Buried deep in a new bill is a major change that would cut off a popular federal student loan forgiveness program for medical and dental residents.
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Republicans Will Cut Off Student Loan Forgiveness For Medical Residents Under New Plan
By
Adam S. Minsky,
Senior Contributor.
Adam Minsky is an attorney and writer focusing on student loans.
May 01, 2025, 08:31am EDT
UNITED STATES - FEBRUARY 5: Chairman Tim Walberg, R-Mich., attends the House Education and Workforce ... More
CQ-Roll Call, Inc via Getty Images
House Republicans this week unveiled sweeping legislation to
remake the federal student loan system. Nearly every element of the federal student aid system, from grants to aid disbursement to repayment plans and loan forgiveness programs, would be impacted if the plan is enacted. And buried deep in the bill is a major change that would cut off a popular federal student loan forgiveness program for medical residents and interns.
“This bill set forth by Committee Republicans not only would save taxpayers over $330 billion but also bring much-needed reform in three key areas: simplified loan repayment, streamlined
student loan options, and accountability for students and taxpayers,” said Education and Workforce Committee Chair Tim Walberg (R-Mich.) in a speech on the House floor on Tuesday. “Moreover, it simplifies and improves the system going forward by streamlining repayment options and providing targeted assistance to struggling borrowers who need it rather than blanket bailouts for those who don’t."
While not expressly called out in Walberg’s speeceh, the bill explicitly cuts off medical and dental residents from key student loan forgiveness benefits, suggesting that the legislation’s authors believe these individuals don’t need the relief. The proposal is intended to become part of a massive reconciliation “mega-bill” that Republican lawmakers hope to enact this summer. The reconciliation process, which allows legislation to pass with simple, party-line majorities in Congress without crashing into a Senate filibuster, would facilitate the GOP’s expansion of expiring tax cuts and slash government spending to cover the associated costs.
PSLF Historically Has Provided Broad Student Loan Forgiveness Benefits
Public Service Loan Forgiveness allows borrowers to qualify for a discharge of their federal
student loans after making 10 years of qualifying payments. Under current law, a qualifying payment is one made on a Direct federal student loan under either a 10-year Standard plan or one of several income-driven repayment options, while the borrower is employed full-time by an eligible public service employer. This includes 501(c)(3) nonprofit organizations and government or public entities. Many nonprofit and public hospitals and community health centers are PSLF-eligible employers.
The statute governing PSLF, which was passed by Congress and signed into law by President George W. Bush in 2007, does not distinguish between different types of public service work, as long as the entity is a 501(c)(3) nonprofit or public organization and the borrower is meeting all of the program’s eligibility criteria. That means someone who is employed at, for instance, a nonprofit hospital, could qualify for PSLF regardless of whether they are a medical technician, a nurse, a doctor, or an administrative support staff member. While doctors and nurses may earn significantly more income than other employees at the same organization, they likely would be earning comparatively much less than they would in a private practice setting. These borrowers also likely carry significantly higher student loan balances due to their education, and would have much higher monthly payments under income-driven repayment plans as a result.
GOP Bill Eliminates Student Loan Forgiveness Eligibility For Medical And Dental Residents
But for the first time in the PSLF program’s history, the House Republican bill – if enacted – would target a specific group of public service employees and cut them off from student loan forgiveness under the program.
“The term ‘public service job’ does not include time served in a medical or dental internship or residency program (as such program is described in section 428(c)(3)(A)(i)(I)) by an individual who, as of June 30, 2025, has not borrowed a Federal Direct PLUS Loan or a Federal Direct Unsubsidized Stafford Loan for a program of study that awards a graduate credential upon completion of such program," reads the legislative text under the heading, “Exclusion.”
This essentially would mean that if the bill becomes law, doctors and dentists would receive no PSLF credit during their residencies and internships. Typically, medical and dental residents work long hours (often at nonprofit or public hospitals) for very low pay for several years at the beginning of their careers, before moving into more permanent roles. Many medical residents repay their student loans under income-driven repayment plans during that time, given their low income, and interest accrual often means significant balance increases by the time the borrower completes their residency. Residency periods historically have counted toward student loan forgiveness under PSLF, as long as the borrower is meeting all of the program’s eligibility rules.
Department Of Education May Further Limit Student Loan Forgiveness Under PSLF
The good news for PSLF borrowers is that the House Republican draft reconciliation bill would not make other significant changes to the program, such as by capping loan forgiveness or cutting off borrowers at certain income levels. Some advocates had been concerned that additional restrictions on student loan forgiveness under the program would be included in the GOP bill. But that’s not the end of the story.
This week, the Department of Education held its first public hearing as part of negotiated rulemaking, a lengthy process that allows the department to update, change, or repeal regulations governing federal student loan programs. And
PSLF is explicitly a topic for negotiated rulemaking this year. The department is considering enacting new rules to implement President Donald Trump’s executive order in March that would cut off student loan forgiveness eligibility under PSLF for organizations that
engage in certain “illegal” activities. Advocacy groups have warned this is not allowable under the PSLF statute passed by Congress, and that the definition of “illegal” in the president’s order is so vague and broad that it could wind up sweeping up untold numbers of nonprofit organizations and government entities whose mission or actions the Trump administration simply disagrees with.
“This month, the Department of Education began a process called negotiated rulemaking or ‘neg reg’ that will decide the future of student loan programs including Public Service Loan Forgiveness (PSLF),” said the Student Debt Crisis Center in an email this week. “The current Trump Administration is seeking to end PSLF eligibility for public service workers working at certain non-profits or serving certain communities.”
Meanwhile, the Trump administration is taking additional steps that could jeopardize student loan forgiveness under PSLF. Earlier this month, the administration began
targeting the nonprofit status of Harvard University, which could be a prelude to a broader effort to eliminate the tax-exempt status for other nonprofit organizations that the administration has clashed with. So far, that has not yet happened, but advocates remain concerned. In the meantime, Republican lawmakers are considering a separate proposal that would remove the tax-exempt status from nonprofit hospitals, which could make additional healthcare workers
ineligible for PSLF.
