Governor Newsom advocates for California physician loan forgiveness

June 28, 2022
Area(s) of Interest: Physician Workforce 

Governor Gavin Newsom recently sent a letter to U.S. Education Secretary Miguel Cardona, urging him to fix the Public Service Loan Forgiveness (PSLF) Program, which unfairly excludes California and Texas physicians. The exclusion is severely limiting California’s ability to recruit and retain physicians because they cannot receive loan forgiveness, and the inequity ultimately harms patient access to physicians in community hospitals.

The California Medical Association (CMA) has long been advocating for a fix, through both legislative and regulatory channels, so that California physicians aren’t unfairly excluded from the program.

The PSLF program was intended to provide loan forgiveness to individuals who commit to community service for 10 years by working in non-profit organizations, encouraging careers serving the public good and improving access to health care by making it easier for physicians to pursue careers working in nonprofit community hospitals.

Unfortunately, when the U.S. Department of Education wrote the implementing regulations, they were narrowed to require physicians to be “directly employed.” Because state laws in California and Texas prohibit most hospital employment of physicians, physicians in our nation’s two largest states were unintentionally excluded from the program, in which physicians from all other 48 states participate.

Earlier this year a bipartisan group of Congressional representatives sent Secretary Cardona joint letter emphasizing that Congress never contemplated excluding physicians in the nation’s two largest states when they created the program.

With an average $200,000 in medical school debt, physicians are discouraged from practicing in California and Texas because they cannot get their loans forgiven, as they can in other states. California and Texas are projected to have the two largest physician shortages over the next decade due to growing and aging populations, and an aging physician workforce (roughly one-third of physicians are over age 60, and half are over age 50). It is imperative now more than ever that the U.S. Department of Education update the regulations so that of California and Texas physicians can participate in the program, along with their colleagues in all other states.

Gov. Newsom is urging Secretary Cardona to adopt a proposal recently submitted by CMA, along with the California Hospital Association (CHA), the Texas Medical Association (TMA) and the Texas Hospital Association (THA) that would provide a rigorous California and Texas equivalent to direct hospital employment, which we believe meets the intention of the original statue and the department’s standards.


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