Physician Student Loans and the CARES Act: Preparing to Manage Your Loans Through Payment Resumption

Ned Palmer, MD, MPH


February 24, 2022

The Coronavirus Aid, Relief, and Economic Security (CARES) Act is the largest federal relief program in history, outpacing even President Roosevelt's New Deal by a factor of two. Much has been discussed about this unprecedented act in regard to how hospitals were financially supported, the emergency fund for personal protective equipment (PPE), and the Paycheck Protection Program (PPP). However, given the current state of physician debt, most physicians directly experienced CARES via a significantly smaller package nestled within the language of the act: student loan forbearance.

Student loans affect 80% of graduating medical students. Of the total $1.6 trillion in federal student loans, it is estimated that $150 billion is for outstanding healthcare school loans, and nearly all of those loans have all been stuck in forbearance.


Signed into law right at the beginning of the pandemic on March 27, 2020, the CARES Act is a $2.2 trillion economic stimulus package. Provisions in this bill allowed for over $350 billion toward PPP, $274 billion for state and local government response to the COVID-19 epidemic, and over $100 billion directly to hospitals to support their lost income and defray the costs of PPE purchasing.

Student loan relief made up a much smaller fraction of the bill: $43.7 billion allocated toward establishing temporary relief for borrowers. The CARES Act provided for three foundational changes to federal management of student loans: suspension of loan payments, reduction of the interest rate to 0%, and cessation of collection practices. For the borrower, this means that their student loans were effectively frozen in time, without continued interest growth and with no penalties for nonpayment. For those pursuing public service loan forgiveness (PSLF), there was an expanded benefit of these $0 months counting toward the total count of 120 required for forgiveness.

Extending the Extensions

Figure. The author's student loan balance as of February 1, 2022, as shown on his MyFedLoan dashboard. Credit: Ned Palmer, MD, MPH

Initially, the student loan relief was for 6 months. This temporary forbearance has now been extended six times: four times by President Trump and two more times by President Biden. Presently, the forbearance period is set to expire on May 1, 2022. This means that many borrowers would see their first student loan bill in more than 2 years come due in May or June.

There has been a great deal of talk about whether this will be extended again. More optimistically, many are hopeful for student loan forgiveness. Despite being in support of comprehensive student loan relief (Figure), we will presume that student loans will be coming back online in May of this year.

Reasons for Further Extensions

At the beginning of the student loan payment freeze, there were 45 million borrowers with outstanding student loans. With the initial forbearance, student loan servicers had to radically restructure their operations. Student loan balances did not change month to month, and thus the need for whole departments reduced to zero. This meant laying off many staff, especially those responsible for facilitating payments, call-center workers, and administrative staff.

Without receipt of payments and with restriction on debt collection, the student loan servicers entered a type of quiescence.

Resumption of these core operations will not be trivial. Many of the laid-off workers have almost certainly found other employment in the last 2 years. Moreover, the shifting deadline of this political football has not given the services a definite deadline to plan around.

As a result, three of the nine federal servicers have decided not to renew their contracts with the US Department of Education. Navient, Granite State Management and Resources (GSMR), and MyFedLoan (also known as Pennsylvania Higher Education Assistance Agency) have all declared that they will not be continuing their contracts, leaving nearly one third of borrowers up in the air without a servicer. Transferring all these borrowers, along with their historical payments, PSLF eligibility, and payment records has been cited repeatedly by the Consumer Financial Protection Bureau as a cause for concern.

Effects on Physicians

As the cost of medical education has risen, for many graduates student loans are the single largest debt owed. This debt is so large that it requires targeted management techniques at different stages in training and in your career.

For instance, without intervention, student loans convert to a payment plan based on a standard 10-year repayment plan. Few in residency and fellowship would be able to afford these payments, which would be upward of $2000 per month for a starting principal of $200,000. If you're one of the many borrowers who owe significantly more than this (like me — see the Figure), you could owe much more than that. My own loans would cost upward of $4700 per month if I was not in an income-driven repayment (IDR) plan.

Many physician borrowers went into the student loan forbearance period already in an IDR plan. These plans require annual renewal and recertification, which will have lapsed for many borrowers. It would be very challenging to experience your loans coming back online at the full payment amount, which would be devastating from a cash flow perspective to physicians who have already been fighting back against lost wages due to COVID-19.

Being Prepared

Preparing yourself is the best guard against the upheaval caused by the resumption of student loan payments. What this preparation will require depends on what your future plans are.

Obtain historical records. If your current servicer is one that is changing — Navient, MyFedLoan, or GSMR — then it is important to call and obtain records of your current loan status. This includes dollar amount, historical payments, and your PSLF eligibility. Even if your servicer is not changing, now is a good time to make sure you have an accurate snapshot of the health of your loans. Given that call volumes are down, wait times are also down and you should be able to get this information emailed to you without too much hassle.

Apply for IDR. If you are not in a place to make full payments (either because you are still in training or because your salary decreased last year), submit your application for IDR at This will ensure than when payments come back online, they are at a manageable amount for your current financial state.

Submit your annual employment certification form for PSLF. If you are planning to participate in the PSLF program and your employer is currently eligible, now is a great time to submit an employment certification form. This will trigger your servicer to recalculate the total number of qualifying payments and you'll have an up-to-date count of your progress toward forgiveness. This is especially important if your servicer is changing, so that you have an updated count to give to your new servicer in case there are discrepancies.

Bottom Line

The CARES Act modified student loans more than any other piece of legislation. After nearly 2 years of forbearance, it's important to be prepared for the resumption of payments. As physicians with outsized loan balances, these preparations can prevent a surprise bill of thousands of dollars.

While the forbearance expiration date is currently set for May 1, these preparation measures are valuable even if the date gets pushed further out. More importantly, these preparations do not prevent the borrower from receiving any potential forgiveness measures.

Follow this column for more information about physician financial health, especially student loan management.

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About Dr Ned Palmer
Ned Palmer, MD, MPH, is the COO and co-founder of Panacea Financial, the national digital bank for doctors. He is also a practicing pediatric hospitalist at Boston Children's Hospital and is on faculty at Harvard Medical School. He has been published on Medscape and in Academic Medicine on the topics of physician debt, and has lectured nationally on student debt and financial literacy for doctors and doctors-in-training.

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