CHA News

New Education Department Rule Makes CA Physicians Eligible for Federal Loan Forgiveness 

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The U.S. Department of Education has released the final rule on the national overhaul of the broken Public Service Loan Forgiveness (PSLF) Program.  

Included in the rule is a specific fix sought by CHA — that all eligible California physicians can participate in the program, despite the state’s prohibition on physician employment.  

Applications will open in July 2023 under the new rules, which are retroactive for the last 10 years of work in public and private nonprofit hospitals and clinics. 

This is a major win for California physicians, hospitals, and patients. It ensures California can compete equally with other states for a physician workforce and will ultimately protect patients’ access to medical care. 

For years, CHA, along with the California Medical Association, worked with the Texas Medical Association and the Texas Hospital Association (Texas has a similar physician employment ban), urging the Department of Education to fix the inadvertent exclusion of California and Texas physicians. 

The PSLF Program was intended to provide loan forgiveness to individuals who commit to community service for 10 years by working full time (30 hours/week) in nonprofit organizations, such as nonprofit hospitals/clinics. Unfortunately, the program’s implementing regulations were narrowed to require physicians to be “directly employed.” As a result, physicians in our nation’s two largest states were inadvertently excluded because, while they may be working full time in private nonprofit hospitals and able to meet all PSLF Program eligibility requirements, state laws in California and Texas prohibit these hospitals from employing physicians.  

CHA hopes that the ability to participate in the PSLF Program will be an important tool to improve recruitment and retention of physicians. The final rule now ensures that physicians in all 50 states have equal access to loan forgiveness.