2008-09 AMSA Legislative Agenda

3. Congress must take proactive steps to reduce and eventually eliminate medical student indebtedness by reforming the policies of the Higher Education Act.

Background

The average medical student debt load upon graduation from an academic medical program is approximately $140 thousand USD 14. For new physicians with dependents or limited resources, this debt burden has a prohibitive effect on choosing primary care or lower-reimbursement health professional fields. The ideal ratio of primary care physicians to specialists is 1:1 15; the current ratio is trending toward 3:8 16 and allowing medical student debt to continue accelerating will further imbalance this ratio in ways that are harmful to our public health system.

The so-called “20/220 rule” enabled 67 percent of residents to defer their loans during residency if their incomes and debt burdens combined to qualify them for economic hardship deferment 17.

Economic Hardship Deferral. Residents working full-time 80 hour work weeks would qualify to defer payment of their loans until after residency if a) their debt burden was greater than 20% of their income and b) their income minus debt burden was less than 220% of the Federal Poverty Line for a family of two.

In 2008, President Bush signed the College Cost Reduction and Access Act of 2007 (H.R. 2669) which went into effect on July 1, 2009. This law eliminated the 20/220 rule as of Oct. 1, 2007. The replacement income-sensitive repayment plan will qualify few residents for economic hardship deferment 18. To be eligible for the new plan, a borrower’s income cannot exceed either the minimum wage rate or 150% FPL. Resident’s loan repayments will be as much as 15% of any income above 150% of the Federal Poverty Line 19. Similar to the 20/220 pathway, the federal government will continue to pay interest on the subsidized portion of the loan for up to 3 years, but interest will continue to accumulate on the unsubsidized portions. Though standard residencies such as Surgery and Obstetrics/Gynecology are longer than 3 years, interest will begin accruing on subsidized portions after the first three years of any residency.

Through a compensatory measure of Congress, medical residents who are eligible for deferment are now able to apply for one additional year of the 20/220 pathway deferment only through July 31, 2009.

AMSA Position

Everyone should have affordable, high-quality health care. One barrier to achieving this priority is the shrinking primary care workforce trained in the US. Our nation’s leaders must address the growing physician shortage and the resultant health disparities by implementing creative solutions to make primary care more attractive to new physicians: Congress must act rapidly to decrease and manage medical student indebtedness.

Proposed solutions:

Expand fair, low interest rates for new student loans to medical students. The College Cost Reduction and Access Act of 2007 cut the fixed interest rates on newly originated subsidized Stafford loans for undergraduate students to 6.0% (2008-09), 5.6% (2009-10), 4.5% (2010-11) and 3.4% (2011-12), with a return to 6.8% in 2012-13. These cuts are available only to undergraduate students, not graduate students, and only for subsidized Stafford loans, not unsubsidized Stafford loans. Those loans remain at a fixed rate of 6.8%.

Strengthen existing, create new, and fund public programs to increase financial literacy of medical students.

Increase the number of federally subsidized loans to medical students so that have more options than resorting to the more expensive private loan industry.

Provide grant programs to students from racial and ethnic minority backgrounds, to decrease health care and workforce disparities by increasing the number of physicians of color. Focus grants as well on programs to encourage low-income students to enter the field of medicine, especially in primary care fields.

Place and enforce a cap on the rising state medical school tuition. Tuition and fees have been rising at an alarming 11.1% (AAMC, in the years between 2001 and 2006). This is especially prevalent in public medical schools. In fact, indebtedness for public medical schools is increasing faster than it is for private medical school graduates.

Increase grant-funded medical education to a level above loan-funded medical education to make physician training in medical school more affordable.

Create a comprehensive service-based health corps to repay loans and increase grant monies for medical students. Focus this program on incentivizing primary care. Enhance health corps appeal for medical students by allowing students the flexibility to choose this program as a career and as an education financing option at any point in their student and resident medical career.

Implement robust programs of loan deferment that are available to residents for the entire length of residency. Focus these programs on primary care fields.

Give income tax breaks to residents and new physicians during loan repayment.

14 AAMC latest data on average student debt on graduation: in 2007, average medical student debt burden upon graduation was $139,517 “AAMC graduation questionnaire”; 2008 figures are not yet available, though this year’s questionnaire closed for input on 7/17/08 and data will be available shortly.
15 (1999) that said the ideal ratio was 50:50 ("Managed Care Strategies" by George B. Moseley, III)
16 From the American Academy of Family Physicians, based on data from the National Resident Matching Program: The impending collapse of primary care medicine and its implications for the state of the nation’s health care. Washington, D.C.: American College of Physicians, January 30, 2006. (Accessed August 10, 2006, at http://www.acponline.org/hpp/statehc06_1.pdf.)
also: H.H. Pham and P.B. Ginsburg, “Unhealthy Trends: The Future of Physician Services,” Health Affairs 26, no. 6 (2007): 1586–1598; 10.1377/hlthaff.26.6.1586]
Although there has only been a slight decline in the overall proportion of physicians who are primary care generalists (39.8 percent in 2000–01 to 36.7 percent in 2004–05), the decline has been mitigated by an increase in the proportion of women, who are more likely to choose primary care, entering medical practice.14 If the entry of women represents a one-time shift, then future shortages might arise as relatively low incomes for PCPs make these career paths unattractive to new physicians. Among recent medical school graduates, a falling number choose to train in primary care specialties, although foreign medical graduates (FMGs) are compensating for the shortfall for the time being.
17 http://www.ama-assn.org/ama/pub/category/18107.html
18 http://www.aamc.org/advocacy/library/educ/ed0004.htm
19 http://www.ama-assn.org/ama1/pub/upload/mm/15/hr2669_talkingpoints.pdf American Medical Association Medical Student Section (AMA-MSS)