Are Physician Loan Repayment Programs Good for Primary Care?

Physician pay is decreasing while the cost of a medical education continues to increase. What’s to be done? Can physician loan repayment programs make a difference? Specifically, are physician loan repayment programs good for primary care? Considering there is a projected shortage of 68,020 full-time primary care physicians by 2036, improvements to the primary care workforce are critical to our nation’s healthcare delivery. 

Let’s take a closer look. 

Medical Education Costs 

Becoming a doctor is an investment, and 70 percent of medical students borrow money to attend medical school. According to the Association of American Medical Colleges (AAMC), in 2023 the average medical school debt was more than $200,000 — which with interest can balloon to $300,000 over the life of the loan. 

Four years of medical school costs between $268,476 for public medical school and $363,836 for private medical schools, according to the AAMC. And that doesn’t include costs like living expenses, textbooks, or supplies. It also doesn’t include the cost of an undergraduate education.  

Undergraduate tuition is going up, and has been for the last two decades. In 2023-24, the average cost of attending a 4-year, in-state public college was $28,840, compared to $60,420 at a private institution, with out-of-state public colleges costing 62 percent to more than 100 percent more than in-state. The average cost of an undergraduate education increased for 2024-25 academic year for both public and private schools, according to a new report from U.S. News. Once again, that cost doesn’t factor in room, board, and textbooks, which can add thousands more to the bill. It’s worth noting that grants and other aid can reduce the costs of an undergraduate education. 

Bottom line: Despite incurring substantial costs — and debt — to become a physician, the upward trajectory for education costs unfortunately isn’t matched by physician pay. 

Physician Pay

After several years of modest or declining growth, average pay for physicians increased by 5.9 percent in 2023, according to Doximity’s “2024 Physician Compensation Report” published this past May. At first glance this appears to be positive step forward, especially considering 2022 saw a drop of 2.4 percent. 

Unfortunately inflationary pressures continue to negatively impact physicians’ real income. Plus Medicare physician payment has decreased 22 percent since 2001. And in addition to the Centers for Medicare and Medicaid Services (CMS) cutting overall physician pay 1.25 percent in 2024, a proposed new CMS payment rule could see Medicare reimbursement fall by an average of 2.9 percent next year. 

Bottom line: Inflation plus declining reimbursements combine to create contracting physician pay, with primary care physicians already making significantly less than specialists — and nearly $100,000 less per year than the average for all physicians. 

Physician Loan Repayment Programs

Increasing debt and declining physician pay combine to create and exacerbate risks — like the physician shortage, specialty gaps, and physician stress and burnout, which comes from overwork, among other factors. The ultimate loser is patient care. 

Can physician loan repayment programs make a difference? Specifically, are physician loan repayment programs good for primary care? The answer to both is “yes.” They can certainly make an impact on a physician’s debt — which then has an impact on decisions like specialty as well as where a physician decides to practice. 

Offered as a recruiting incentive, educational loan repayment is an attractive benefit. In exchange for an employment commitment, a recruiting hospital or other facility will pay a physician’s medical loans. An April article by the American Medical Association (AMA) cites 2023 stats from recruiting firm AMN Healthcare’s Physician Solutions division indicating 18 percent of searches included loan repayment benefits. The average amount in 2022-23 was $98,665, and most applicants were required to stay in their position for 3 years or more. The range of incentive amounts offered varied from $10,000 to $400,000. 

Other opportunities for physician loan repayment also are available — and specifically for primary care. Due to the exceptional need for primary care physicians, loan forgiveness programs are more widely available for these fields than other specialties. 

Through the Health Resources & Services Administration (HRSA), the National Health Service Corps (NHSC) offers loan repayment to licensed primary care physicians in exchange for serving at least 2 years at an NHSC-approved site in a Health Professional Shortage Area (HPSA). HPSAs can be defined by geography, population, or facility type, like private medical facilities, correctional facilities, or Federally Qualified Health Centers (FQHCs). In fact, this April the HRSA increased loan repayment amounts by 50 percent for primary care providers who commit to practicing in high-need and rural areas. 

Public Service Loan Forgiveness (PSLF) programs are also an option. Physicians must complete full-time public service employment by a 501(c)3 tax-exempt nonprofit or public institution, and includes working in areas that are underserved or have a high need for medical professionals. In this program, borrowers must make monthly payments for 10 years during PSLF-qualified work, after which the federal government will forgive their remaining debt. 

Military programs are another option. Military branches offer tuition assistance for students who are service members, but even doctors who have already graduated and are practicing can enroll in military service to get student loan assistance. Programs vary by branch. 

For state programs, the Association of American Medical Colleges (AAMC) maintains a searchable database of loan repayment and other programs for students and residents. 

Although loan repayment programs are obviously a benefit more geared toward younger physicians, as established physicians have a higher likelihood of having paid off their debt and have already selected their area of specialty, they can be a terrific way to reduce large portions of debt early in a physician’s career. They can also encourage physicians to specialize in high-need areas, as well as serve high-need populations — specifically in primary care.