Student loan deferment program restored -- for now

Qualifying residents get a year's reprieve while final rules are developed to determine the program's future.

By Myrle Croasdale and Damon Adams, AMNews staff. Dec. 3, 2007.

An economic hardship student loan deferment program that medical school graduates use as they go through residency will remain in place until fall of 2008, and more students are eligible to participate.

The U.S. Dept. of Education announced Nov. 1 that it will temporarily reinstate the program, with a final decision on its fate due next year.

The news means that eligible medical school graduates and current residents will not have to start repaying loans immediately and may continue to defer paying back medical school debt without accruing any extra interest at least until fall 2008.

In its November announcement, the department also made the program available to a larger number of medical residents. To qualify under the old plan, the typical first-year resident making about $45,000 needed to have a debt of at least $106,000, said the Assn. of American Medical Colleges. Under the new requirements, a resident with the same salary qualifies with a debt of $80,100, the AAMC said.

Roughly two-thirds of first-year residents qualified for economic hardship loan deferments under the old requirements, the AAMC said. At press time in mid-November, it had yet to calculate how many more residents would qualify under the new formula.

Policy watchers said lowering the eligibility requirements fell within the Dept. of Education's rule-making authority and speculated that pressure from the medical community contributed to the change.

The American Medical Association, which has been lobbying to protect and expand medical students' loan repayment options, welcomed the move. "For now, the crisis is averted," said AMA Trustee Samantha L. Rosman, MD.