Bills Offer Relief from Medical School Debt

by Tanya Albert

Med school graduates drowning in student loan debt could see a bigger income tax return if legislation proposed in the House and Senate is successful.

The bills would repeal the five-year limit on the amount of time that students can deduct the interest they pay on the loans, and would increase the amount of money graduates are allowed to make and still be able to take the tax deduction. The House version of the bill also would eliminate the limit on how much interest can be deducted annually.

The changes are for all student loans, not just those for medical students. But the breaks are especially helpful for medical school graduates.

“There are people who don’t go to medical school because they’re afraid of the debt burden,” said Dr. Liana Puscas, resident at the University of Southern California. Even though their average debt is $95,000, med school graduates often lose out on deducting their loan interest. Lower-paid residents often defer loans during the five years in which they would be able to deduct the interest under the current system. Then, after residency, most doctors make too much money to be eligible to write off the interest they’re paying.

The AMA, the American Dental Association, and various academic institutions have voiced support for the bills. The legislation is now in House and Senate committees.

“As the cost of higher education goes up, more and more students are taking out loans…and many students are saddled with large amounts of debt,” said Jennifer Hall, the press secretary for Representative Phil English (R, Pa.), who co-sponsored the House bill with Representative Kenny Hulshof (R, Mo.). “[The bill] enables medical students who get a decent-paying job to deduct the interest.”

Senators Charles Grassley (R, Iowa) and Max Baucus (D, Mont.) co-sponsored the Senate legislation.

Reprinted with permission from American Medical News, March 19, 2001.

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