Medical Student Debt

An issue brief from the AMA-MSS

Why should I care?

Medical students often incur huge debt to finance their education. Student loan debt continues to be a tremendous hardship, especially during a physician’s residency training program.  In 2007, the typical medical student graduated from medical school with an average of $139,751 in student loan debt. During residency training, physicians work for an average starting salary of $44,747 without significant increase until the conclusion of residency.

What is the problem?

The economic hardship deferment pathway known as "20/220" is in danger of being permanently eliminated. The 20/220 pathway allows most residents to defer student federal loan debt for up to three years while in training. The elimination of this deferment option would require most residents to begin unaffordable monthly payments on their loans or enter into forbearance.

What exactly is the "20/220" rule?

  • The 20/220 Rule determines eligibility for Economic Hardship Deferment of federal student loans, including medical student loans.
  • “Economic Hardship Deferment” eligibility means:
    • NO payments required for up to 3 years, and
    • NO interest accrues on subsidized loans
  • To be eligible for the 20/220 Rule, residents’:
    • Debt must be > 20% of their income
    • Income less debt < 220% FPL
  • 67% of incoming residents are eligible for Economic Hardship Deferment under the 20/220 Rule.



Details regarding efforts to reinstate the 20/220 pathway from the AMA website:

Rescuing The 20/220 Pathway For Economic Hardship Deferment

The federal government has recently made significant changes to the laws pertaining to the repayment of medical education loans during residency. The AMA is working to preserve the 20/220 pathway for economic hardship deferment. The AMA sent a letter (PDF, 20KB) to all members of the House and Senate education committees, urging them to reinstate the 20/20 pathway through the conference process for the Higher Education Act (HEA) re-authorization bills. You can help by using this AMA call-in Script (PDF, 21KB), which includes a list of key Congressional contacts and answers to frequently asked questions, and the AMA Capwiz site to send Congressional members a message in support of the 20/220 pathway!

Why we are fighting for the 20/220 pathway: 
The average US medical graduate has over $139,000 in student loan debt, and earns an average stipend of $43,266 during residency and fellowship. As a result, many residents and fellows are unable to make payments on their student loans during residency and fellowship.

The old rules:  Medical education debt repayment (in effect until July 1, 2009)
For residents unable to make payments on their student loans, there are currently two options to avoid making repayment. These rules were changed by Congress and only apply until July 1, 2009.

The first and most desirable option is to apply for Economic Hardship Deferment, under which a resident/fellow could avoid making payments for up to three years, during which time the federal government will pay the interest on the subsidized portion of federal loans. To qualify for Economic Hardship Deferment, one's debt to income ratio must not exceed 220% of the Federal Poverty Level. The average first-year resident earning $43,266 would qualify for deferment under 20/220 if their student debt exceeded $100,000. Up to 67% of graduating medical students are eligible for Economic Hardship Deferment through the 20/220 pathway (per AAMC). Unfortunately, the 20/220 pathway for economic hardship deferment could be eliminated as soon as July 1, 2009.

The second and most costly option is to utilize forbearance, where no payments are made and interest accrues on all loans.

The new rules:  Medical education debt repayment (beginning July 1, 2009)
In 2007, Congress developed legislation aimed at dealing with the cost of higher education. This legislation, the College Cost Reduction and Access Act (CCRAA)(P.L. 110-84), will help some students by increasing maximum Pell grant awards, easing Pell grant eligibility requirements, and offering $5,000 in loan forgiveness over five years if employed in areas of national need. However, residents and fellows are significantly affected by this bill in two ways:

20/220 Pathway Eliminated: The pathway that as many as two-thirds of residents used to avoid making repayment on their loans was eliminated (the 20/220 pathway). For residents who qualified under 20/220, the government paid interest on the subsidized portion of the loans for three years, and interest accrued only on unsubsidized loans.

Income Based Repayment: A new Income Based Repayment (IBR) program for borrowers was created, to begin July 1, 2009. Any borrower with any amount of debt (subsidized or unsubsidized) is eligible for the IBR program, in which payments are capped at 15 percent of their income that exceeds 150 percent of the federal poverty level (e.g. the monthly payment for a resident earning $43,266 annually would be ~$350).

Government payments on subsidized interest still an option: Similar to the 20/220 pathway, the resident using IBR will still have the benefit of the government paying the interest on the subsidized portion of their loans for up to three years, but only if residents make payments on their loans.

Forbearance still an option: Under the new law, a resident/fellow who cannot afford to make repayments will be forced to enter forbearance under which interest will accrue on all loans. Using forbearance will add thousands of dollars to already steep debt burdens.

20/220 is a needed program!
While IBR is an attractive option for some borrowers, there are residents and fellows who simply cannot afford to take advantage of it by making payments. Residency and fellowship is a time when borrowers are least able to afford payments. Requiring repayment during this time places an excessive burden on residents and fellows, particularly those who live in areas with a high cost of living or who have families. The AMA seeks to have the 20/220 pathway permanently reinstated so that residents can defer repayment on their student loans without interest accruing on their subsidized loans. The government needs to be creating ways to entice and encourage students to enter medicine – not put up additional barriers and deterrents.

The AMA has been lobbying relentlessly for 20/220
Your AMA is working to save 20/220 so that residents do not have to choose between loan repayments or added medical education debt as interest accrues. The AMA and AAMC are working through both regulatory and legislative avenues to maintain the 20/220 pathway. The Department of Education has been asked to keep the 20/220 pathway intact through their regulatory authority. Concurrently, we are seeking a legislative solution through the passage of Senate bill S. 2303, introduced by Senators Burr and Isakson, and the companion House bill, H.R. 4344, introduced by Congressmen Walberg, McKeon, Ehlers and others.

How YOU can help with this effort

  • Please act now by using this call-in Script (PDF, 21KB), which includes a list of key Congressional contacts and answers to frequently asked questions
  • Use the AMA Capwiz site to send Congressional members a message in support of the 20/220 pathway
  • Tell your peers about this issue – forward this website to your state and specialty society, program, medical school classmates and friends
  • Download our PowerPoint and host a 5 minute info session at Grand Rounds or M&M conference


Resident advocacy efforts have been critical and are still needed!
Your AMA-RFS Governing Council, staff and RFS members have:

  • Had a massive call-in at I-07 in Hawaii to Congressional Members
  • Organized call-ins from residency programs to Congress and Secretary of the Department of Education Spellings Office
  • Hosted Media interviews & informational releases
  • Created of extensive resources such as Web pages, talking points, a PowerPoint, and a call-in script
  • Actively engaged state, region and specialty society leaders
  • Collaborated with the AMA-MSS