Does Residency Count Toward Public Service Loan Forgiveness?
Medical resident with student loans? Learn how your training employment can qualify for Public Service Loan Forgiveness. Get expert guidance for PSLF success.
The Public Service Loan Forgiveness (PSLF) program helps individuals in public service careers by offering debt forgiveness. It provides a path to debt forgiveness for those who work full-time for qualifying employers.
Medical and dental students often wonder if residency or similar training programs count towards PSLF. Understanding how residency fits into the program’s requirements is important, as PSLF criteria apply to all applicants.
Core PSLF Eligibility Requirements
To qualify for Public Service Loan Forgiveness, borrowers must meet three primary criteria: eligible loans, qualifying employment, and 120 qualifying payments.
Only loans made under the William D. Ford Federal Direct Loan Program are eligible for PSLF. This includes Direct Subsidized, Unsubsidized, PLUS, and Consolidation Loans. Other federal loan types, such as Federal Family Education Loan (FFEL) Program loans or Federal Perkins Loans, do not directly qualify. However, these non-qualifying federal loans can become eligible if consolidated into a Direct Consolidation Loan. Private student loans are never eligible for PSLF.
Qualifying employment requires working full-time for a qualifying organization. This includes government organizations at any level—federal, state, local, or tribal—as well as 501(c)(3) non-profit organizations. Certain other non-profit organizations that provide specific public services may also qualify. Employment with for-profit organizations does not count towards PSLF. Full-time employment means working at least 30 hours per week, or the employer’s definition of full-time, whichever is greater.
The final requirement is making 120 qualifying monthly payments. These payments do not need to be consecutive. Each payment must be for the full amount due, made within 15 days of the due date, and while employed full-time by a qualifying employer. Payments must also be made under a qualifying repayment plan, with income-driven repayment (IDR) plans being a common option.
How Residency Employment Qualifies for PSLF
Employment during a medical, dental, or similar residency program can count towards Public Service Loan Forgiveness. Eligibility depends on the type of institution employing the resident, not the nature of the work. Residents must work for a qualifying PSLF employer for their time and payments to count.
If the residency program is based at a government hospital, such as a Veterans Affairs (VA) hospital, or a non-profit hospital that is tax-exempt under Section 501(c)(3) of the Internal Revenue Code, the employment generally qualifies. Many university-affiliated hospitals and community hospitals fall under the 501(c)(3) non-profit classification, making employment within them eligible. These institutions are considered public service employers because their primary purpose is to provide public services rather than generate profit for shareholders.
Employment at a for-profit hospital will not count towards PSLF. This is true regardless of the demanding hours or public service nature of the medical work performed. The program specifically excludes for-profit entities.
Residency programs typically meet the full-time employment requirement for PSLF. Residents usually work more than 30 hours per week, satisfying this criterion.
Payments made during residency must still meet all other PSLF criteria. This means payments must be on eligible Direct Loans, under a qualifying income-driven repayment plan, for the full amount due, and within 15 days of the due date. Both eligible employment and qualifying payments are needed for forgiveness.
Proactive Steps for PSLF During Residency
Residents can take several proactive steps to maximize their progress towards Public Service Loan Forgiveness during their training. Careful planning and consistent action throughout residency can significantly impact the amount of debt ultimately forgiven.
Enrolling in an Income-Driven Repayment (IDR) plan is a crucial first step for residents. These plans, such as the Saving on a Valuable Education (SAVE) plan, calculate monthly payments based on a borrower’s discretionary income and family size, rather than their loan balance. Given that resident salaries are typically lower than those of attending physicians, IDR plans often result in significantly lower monthly payments, which can be particularly beneficial for managing finances during training. These lower payments still count as qualifying payments for PSLF.
If a resident has Federal Family Education Loan (FFEL) Program loans or Federal Perkins Loans, consolidating them into a Direct Consolidation Loan early in residency is essential. Only Direct Loans are eligible for PSLF, so consolidation makes these other federal loan types eligible. Payments made on FFEL or Perkins loans before consolidation do not typically count, so consolidating promptly ensures that subsequent payments made during residency contribute to the 120-payment requirement.
Submitting the Employment Certification Form (ECF) regularly is another important practice. While not strictly required until applying for forgiveness, submitting the ECF annually or whenever employment changes allows borrowers to track their progress and confirm that their employer and payments qualify. This proactive approach helps identify and correct any potential issues early, preventing surprises later in the PSLF journey. The PSLF Help Tool on StudentAid.gov can assist in preparing and submitting this form.
Maintaining meticulous records of employment, payments, and all correspondence related to student loans and PSLF is highly advisable. This includes W-2 forms, pay stubs, and confirmation of payments made. In the event of any discrepancies or questions regarding qualifying payments or employer eligibility, having detailed personal records can be invaluable for resolving issues with loan servicers.
Finally, residents should diligently understand the PSLF eligibility of any new employer, whether changing residency programs or transitioning to post-residency employment. The Federal Student Aid website offers an employer search tool where individuals can check an employer’s eligibility using their Employer Identification Number (EIN). This verification is important when considering job opportunities, as working for a non-qualifying employer, even temporarily, will pause the accumulation of PSLF-eligible payments.