Depending on where your searches take you or which books and articles you read, you may come across some questionable insight when it comes to PSLF eligibility for doctors. In short, people often argue that because approximately 70% of all hospitals in the United States are nonprofit hospitals, that a similar fraction of jobs at those hospitals qualifies for loan forgiveness. This is very logical, but it is unfortunately not true.

Now to be clear, this is often used as an argument for why residents should remain in a federal repayment plan like REPAYE instead of private refinancing, for which I wholeheartedly agree. In most cases, residents will get as good if not a better rate staying in REPAYE than they could get with a private company, all while enjoying the benefits, protections, and flexibility of the government plans while giving you the chance to achieve tax-free loan forgiveness via PSLF–depending on what job you take after finishing training. You really never know until you know. Most of you reading probably didn’t even apply for the same residency you’d have guessed when you applied to medical school, so why pretend you know exactly where you’ll be working years in the future?

That post-residency job bit is key though because the magic of tax-free loan forgiveness via PSLF requires a few things: qualifying loans paid for using a qualifying repayment plan while working at a qualifying institution.

The counterintuitive issue here is that it does not actually matter what you do for your job or even where you do it, it only matters who pays you. Outside of academia, county hospitals, and the government (including the VA and active duty military hospitals), relatively few “nonprofit hospitals” directly employ their docs. In some states like Texas and California, none at all.

It’s common knowledge that many specialties like radiology, pathology, and emergency medicine are nearly always a contracted private practice group that provides services. Specialists are a relatively uncommon direct hire at most non-profits. But even many hospitalists are actually employed by a separate physician group. So the question in many cases isn’t “is the hospital a non-profit?” It’s: is the physician group also a non-profit?

To give you an example: the very famous healthcare organization Kaiser Permanente runs a lot of 501(c)(3) hospitals. Many people who work at these places would definitely qualify for PSLF. However, the physicians who work for Kaiser are not employed by Kaiser Permanente itself or any of its network nonprofit hospitals. They are employed by various for-profit Permanente Medical Groups. It doesn’t matter if they work at a nonprofit; it matters who pays the bills. Whoever appears at the top of your W2 is who counts.

Sad but true. While the law was intended to encourage people to pursue careers in public service, the nature of how it was written dictates that it is only the details that matter, not the substance.

This is not to say that there are no qualifying nonprofit hospital jobs out there outside of the usual academic/safety net/government axis (of course there are) but rather that working at a nonprofit hospital doesn’t necessarily mean you are working for that hospital. It’s not the same kind of guarantee that working at an academic/university institution typically is, and even some academic hospitals are “privademics” that still silo off most of their doctors.

If you are relying on or planning for PSLF, then eligibility will be an important consideration when choosing your first job or two as an attending. In this case, you had better make sure you know exactly who your real employer would be, not just where you’d be working.

To repeat: if your hospitalist gig means you’re actually employed by a hospital-associated provider group, it’s the group that needs to be a 501(c)(3).

It doesn’t matter what hospital you work at if the hospital doesn’t employ you. It matters that your direct employer is a 501(c)(3) organization that treats you as a full-time employee.