Who Should Go to an For-Profit Hospital Residency? For-profit hospitals are not only more likely to have higher mortality rates, but they also don’t have the same financial incentives to provide the best health care as their nonprofit counterparts do. However, not all of them are terrible. There are still a few nationally accredited for-profit hospitals that are known for caring for the sickest of the sick.
As a medical professional myself, I often find myself at odds when it comes to for-profit hospitals, which is not surprising, given that this is a highly controversial issue. You see, for-profit hospitals are all the rage these days, thanks to the economic climate, and for good reason. These hospitals are usually managed by for-profit organizations, and are the ones that often offer the shortest time to degree programs and offer the most affordable prices, as you can tell from the information below.
If you’re a doctor, you’ve probably been thinking about your student loans since the day you started medical school. And you probably know you need a plan to pay off your massive medical school debt.
The Utility Loan Forgiveness Program (UFLP) is a popular debt relief option for health care students. This is often the main plan for doctors to pay off their student loans in just 10 years. Physicians can participate in this reimbursement program as soon as they begin their training as a physician in training.
If you apply for the PSLF, the place where you live may determine whether or not you are eligible. Below, we explain why nonprofit specialty hospitals can be confusing to health care professionals applying for a PSLF. We will also review how to find PSLF hospitals near you.
Overview PSLF
The PSLF program is the state’s option for forgiving student loans. Physicians and healthcare professionals can benefit from this program by working full time for an eligible employer. Skilled public service jobs may include:
- Government organizations at all levels (federal, state, local, or tribal).
- Nonprofit organizations that enjoy tax exemption under Section 501(c)(3) of the Internal Revenue Code.
- Other types of nonprofit organizations that are not tax-exempt under Section 501(c)(3) of the Internal Revenue Code if their primary purpose is to provide certain types of qualified public services
Message: You may also be eligible for PSLF if you are a full-time AmeriCorps or Peace Corps.
Making sure your home meets the criteria of a community service organization is just the first step. You should also make sure that all of your loans are Federal Direct Loans and that you have enrolled in a qualified repayment plan. Federal Family Education Loans (FFELs) and Perkins Loans are not covered by the program, but may be covered if combined into a new consolidated Direct Loan.
If you meet the above requirements, you can begin filling out the Public Service Loan Benefits form here. If your application is successful, your eligible loans will be transferred from your current servicing company to FedLoan Servicing.
However, after making 120 eligible payments, the balance of the debt is forgiven tax-free. Moreover, these payments need not be constant.
According to the AAMC, the average physician is $200,000 in debt upon graduating from medical school, so the benefits of working in hospitals with PSLF can run into six figures. You can see why you want to start participating in the student loan forgiveness program as soon as possible.
Effect of choice of charity home on SLMF
Where you want to go can lead you to a non-profit hospital, including the sale of large hospitals to the non-profit Hospital Corporation of America (HCA). If this is the case, you cannot start a PSLF program until after your residency.
This means that you will be paying off your student loan for at least three to five years without it counting towards your PSLF. At this point, you have two options to compare.
Option 1: Participate in an income-contingent installment plan and reduce your expenses while you learn. Then sign up for the PSLF.
Let’s say you start your internship at a for-profit hospital with $190,000 in debt and an average interest rate of 6.5%. You have the right to participate in the Pay As You Earn (PAYE) redemption plan. Let’s also assume that you make an average of $57,000 a year and that your monthly payments are $323.
During your five years of residence, you will spend $19,380 in federal student loan repayments. During this time, your student loan would have grown anyway, thanks to the interest. Each year, $12,350 in interest is added to the principal, bringing your total debt to about $232,370.
You can start a PSLF after completing your residency, but you will likely earn much more. According to the Bureau of Labor Statistics, the average salary for a doctor is $208,000 a year, so let’s use that figure.
We see that you will be making minimal payments for 10 years. Your initial payment is $1,582 per month, but this may increase as your salary or family income increases. After 10 years, your student loan debt will be forgiven in the amount of approximately $147,047 and your total repayments will be $217,573.
Those few years that you didn’t participate in the PSLF program while working at a for-profit hospital would certainly have cost you money in the long run. But not as much as refinancing.
Option 2: Refinance your student loan at a lower interest rate and start repaying it
You can refinance your student loan debt at a lower interest rate – in some cases less than 3%. But here, let’s assume you refinance at 4.5% with an original balance of $190,000. To pay off your student loans in 10 years, you will have to pay a total of $236,296.
PSLF vs. refinancing
You’ll end up saving more money by working on PSLF hospitals and pursuing debt forgiveness than by refinancing your federal loans.
Although maintaining an IDR plan while in school and enrolling in PSLF takes five years longer than the normal refinance payment period, you will have more money in your pocket at the end of that period. If you do, you run the risk that the program will no longer exist, as is the case for those currently using the PSLF program.
If you are considering staying in the private sector or starting a private practice, you may not even be considering the PSLF. In that case, it makes sense to restructure student loans or opt for an income-based repayment plan.
How to find PSLF Hospitals
The availability of hospitals offering the PSLF program in your area depends largely on where you live. For example, according to the Kaiser Family Foundation (KFF), there are currently seven states where more than 90 percent of hospitals are nonprofits or public hospitals. However, in four states, the percentage of hospitals with FFP is less than 30%.
If you want to know if there is a hospital near you, you can search for it in the Guidestar or Non-Profit Directory. You can also use the PSLF reference tool to find employers who qualify for the loan. Finally, don’t hesitate to ask the recruiter during the interview if the hospital is for-profit or not.
What if you choose an income-contingent repayment plan?
You can choose to stay in the private sector. If you have already enrolled in an IDR during your hospital stay, you can continue to enroll in your current plan. Note that this plan is less desirable than the PSLF for two main reasons:
- They will make payments for 20 to 25 years, and
- You will have to pay tax on the amount awarded.
Of course, if you work in the private sector, you can’t do anything about it. However, you can make sure that you choose an installment plan that will cost you as little money as possible.
Demand for medical credits
Which payment program should you participate in for the PSLF or IDR?
For the repayment of PSLF and IDR, the borrower must have an acceptable IDR repayment plan. You can choose from the following options:
If you decide to use the PSLF after your stay – or the IDR during your stay – the payment plan you choose will affect the amount of money you have left. In the above example, the PAYE plan was used because it is one of the plans that keep fees low.
Choose the plan with the lowest monthly payment, even if that means your student loan will be higher. PAYE and REPAYE are the best options as they only take up 10% of your disposable income. You can limit the growth of your adjusted monthly income by making the most of your pre-tax retirement accounts.
The idea is to capitalize on forgiveness. Keep payments to a minimum and don’t make any extra payments, as it’s a waste of your money.
Weighting of all loan options
There are more options for student loan forgiveness for people in the health care industry. Consider whether the PSLF approach at a for-profit hospital seems better for you than the IDR loan route and how other programs can help you.
Specific incentive programs for states and incentive programs for areas of high need for primary care offer incentives and reduced rates. If you have some leeway, you can use these plans to pay off a significant portion of your student debt.
In 2019, HCA launched a student loan assistance program for people working at one of its nonprofit hospitals. This program currently offers a monthly benefit of $150 if you work full time and $75 if you work part time. If you work for an HCA firm, you should consider this, but this option has nothing to do with other student loan forgiveness options.
Don’t know yet which way you want to go? The professionals at Student Loan Planner® can help. We will look at your specific numbers and create an installment plan that will allow you to live your new career to the fullest. Contact us to schedule an appointment today.
A plan for a student loan
Refinance your student loan and receive a bonus in 2021.
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Not sure what to do with your student loan?
Take our 11-question quiz to get personalized advice on PSLF, IDR, or refinancing (including information on which lender we think can offer the best interest rate).
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All of the above rates reflect the APR. 1General obligation If you refinance over $100,000 through this website, $500 of the above cash bonuses will be provided directly by Student Loan Planner. General Bond Disclosure. 2Earnest: $1,000 for $100,000 or more, $200 for $50,000 to $99,999.99. For Earnest, if you refinance $100,000 or more through this site, $500 of the $1,000 cash bonus will be provided directly by Student Loan Planner. In the above price range, an additional discount of 0.25% is included for automatic paymentInformation on income.
3Laurierweg: If you refinance over $250,000 through our link and Student Loan Planner receives the loan, a $500 cash bonus will be paid directly to Student Loan Planner. If you are a member of a professional association, Laurel Road can offer you the choice of a reduced interest rate or the $300, $500 or $750 cash bonus mentioned above. The Laurel Road proposals cannot be combined. The above price range includes an additional 0.25% discount for automatic payment. Laurel Road Disclosure.
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Frequently Asked Questions
Do non profit hospitals count for PSLF?
No, non-profit hospitals do not count for PSLF.
Does medical residency count towards PSLF?
No. Medical residency does not count towards PSLF.
Does residency qualify for public service loan forgiveness?
No, residency does not qualify for public service loan forgiveness.
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