Physician Assistant Loan Repayment: Once you have completed your two-plus year physician assistant program, you have passed the PANCE, and now you are ready to enter the workforce.Often, a new physician assistant will be beaming with excitement.
Thrilled for the challenges that lie ahead. The last thing that may be on your mind is your student loans which have piled up, perhaps in the previous six-plus years. Today we will be talking about physician assistant loan repayment.
Many physician assistants (PAs) find themselves in loan repayment purgatory which can end up costing those thousands. Most PAs end up here because the combination of making a six-figure salary and owing between $150,000-$200,000 makes the loan repayment strategies very confusing.
The 10-year payment may seem just a touch too high but the income-driven repayment plans like PAYE & REPAYE can be more than affordable.
So some PAs choose the in-between route. Go with PAYE and pay extra toward their loans when they can. They may not understand that being on the loan forgiveness track but paying back the full amount before any amount can be forgiven can end up costing thousands of dollars more to pay back their loans.
Physician Assistant Loan Repayment Options
There is a myriad of different national or federal programs that can help physician assistants relieve their student loan debt faster, instead of simply making your monthly payments on your own. It is well worth your time to investigate these options as you enter practice to see if or which of the many options that you may qualify for.
AmeriCorps is a government ran organization to aid students in repaying their student loans. This option provides several ways to work in the field of medicine and earn physician assistant loan repayment assistance. If one were to join AmeriCorps, a healthcare provider would often serve a year and then receive approximately $4,725 to use to pay back student loans. Additionally, the time in which you worked with AmeriCorps can be used towards Public Service Loan Forgiveness (PSLF) which we will talk more about later.
2. Indian Health Services Program
The Indian Health Service has a loan repayment program that health professionals can receive if they commit to a two-year commitment to serve in American Indian or Alaska Native communities. In this route, you can earn up to $40,000 in loan repayment for the two-year commitment. Additionally, the contract can be renewed until your debt is paid off completely!
3. Military Loan Repayment
The Commissioned Corps of the U.S. Health Service loan repayment may be available if you are a member of the Commissioned Corps. In this program, dependent upon where you work, you could meet the criteria for the Indian Health Service Loan Repayment Program. Another service that might be beneficial is that if you have not finished your education yet, you could also get access to the Post 9/11 GI Bill.
For those who are serving in the military, you may have the opportunity to use the physician assistant loan repayment through The Health Professions Loan Repayment Program. This program is available for physician assistants who are members of the Army, Navy, and National Guard.
The Army provides active duty physician assistants possibly $40,000 annually for three years towards student loans through the Active Duty Health Professions Loan Repayment Program.
Income-Based Repayment Plans
If your student loans are federal student loans, and you have difficulty being able to afford and pay your payments, you can consider an income-based repayment plan.These include the Pay As You Earn Repayment Plan (PAYE), Income-Contingent Repayment Plan (ICR), Income-Based Repayment Plan (IBR), and the Revised Pay As You Earn Plan (REPAYE).
With all of these plans, you will not be getting out of your student loan debt at a faster rate; however, they will work to lower your monthly payments to a percentage of your income.
Once you have paid into your loan for 20 or 25 years depending on your plan, you can apply to have the remaining portion of your debt forgiven.It is important to remember with these plans that you will have to reapply annually.This means that if you have an increase in your income, then your payments are likely to increase somewhat as well.
State Loan Repayment Program
Aside from the federal loan forgiveness and repayment options, you could qualify for local options in your state. For example, if you’re looking for physician assistant loan forgiveness New York or California, Iowa or Maine check individual state websites for programs available.
There are State Loan Repayment Programs (SLRP) from The Health Resources and Services Administration (HRSA) that work with over 30 states to support their loan forgiveness and repayment programs.
Physician assistants must work in Health Professional Shortage Areas (HPSA) and serve for at least two years, potentially more depending on the contract.
In order to be eligible, physician assistants must have one of the following specialties:
Public Service Loan Forgiveness
The Public Service Loan Forgiveness (PSLF) provides student loan forgiveness to providers who work in not-for-profits, governmental organizations, and other public service organizations. To qualify you first must consolidate your student loans into a Direct Consolidation Loan.
After this, you will make 120 payments, and once these payments are completed, one can apply for forgiveness. However, there has been some concern with PSLF recently where people are finding out that their approvals are being reversed after making years’ worth of approved payments.
The National Health Service Corps provides up to $50,000 in student loan repayment that is tax-free for a two-year time commitment to work at an approved site. Just as with the Indian Health Service, you can work another two-year contract and continue doing so until you have paid off all of your student loans if desired.
Refinancing and Consolidation
Two additional ways to alter your student loans are to use private loan refinancing or consolidation. When you refinance your student loan, a private loan pays your balance to the federal government. And in return you likely benefit from a lower interest rate with your new loan from the private company.
Consolidation is available if you have federal loans and allows you to combine all of your loans into one loan. This enables you to pay off your debt with a single monthly payment with a weighted interest rate.
The benefit of refinancing is a lower interest rate can help you pay off the debt faster than originally. And additionally, save money if you have a shorter repayment term with the new company. The second benefit is that if you would choose a longer payment term, this can; lower your monthly payments and creating less of a burden. But in the long run, it will likely not save you much money.
What’s the Best Way for Physician Assistants to Pay Back Their Student Loans?
Kristin is 26 and graduated from PA school a year ago with $170,000 of student loans at 6.5%. Her current salary is $100,000. Let’s compare her options between PAYE (the passive approach) vs Refinancing (the aggressive approach):
If we’re looking at total loan payments alone, Kristin would spend about the same on PAYE and refinancing. The difference is that with PAYE, that amount is spread out over 20 years vs 10 years.
That means refinancing payments would be much higher than PAYE. Her refinancing payment could be $1,803/month for 10 years vs a starting pay of $685 on PAYE. That’s a $1,200/month difference.
But wait! PAYE means that the forgiven loan balance of $170,000 is taxed as income, so she would owe about $68,000 in taxes (estimated 40% tax rate) in 20 years. That brings her total out-of-pocket cost for PAYE to $289,000 vs $221,000 on refinancing, a $68,000 higher cost.
Finally, I hope this article provided several options for student loan forgiveness for those new and currently practicing physician assistants.Just like the countless hours you spent studying in PA school or for the PANCE, make sure that you are researching your options for student loan forgiveness, and making the best decision for yourself and your future!