PA Education Policy 101: Student Loans and Loan Repayment Programs
As summer draws to a close, the beginning of back-to-school season presents an opportunity to celebrate learning and growth for the year ahead. In recognition of the season, PAEA’s Government Relations team is launching a new, three-part educational series entitled PA Education Policy 101. Through this series of articles, the Government Relations team will be sharing information on the impact of federal policy on PA education covering three key areas: student loans and loan repayment programs; investments in equity, diversity, and inclusion; and resources for clinical site development.
The first part of this series, focused on student loans and loan repayment options, comes at a time of significant policy change for borrowers. As required by the Fiscal Responsibility Act of 2023, the COVID-era suspension of federal student loan payments and interest accrual will conclude this fall with interest accrual resuming as of September 1 and required payments resuming in October. As such, it is critical for all students and graduates to be familiar with the student loan options available to them, the terms of these offerings, and how federal aid programs can equip them to achieve their career goals.
To finance their education, PA students have access to two federal borrowing options that collectively allow them to fully fund the cost of their program. The first – Direct Unsubsidized loans – provides students with up to $20,500 in annual aid with interest that accrues while they are enrolled in their program. For expenses beyond this limit, students have access to Grad PLUS loans up to their university-determined cost of attendance.
While both Direct Unsubsidized loans and Grad PLUS loans are administered by the Department of Education, there are several key differences between the programs. For instance, Direct Unsubsidized loans typically impose an interest rate 1% below that of Grad PLUS loans. Additionally, unlike Direct Unsubsidized loans, Grad PLUS loans are subject to credit checks. In the event of an adverse credit history, however, students can still borrow under the Grad PLUS program by obtaining an endorser with no adverse credit history or if they can provide sufficient documentation of extenuating circumstances related to their credit history.
In addition to federal loan programs, PA students also have access to the private student loan market to meet their financial needs. However, while this option is available, borrowers should note that private student loans typically have fewer repayment protections, stricter credit requirements, and higher interest rates than federal options.
If you are considering federal borrowing options to finance your PA education, please visit the U.S. Department of Education’s Federal Student Aid website to learn more about Direct Unsubsidized and Grad PLUS loans.
Loan Repayment/Forgiveness Programs
In recognition of the significant cost of health professions education, Congress has also authorized a number of federal loan repayment/forgiveness programs that are available to PA graduates to help reduce the impact of educational debt. Among these options are:
The National Health Service Corps
First established in 1972, the National Health Service Corps (NHSC) provides educational assistance in the form of both scholarships and loan repayment agreements in exchange for a service commitment in a designated health professional shortage area. The NHSC administers a wide array of loan repayment offerings including a federal repayment option, state-based programs, and programs targeting the needs of particular communities, such as rural areas. Each of these component programs requires different practice commitment lengths with different amounts of available aid. Interested graduates are encouraged to learn more about the NHSC’s component programs through the information available on the website of the Health Resources and Service Administration (HRSA) and on PAEA’s NHSC Resource page.
While the NHSC is a critical resource, without meaningful intervention from advocates, stakeholders, and lawmakers, the NHSC is facing a funding cliff this September. To prevent this lapse in mandatory funding and maintain the benefits offered to PA students and graduates through these component programs, we urge all stakeholders to contact their representatives through PAEA’s current online NHSC campaign.
Public Service Loan Forgiveness
In addition to the NHSC, options for student loan forgiveness are also available through the Department of Education. Established in 2007, the Public Service Loan Forgiveness program offers full forgiveness of remaining federal Direct loans for those employed for ten years in a qualifying non-profit or government setting. This option is particularly useful for graduates working in either non-profit clinical settings or as a faculty member at a public, non-profit institution of higher education. Additional information on the Public Service Loan Forgiveness program can be found on the website of the Department of Education.
The Substance Use Disorder Treatment and Recovery Loan Repayment Program
In recognition of ongoing challenges in ensuring access to mental and behavioral health care, Congress has also recently acted to expand loan repayment options for health professionals, including PA graduates, providing substance use disorder care. Specifically, Congress established the Substance Use Disorder Treatment and Recovery Loan Repayment program as part of the SUPPORT for Patients and Communities Act in 2018. Participants in the STAR loan repayment program are eligible for up to $250,000 in loan repayment aid in exchange for a six-year service commitment at an approved facility. Additional information on the STAR loan repayment program can be found on the HRSA website.
As students seek to leverage federal financial aid to complete their education, PAEA’s Government Relations team is committed to serving as a resource in navigating borrowing and repayment options. Members and students with questions are invited to contact Tyler Smith, PAEA’s senior director for government relations, at tsmith@PAEAonline.org.