The Health Resources and Services Administration (HRSA) of the U.S. Department of Health and Human Services (HHS) offers student loans, loan repayment programs and scholarships for graduate students who are interested in becoming a health professional. These sources of financial aid are provided to doctors, dentists, optometrists, pharmacists, podiatrists, veterinarians and nurses who are interested in working in underserved areas.
Loan Programs for Doctors, Dentists, Optometrists, Pharmacists, Podiatrists, Veterinarians and Nurses
HRSA offers four main campus-based revolving loan programs for health professions students.
Health Professions Student Loans (HPSL). This revolving loan program is open to full-time students who are pursuing a degree in dentistry, optometry, pharmacy, podiatric medicine or veterinary medicine at one of more than two dozen participating U.S. schools.
Nursing Student Loans (NSL). This revolving loan program is open to full-time and half-time students who are pursuing a degree in nursing at one of more than three dozen participating U.S. schools.
Primary Care Loans (PCL). This revolving loan program is open to full-time students who are pursuing a degree in allopathic or osteopathic medicine at one of more than a dozen participating U.S. medical schools. Borrowers must complete residency training in primary care (e.g., family medicine, pediatrics, geriatrics, public health, preventive medicine and sports medicine) within four years of graduation and work as a primary care physician for the life of the loan or for 10 years (including the residency), whichever is less.
Loans for Disadvantaged Students (LDS). This revolving loan program is open full-time students from a disadvantaged background who are pursuing a degree in allopathic or osteopathic medicine, dentistry, optometry, pharmacy, podiatric medicine or veterinary medicine at one of more than two dozen participating U.S. medical schools.
The loan programs share a common set of loan terms (slight differences are noted below):
Service Requirement: The borrower may be required to work in an underserved area or practice in a particular field until the loan is paid in full. For example, borrowers of PCL loans made on or after March 23, 2010 must practice in primary care for 10 years (including any residency training in primary health care) or until the loan is paid in full, whichever comes first. The 10-year cap does not apply to PCL loans borrowed before March 23, 2010.
Need-Based: Eligibility for these loans is based on demonstrated financial need. The determination of financial need may include consideration of parental financial information, even if the student is considered independent according to the criteria set forth on the Free Application for Federal Student Aid (FAFSA).
Citizenship: Borrowers must be U.S. citizens, nationals or permanent residents. Male students must also have registered with the Selective Service System.
Loan Limits: Loan amounts are determined by participating schools. Loan limits for the HPSL, LDS and PCL are generally capped at the school’s cost of attendance, but may exceed the cost of attendance during the third and fourth years of medical school for the purpose of paying off the balances of loans with less favorable terms from other sources. The annual loan limit for NSL is $3,300, except during the last two years of the nursing program when the annual loan limit increases to $5,200, and the cumulative loan limit is $17,000.
Interest Rate: The current interest rate is 5%. The interest rate increases to 7% if the borrower is noncompliant with the service requirements. (Previously, the penalty interest rate was 18%.) Interest does not accrue during the in-school and grace periods, but does accrue during forbearances and renegotiated repayment schedules.
Fees: Schools may charge an insurance premium of up to 0.6 percent of the amount disbursed to cover the institutional share of the cost of death and disability discharges. There is a late payment fee of up to 6 percent of the amount of a late payment. A payment is considered to be delinquent if it is not made within 60 days of the due date.
Grace Period: HPSL, PCL and LDS have a 12-month grace period after the student graduates or drops below full-time enrollment status. The grace period for NSL is 9 months.
Repayment Term: The repayment term for HPSL, PCL and LDS is 10 to 25 years, at the discretion of the school. The repayment term for NSL is 10 years.
Minimum Monthly Payment: The minimum monthly payment is $40, which may result in a shorter repayment term.
Deferments: Payments may be deferred for advanced professional training including internships and residencies (unlimited for HPSL or LDS, 10 years for NSL), active duty service in the U.S. Armed Forces, National Oceanic and Atmospheric Administration (NOAA) Corps and U.S. Public Health Service Commissioned Corps (3 years), Peace Corps volunteer (3 years), fellowship training programs (2 years for HPSL and LDS) and leave of absence from the health professions school for related educational activity such as a joint-degree program (2 years for HPSL and LDS). Interest does not accrue during deferment periods. Borrowers must apply for deferments in one-year increments.
Forbearance: Forbearances are available for extraordinary circumstances that have a short-term impact on the borrower’s ability to repay the debt, such as unemployment, illness and natural disasters. Interest continues to accrue during forbearances and the borrower is required to pay at least the new interest that accrues. Payments toward the principal balance of the loan are suspended for the duration of the forbearance.
Renegotiation: Renegotiation provides borrowers who are encountering financial difficulty with a different repayment schedule. The obligation to make payments toward principal and interest is not suspended during a renegotiated repayment schedule.
Discharges: Loans are canceled if the borrower dies or becomes totally and permanently disabled.
Prepayment Penalties: None. Borrowers may prepay the loan in-full or in-part at any time.
Consolidation: PCL may not be included in a federal consolidation loan, due to the service requirements. HPSL, NSL and LDS may be included in a federal consolidation loan at the option of the lender.
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