Does Texas Forgive Student Loans for Physicians?
The answer is YES! The State has a program to forgive student loans for Texas Physicians. However, is it like the national programs?
One of the leading programs people think of when they want student loan forgiveness is the Public Student Loan Forgiveness or PSLF national program. However, physicians do not have to be part of this program to receive student loan forgiveness.
The program with the State of Texas is called Physician Education Loan Repayment Program or PERLP. The Texas Higher Education Board established this student loan forgiveness program in 2013. It aims at physicians who practice outpatient medicine in a health shortage area designated by the US Department of Health and Human Services. Also, physicians who provide health care services to recipients under the medical assistance program authorized by Texas Human Resources Code, Chapter 32. Also, enrollees under the child health plan program authorized by the Texas Health and Safety Code, Chapter 62 can qualify for the program. In summation, physicians who practice in low health provider areas, provide services to Medicaid, and the Children’s Health Insurance Program or CHIP, qualify for the program.
Check to see if you are in a Health Shortage Area.
I know this is a lot of technical codes and jargon by the State. But it works! We had many clients go through the process and are happy with the results. I met with a client in person when they got the notification that they were approved and received their first payment towards their student loans; WOOHOO! It was a fantastic feeling for them to realize that their student loans would get paid off in three more years.
Student Loan Eligibility Requirements
Unlike the PSLF program, a physician does not have to teach or work for a government or non-profit agency to receive student loan forgiveness. There are a few other requirements, such as loans cannot be taken out after medical school, and the loans cannot be in default status. Most importantly, the number of payments or years before forgiveness is not required. A physician must remain in their health shortage area for the length of the program (4 years). Also, PERLP cannot combine with any other forgiveness or repayment program like PSLF.
Eligible Physicians with Student Loans
Many physician specialties qualify for this award. They include:
- Family Medicine/Family Practice
- General Practice
- General Internal Medicine
- General Pediatrics
Award Amount Breakdown
The State of Texas has a highly beneficial award that they pay out each year for up to four years. Below is a chart of the awards:
- $30,000 for the first service period or 16% if the total loan balance is less than $180,000
- $40,000 for the second service period or 22% if the total loan balance is less than $180,000
- $50,000 for the third service period or 28% if the total loan balance is less than $180,000
- $60,000 for the fourth service period or 34% if the total loan balance is less than $180,000
The total amount the State of Texas will forgive is $180,000, which is generous. Most physicians with student loan debt can top over $200,000 for medical school. The median student loan debt for physicians in the United States is between $200,000 and $250,000. Student loan debt can be crippling to the first few years of a physician’s life. Therefore, getting student loan debt paid off is vital to a physician’s financial plan.
At Benold Financial Planning, we are always looking for ways to reduce, refinance or have your student loans forgiven. We know the importance of starting your career and financial future on a firm foundation. Because of this, we prioritize consumer debt payoff with free cash flow a physician has in their first years. Having freed up money from debt, they can start investing more, buying a home, saving for children’s education, and putting money away in an emergency fund. If you feel you meet the program’s requirements or know someone who would benefit, please click below or call the customer service number for more information.
How to Apply for Student Loan Forgiveness
To complete an application, go to Physician Education Loan Repayment Program Application for Enrollment. You will have to create a username and password to fill out the application.
Or you can call Customer Service regarding your specific loan repayment at call 833-597-0454.
Remember, you have to reapply each year!
About The Author
Jordan Benold, CFP® provides fee-only financial planning and investment management services in Frisco, TX. Benold Financial Planning serves clients as a fiduciary and never earns a commission or sells a product. Jordan has over 3 years of experience as a financial advisor in Frisco.