President Joe Biden on Wednesday announced a plan that will cancel up to $20,000 in federal student loan debt for certain borrowers—a move that will help many medical residents and current medical students who have accumulated education debt.
How will Biden's student loan forgiveness impact medical students?
President Biden on Wednesday announced that individual borrowers with an annual income of $125,000 or less will qualify for up to $10,000 in federal student loans forgiveness, while Pell Grant recipients who earn $125,000 or less could have up to $20,000 cancelled.
The loan cancellation may help medical residents and students decrease the amount debt they accumulate, especially for those with lingering debt from their undergraduate studies.
Notably, around three quarters of all medical students who graduated in 2021 had education debt, most of which came from federal loans, Axios reports.
According to the Association of American Medical Colleges (AAMC), the average medical student from the class of 2021 graduated with $203,062 in education debt. In addition, 30% had lingering education debt before they started medical school, with a median amount of $27,000.
For the class of 2022, the total cost of a four-year medical school program ranged from $263,488 for public schools to $357,868 for private schools, Axios reports.
According to a 2022 Medscape survey, medical residents in 2022 made an average annual salary of $64,200, which means many should fall under the loan cancellation program's $125,000 threshold.
However, most fully trained physicians will not qualify. According to the Bureau of Labor Statistics, the average pediatrician makes roughly $198,000 a year, and the average cardiologist makes roughly $331,000.
Typically, physicians become high earners—but they must undergo years of residency training before they reach a high salary level. During that time, their student loans continually accumulate interest.
Under Biden's plan, most medical residents and current students should qualify for some loan forgiveness, said Matthew Shick, senior director of government relations and regulatory affairs at AAMC.
Alexis Horton, a biology major at Howard University who intends to further studies, said the announcement is a relief.
"As a biology student who wants to go to med school, I do rack up a lot of loans at school, so hearing that I could possibly get $20,000 or $10,000 (off) does sound really good," Horton said.
"$10,000 to $20,000 forgiven in terms of over $200,000 in debt might not sound like a lot, but everything helps," Shick said. "It's good to receive that help early in your career in medicine, because then the interest isn't accruing as long." (Knight, Axios, 8/25; Douglas-Gabriel, Washington Post, 8/25; Singh, Reuters, 8/25)