This column was originally published in AMA eVoice on Nov. 1, 2007. Dr. Davis is president of the American Medical Association.
Last week I had an opportunity to take part in a roundtable discussion on issues affecting the practice of medicine during a breakfast event hosted by the Sangamon County Medical Society in downstate Illinois. A number of statewide political leaders also participated, including members of the Illinois General Assembly.
During the conversation, John Frisbee, MD, an ophthalmology resident at the Southern Illinois University School of Medicine, shared details of a troublesome financial dilemma he faced—one to which many residents probably can relate. Dr. Frisbee soon will be moving to New York City to finish his residency, where he’ll pay about $3,000 a month for an apartment in Manhattan while living on a salary of about $42,000. And because of recent congressional legislation, he would have been forced to repay several thousands of dollars in medical school loans, stretching his money to the limit.
But Dr. Frisbee and residents nationwide received good news today when the U.S. Department of Education announced an extension of the "20/220 pathway" loan deferment program for one year—until Nov. 1, 2008. This development allows fourth-year medical students and current residents to continue to reapply for economic hardship deferment during the next year, and it provides time for the AMA to pursue long-term legislative solutions to this problem.
Congress eliminated the 20/220 pathway on Oct. 1 as part of the College Cost Reduction and Access Act of 2007, leaving a significant gap until a new income-based loan repayment program takes effect in July 2009. Thousands of residents who rely on the 20/220 pathway would have been forced to begin making extremely large loan payments or go deeper into debt at a time when they are still in training for another three to seven years. Few residents would have qualified for hardship deferment, leaving forbearance (with interest accruing on all loans) as the only remaining option for those in need of avoiding payments during their training.
With the average resident earning about $43,000 a year and carrying a debt burden of more than $130,000, the 20/220 pathway has been invaluable to residents. Up to 67 percent of entering residents qualify for economic hardship deferment under the program, allowing them to postpone payment on federal loans for three years without accruing interest on the subsidized portion of those loans. Residents qualify if their debt burden is greater than 20 percent of their income, and if their income minus their debt burden is not greater than 220 percent of the federal poverty level.
Under the new program slated to take effect in July 2009, loan repayments would be capped at 15 percent of the borrower's income that is above 150 percent of the federal poverty level.
Extension of the 20/220 pathway follows strong advocacy by the AMA, including letters to the U.S. Department of Education (PDF, 44KB) and to U.S. Senate leadership and physician legislators (PDF, 41KB) about the program's importance to residents. The governing councils of both the AMA's Medical Student Section (MSS) and Resident and Fellow Section (RFS) played a leading role in this effort—developing background pieces, analysis, and talking points (PDF, 59 KB) for students and residents—and the RFS also produced a PowerPoint presentation on the subject.
Rising medical education debt is a high-priority issue for the AMA, and it’s one that can cause shifts in specialty choice, increase burnout, and decrease the numbers of minorities in medicine. Making it harder to pay back high debt burdens can deter many from practicing in an underserved area, starting a career in medical education or research, or practicing primary care medicine. Various reports point to a nationwide physician shortage (PDF, 47KB), and the difficulty of paying back medical student loans could further deter the best and brightest from pursuing a career in medicine.
I'm pleased the Department of Education has extended the 20/220 pathway, and I credit the medical students and residents who contacted their members of Congress about this issue. The AMA will continue to advocate for students and residents on this matter, and I encourage you to keep sharing your opinions with your legislators. By making your voice heard, together we can limit the impact that medical school debt has on residents and the ranks of the nation's physicians.
The lighter side
In 2004, a cartoonist at the Detroit News portrayed the plight of graduation debt. The graduate in the cartoon owed $120,000, which was probably near the average indebtedness of medical students graduating that year. Click here to see the cartoon.
Please send comments, questions, and replies to amaprez@ama-assn.org.
Content provided by: Ronald M. Davis, MD