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Hospitals paying loans after residency

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  • Hospitals paying loans after residency

    I have heard from a couple different people in different states that after residency a hospital will pay off all student loans as part of an employment contract; although, both these people did not have it happen to them.  I was wondering if other people have heard this, and if so, is there any catch?  Would it be best to pay the absolute minimum off in residency in hopes of a hospital then paying off the rest?

  • #2
    I would recommend being cautious about this.  Many jobs don't offer loan repayment.  There seem to be two categories of jobs that offer to pay off loans: 1) government-related jobs, and 2) jobs that are having a hard time recruiting physicians.  Maybe some of these jobs are OK jobs in less-popular locations (if that would work for you), but I imagine others are unpopular choices for a reason and you should tread carefully.  (Also, I imagine there is some specialty-variation to my generalizations that others could comment on more specifically, like maybe loan repayment is more common for FPs?)

    Remember: there are no free lunches.  I wouldn't let the possibility of loan repayment influence your overall strategy at all.

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    • #3
      Yes there are jobs that include loan forgiveness as part of the recruitment process.  It comes in two forms and if there's a catch is in the eye of the beholder.  Certain organizations are deemed in under served areas by the government and they are allowed to offer loan forgiveness and write it off from for tax purposes.  My understanding is if you were to get forgiveness from them they simply pay your loans.  Other organizations use it for recruitment but are not in under served areas.  In this instance the "forgiveness" is nothing more than a bonus paid to you to use toward your loans.  So with the former you don't pay taxes on it (again from what I understand, could be wrong) and with the later you do pay taxes on the money.  The catch so to speak is there is generally a cap on the amount and they don't just pay it off upfront.  The deal I'm currently under is capped at 100k and paid each year for five years of employment.  So at the end of each year of employment they give me a 20k check. I'd imagine if you got upfront pay off of say 100k you'd have to sing some agreement to stay there for x number of years.  If you have substantial loan burden I doubt you're gonna find a job to pay it all off so I would not factor it in when deciding on payoff plans during residency.

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      • #4
        I wouldn't count on it, but lots of jobs are offering some form of loan repayment. I was paid $75k for mine, in addition to a $30k sign-on bonus.

        I am working for a non-profit hospital system in the Intermountain West. Some may argue it's not a desirable location, but the metro area is > 650k and growing and was one of our hopeful landing spots after residency and fellowship.

        The loan repayment and sign on bonus are "repaid" over 3 years (over halfway there), so if I leave before then I have to pay a pro-rated amount (1/36 times how many months early before 3 years I leave) back to them. Don't see that happening, however.

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        • #5
          Thank you for the responses!  They are very helpful.  I am going into radiology and perhaps that is a specialty less likely to receive a "repayment" bonus similar to primary care specialties.  I may however go to an underserved area, that is still to be seen.  Thanks again, and I would welcome other responses as well!

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