Congress has passed an amendment to the High Education Act (HEA) of 1965 designed to aid medical students and residents with high debt burden and provide enough young physicians to care for the aging American population.
The College Opportunity and Affordability Act of 2007 (H.R. 4137), which was passed last week, extends the HEA - which would have expired on March 31 - by five years. The Senate approved the bill on Jul 26, 2007.
Among the bill's biggest supporters is the American Medical Association.
"Most medical students enter the workforce with substantial debt, an average of $140,000 when entering residency," said Chris DeRienzo, AMA Board Member and fourth year medical student at Duke University. "This high debt burden can and does play a role in students' ultimate career choices, potentially deterring them from primary care specialties or practicing in underserved areas."
Among the provisions in the new bill is a federal loan forgiveness program for physicians who serve in areas of need.
The bill allows eligible medical specialists with five or more years of graduate medical education to qualify for up to $2,000 of forgiveness annually and up to $10,000 over five years of service.
Other provisions include:
• disclosure requirements for private lenders that will improve private student loan transparency;
• disclosure requirements for certain federal lenders that will make sure applicants are provided notice about terms of consolidation; and
• a Government Accountability Office (GAO) study that will analyze the impact of debt on medical school graduates.
"The AMA is committed to easing the significant financial burdens faced by medical students and residents during their graduate medical education years," said DeRienzo. "The higher ed reauthorization bill is a positive step, providing incentives that will help encourage physicians to work in underserved areas where patients desperately need them and increase loan transparency that will benefit med students and residents during the cumbersome financial planning process."
The AMA is also continuing its work to permanently reinstate and expand the medical student loan deferment eligibility during residency.
The College Cost Reduction and Access Act, (HR 2699) was signed at the end of September and went into effect on Oct. 1, 2007, taking away the so-called "20/220 pathway," which allows medical residents to defer payment on their loans for up to three years during their residency training based on economic hardship. A temporary fix has been secured, but it only allows those in their residency to apply for the deferment until July 2009.
"We are committed to working with Congress and the Department of Education on a long term solution for continued loan deferment eligibility for medical residents," said DeRienzo.