American College of Physicians: Internal Medicine — Doctors for Adults ®

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Loan repayment programs offer debt relief in exchange for service

From the March ACP Observer, copyright 2007 by the American College of Physicians.

By Yasmine Iqbal

With the average debt of medical school graduates reaching $120,000 (as of 2004), it's not surprising that many new physicians forego primary care careers in favor of higher paying specialties. But some relief is available for those physicians willing to spend at least a few years after residency practicing in an underserved area or serving in the military.

"Over 80% of medical students carry some educational debt," said Jay D. Bhatt, a fourth-year student at the Philadelphia College of Osteopathic Medicine and President of American Medical Student Association (AMSA). "Debt really impacts how people think about their careers and how they're going to support their families."

Still, physicians don't always enter these programs with the sole intention of paying back debt. Here's a rundown of some loan repayment programs and profiles of physicians who are using them to launch their careers.

Military programs

When Diane C. Homeyer, ACP Associate Member, was attending medical school at Thomas Jefferson University in Philadelphia, she didn't have to think about how she was going to pay for her education. As the recipient of an Air Force Health Professions Scholarship, her tuition, books and other fees were picked up by the government, which also provided her with a monthly stipend. "I never even got a bill," she said. "It was a huge weight that was lifted off of my shoulders."

In return, Dr. Homeyer, now in her second year of residency at Lackland Air Force Base in San Antonio, Texas, will spend four years in the Air Force–one for every year sponsored. Part of that service may include deployment to Iraq or Afghanistan, which she admits is something she never fully anticipated.

"I signed on with the Air Force before 9/11, and I and my fellow students had no idea we could be involved in something like this war," she said. "But I look at deployment as one more opportunity; the medicine that is being practiced in those areas is incredible." She believes that if she is deployed, she'll return a much more seasoned, skilled physician.


Maj. Cecily K. Peterson, ACP Member, (left) entered into a Health Professions Scholarship in college. Her active duty requirement ended in 2001, but "dream" jobs prompted her to stay. Shown, she checks the carotid pulse of retired Col. Lawrence Stetson at the Madigan Army Medical Center in Tacoma, Wash.



Military physicians sometimes stay for the long term. Maj. Cecily K. Peterson, ACP Member, internal medicine program director at Madigan Army Medical Center in Tacoma, Wash., had no military background when she applied for a Health Professions Scholarship in her first year of medical school at Dartmouth. Although her active duty requirement ended in 2001, she has no plans to leave.

"The military gave me financial security about paying for medical school, and I've been able to do one dream job after another," she said.

A Health Professions Scholarship is the most comprehensive aid package offered by the military; all three branches also offer medical students, residents and practicing physicians other ways to receive payment toward their outstanding loan balances in exchange for service. A physician who joins the Army after residency, for example, can receive up to $20,000 per year, or a lifetime maximum of $50,000, through the Health Professionals Loan Repayment Program.

For more information, visit here.

National Health Service Corps

Ariel G. Ton, ACP Member, who completed her internal medicine residency at Louisiana State University in Shreveport in 2005, knew that she wanted to serve disadvantaged populations ever since she was a youngster in Vietnam.

"Having grown up in an underserved country, I understood the hardships that poor people faced," she said. She was less sure of how she was going to pay back her medical school loans until she heard of the National Health Service Corps (NHSC) through a colleague at the clinic in Leesville, La., where she now works.

The NHSC, part of the Health Resources and Services Administration, offers loan forgiveness programs to physicians who agree to practice in underserved regions. The program provides $50,000 in exchange for a two-year commitment and up to $35,000 for each additional year of service. In addition, payments made through the NHSC loan repayment program are now exempt from federal withholding.

For Dr. Ton, practicing in a rural area isn't a hardship—she plans to stay long after the loan is paid off—but she definitely appreciates the financial help. "I feel like I can concentrate more on my patients without having to worry about my finances as much," she said.

The NHSC also awards scholarships to medical students pursuing primary care careers in return for a service commitment; the scholarship covers tuition, fees and health insurance and includes a stipend. Dr. Bhatt, who received an NHSC scholarship in his second year of medical school, noted that applicants must prove that they're dedicated to serving disadvantaged patients. His own background included a degree in public health and years of service in community health centers.

For more information, visit here.

State loan repayment programs

Many states also offer loan forgiveness or repayment programs, most often administered through the state health department. The Ohio Physician Loan Repayment program, for example, provides up to $80,000 in loan repayment over four years in exchange for practicing primary care medicine in a Health Professional Shortage Area.

Guillermo G. Trevino, ACP Member, had heard about the Ohio loan repayment program during a seminar in his first year of medical school. When he was searching for his first job in 2005, the opportunity to get some help tackling his $150,000 debt gave him one more reason to go back to Darke County, the underserved region where he grew up.

He was surprised to realize that he was the only internal medicine physician in Ohio to take advantage of the program that year, and he urged others to do their research. "There's plenty of money out there," he said. "You just need to find it."

For more information about individual state programs, visit here.

Indian Health Services

The IHS is a Department of Health and Human Services agency that serves 1.8 million American Indians and Alaska Natives and operates 33 hospitals, 59 health centers, 50 health stations and 34 urban Indian health projects. The IHS loan repayment program offers physicians in selected specialties, including internal medicine, up to $20,000 per year (for a two-year minimum commitment) toward loan repayment and sends an additional 20% of the award amount to the IRS to offset tax liability.

According to Darrell Pratt, a spokesperson for the IHS, preference is given to physicians who have agreed to serve in an extremely needy community; the agency's goal is to recruit physicians who stay for the long term. "Very few people default on their agreements (and risk having to pay back three times the amount that they received)," said Mr. Pratt. "In fact, our average length of service for physicians is 10 years."

Thomas Kelly, MD, started working at Northern Navajo Medical Center in Shiprock, N.M., a year before he was accepted into the IHS loan repayment program. Over the next four years, the program paid $80,000 toward his $100,000 in school loans. Although he's now debt free, he and his wife, also an IHS physician, plan to stay for the long term.

"We've always had an interest in working with patients who don't have easy access to health care," he said. The advantages of working within this self-contained system, he noted, include a lack of insurance and malpractice hassles and the opportunity to form close bonds with patients. "We're both here because we want to be," he said.

Scott McGarvey, MD, who is currently working toward paying off $100,000 in student loans, started considering IHS when he first entered medical school; today he is an IHS primary care physician in Chinle, Ariz. "It's very satisfying to practice medicine here," he said. "I either provide or coordinate care for a variety of patients, and I have the opportunity to do everything I trained to do as a general practice physician."

Finally, remember that loan repayment programs are open to physicians long after they start working. James R. Lisko, ACP Member, practiced for 12 years in Tampa, Fla., before moving to Gallup, N.M., four years ago to become an IHS physician. "I was becoming pretty entrenched in my practice, and I wanted to do hands-on work with very ill patients," he said.

Dr. Lisko now deals with challenging cases on a daily basis and has adjusted to living in a fairly remote location (the nearest metropolitan area, Albuquerque, is two hours away). The fact that the IHS also helped him pay off $80,000 in outstanding medical loans was a welcome bonus.

"I called Sallie Mae a few weeks ago and found out that my balance was $0," he said. "I'm still in disbelief—that was the icing on the cake."

For more information, visit here.

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Medical school debt facts:

  • The average debt of 2004 medical school graduates was $120,000
  • The average debt has nearly doubled in the last 10 years
  • 81.9% of medical school graduates carry some level of debt
  • More than one-third of all medical students have a debt of more than $150,000

Source: AAMC

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