OFeatured Article:
New Legislation Increases Difficulty In
Repayment Of Student Loans
Article by Tolu Odufuye, National Health Policy and Legislative Affairs
Committee Member
On September 27, 2007, President Bush signed the law
with the intention of helping students. and residents
were not adequately considered. On one hand, the
College Cost Reduction and Access Act will increase the
amount of the maximum Federal Pell Grant, gradually
cuts interest loans on subsidized Stafford loans in half
for undergraduate students, and provides $510 million
between FY2008 and FY2009 for HBCUs and minority
serving institutions to be distributed as stated in the bill.
However, and of particular relevance to medical
students, it eliminates the 20/220 pathway which has
allowed residents to defer paying their loans until the
completion of their residency program. The College Cost
Reduction and Access Act, now Public Law 110-84, will be
What does this mean for you?

Through July 1, 2009, graduates of medical school have
two options for paying back student loans via the
20/220 pathway.

  1. Apply for Economic Hardship Deferment.  Allows
    medical residents to postpone repayment of their
    student loans through residency, avoiding
    forbearance, while the government continues to
    pay the interest on the subsidized portion of their
    loan.
  2. Apply for Forbearance.  Interest is accrued on
    loans but this interest is not paid by the
    government.  Similar to the economic hardship
    deferment, no payments are made until
    completion of your residency program.

Starting July 1, 2009, you will have one option to pay
back your student loans which is "Income Based
Repayment." This means that you are obligated to make
payments on your student loans during residency.
However, the maximum payment you will be required to
pay will be 15% of your income that exceeds the federal
poverty level. Interest still accrues on the loans. If you
cannot make the payment determined for you, you will
be forced to go into forbearance where you do not pay
until after residency. However interest still accrues.

The average annual income for a resident is $43,266.
The average medical student debt is over $139,000.
With the new law, $9,035 will be the interest that will
accrue each year at the current 6.8% interest rate for
the average debt of $139,000.  This amount would have
been paid by the government under the 20/220 pathway.

What can you do about it?

You can contact your local and state legislators asking
them to act to continue the 20/220 pathway.  Several
medical associations have created a quick way to contact
your local legislators. Here are some links:

AMA
Capwiz: Reinstate 20/220

AMSA
Legislative Action Center: Restoring the 20/220 Rule
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