide, "Public Service Loan Forgiveness: What California Physicians Need to Know."