ASH Signs on to Letter Encouraging Student Loan Deferment Mechanism

August 28, 2008 – ASH has joined 96 other professional and medical societies in signing on to a letter urging the Department of Education to make permanent the 20/220 rule that allows for federal student loan deferment based on economic hardship. The rule allows repayment of student loans to be deferred for three years without accruing additional interest if a person's debt burden is greater than 20 percent of their income, and if their income minus their debt burden is not greater than 220 percent of the federal poverty level for a family of two. The relief provided in this rule is especially important for medical residents, whose average first-year stipend is less than $45,000, and whose average student debt burden is $140,000.

The 20/220 rule is set to expire on July 1, 2009, when it will be replaced by the income-based repayment program mandated by the College Cost Reduction and Access Act of 2007 (H.R. 2669). This program, while providing some hardship-based relief, is less generous, and does not allow for payments to be deferred. The expiration of the 20/220 rule will likely increase overall medical student loan debt and may deter physicians from entering public health service, practicing medicine in underserved areas, starting a career in medical education or research, or practicing primary care medicine. ASH joined its co-signing organizations in encouraging the Department of Education to make the 20/220 rule permanent, or to provide a similar alternate funding mechanism to ensure that medical student debt remains manageable.