The 20/220 Pathway and Income Based Repayment
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Recent activity
June 2009: New legislation introduced to permanently reinstate 20/220 pathway
Senator Richard Burr (R-NC) introduced an amendment to the Affordable Health Care Choices Act (the Kennedy health system reform bill) that would reinstate the 20/220 pathway without eliminating IBR (i.e. residents would have two options to repay their loans). As you may recall, Senator Burr also introduced 20/220 legislation in the 110th Congress as well as in March in this Congress. The AMA immediately sent a letter in support of the Burr amendment to all members of the Senate HELP Committee.
On June 24, the amendment was passed with the support of Senator Chris Dodd (D-CT), who is Acting Chair of HELP in the absence of Senator Kennedy. The AMA will continue to monitor this legislation and provide updates as information becomes available.
July 1, 2009: Income Based Repayment program goes into effect
Please be sure to review the AMA-MSS IBR Issue Brief to learn more about this program and how it will affect you.
Background
In September 2007, Congress passed legislation that eliminated a popular form of economic hardship deferment known as the "20/220 pathway" and replaced it with an Income Based Repayment (IBR) program.
The 20/220 pathway provided for complete deferment of federal educational loans for up to three years for borrowers whose debt burden was greater than 20% of their income and whose income minus debt burden was less than 220% of Federal Poverty Level (FPL) for a family of two. The Association of American Medical Colleges (AAMC) estimates that two-thirds of entering residents were eligible for complete deferment through the 20/220 pathway.
The IBR program that replaced 20/220 is not a loan deferment program. Instead, IBR provides for reduced payments for borrowers who demonstrate partial financial hardship. Only individuals earning less than 150% FPL (~$16,000 per year for an individual) are eligible for full deferment. Consequently, under IBR, unlike with 20/220, nearly all residents with student loans are required to make monthly payments starting in their first year of residency.
AMA position
The AMA feels strongly that elimination of the 20/220 pathway unfairly hits resident physicians at a time when they will be least able to make monthly payments on their student loans. The average resident earns just over $45,000 a year and carries a debt burden of more than $150,000. This debt represents a significant hardship throughout the loan repayment period, especially during the three to seven years of residency training.
The high debt burden that many medical graduates face often influences their career choices. Borrowers with high loan debt are often deterred from entering public health service, practicing medicine in underserved areas, starting a career in medical education or research, or practicing primary care medicine. The elimination of the 20/220 pathway exacerbates these problems by leaving resident physicians with one less vital tool with which to manage their substantial student debt.
AMA action
For nearly two years, the AMA, with your help, has been fighting to reinstate the 20/220 pathway and preserve loan repayment options that best serve the individualized needs of all medical students and residents. Your AMA-MSS Governing Council, AMA-MSS members, and AMA staff have:
- Sent numerous letters to members of Congress and the Administration
- Organized call-ins and letter-writing campaigns across the country
- Created extensive resources to help AMA members understand the issue and prepare them to advocate on behalf of their fellow medical students and residents
- Collaborated with the AMA Resident and Fellow Section
Read more about AMA advocacy efforts on this important issue.
What you can do
The AMA continues to monitor progress on pending 20/220 legislation (see recent activity, above) and will notify members when grassroots action is required. Please subscribe to the AMA-MSS Announcements listserv to receive timely updates and future calls to action on this issue.
In the meantime, please share information about this issue with your fellow medical students. You can easily spread the word about this Web page and the useful AMA resources available here by using the "Email" or "Share" links near the top of the page.
Together We Are Stronger!
