Loan deferral during residency: a win-win solution

It is no secret that Canada suffers from an inequitable distribution of health professionals. A 2012 report from the Canadian Institute for Health Information revealed that 18% of Canadians live in rural and remote areas, yet only 8% of doctors live in these regions. The lack of access to medical services in rural communities contributes to the higher rates of disability, poor health status, and mortality that rural residents experience compared to their urban counterparts.

In April 2013, the Government of Canada made positive steps towards reducing this disparity by launching a loan forgiveness program for family doctors and nurses who choose to work in rural and remote areas. Under this program, doctors and residents who have provided four-hundred hours (or fifty days) of service within designated rural communities over the past year are eligible for forgiveness of the federal portion of Canada Student Loans for up to $8000 per year to a maximum of five years. Loan forgiveness programs can be very attractive to newly graduated doctors. As noted in the 2012 National Physician Survey, approximately half of physicians finish residency over $40,000 in debt. A startling 14% begin medical practice owing over $160,000.

Despite the apparent financial incentive offered by the Canada Student Loan Forgiveness for Family Doctors and Nurses program, we are concerned that this initiative may not be maximally effective. Newly graduated physicians are required to begin repaying the federal portion of the Canada Student Loans during residency. But because the interest rate on Canada Student Loans is higher than interest rates for student loans from financial institutions, many residents choose to consolidate their federal loans into private lines of credit. Therefore, this rural recruitment program offers forgiveness for loans that have often already been repaid.

As of November 2013, over 1,150 family doctors and nurses have received loan forgiveness through this initiative. This impressive figure has been used to describe the success of the Canada Student Loan Forgiveness for Family Doctors and Nurses program. However, it is difficult to draw conclusions about the program’s efficacy in recruiting family doctors given that the proportion of participants from each occupation is unknown. Furthermore, tracking the success of loan forgiveness programs through numbers alone is problematic as we are unaware of how many physicians and nurses moved to rural areas in prior years. We cannot know if we have increased doctor supply above the usual influx, or if it just rewarded doctors who would have located in rural areas even if there hadn’t been an incentive program in place.

We propose deferral of federal Canada Student Loan repayment until the end of residency. Not only would this modification maintain the financial incentive to move to rural and remote areas to participate in the loan forgiveness program, but it would also provide significant relief to heavily indebted medical trainees.

Why should the public care about the financial woes of doctors-in-training? In a word, diversity. Skyrocketing medical school tuition has been associated with the number of medical students from families with an income of less than $40,000 dropping from 22.6% to 15.0% between 1997 and 2000. Trends suggest that higher medical school tuition and debt may also influence a students’ choice about where and what to practice.

We believe that federal loan deferral throughout residency training has the potential to allow doctors to participate in programs that bring them to areas where patients need them most, alleviate a significant financial burden so medical trainees can focus on their learning and patients, and ensure that medicine is not a profession that can only be pursued by the wealthy.

The comments section is closed.

  • D. John Hooper says:

    This won’t work.

    Ambitious people from small towns tend to work hard to leave their culturally and intellectually isolating confines. Most of the small-town physicians I know are IMGs who are doing their return-of-service agreements before they hit the road to Vancouver. The physicians that I know from small towns now work in big cities. They wanted to get out.

    Increasing the diversity of medical students will not quell the shortage of small-town physicians.

    Let’s face it: small towns are just not great places to live. Educational opportunities for children are less robust, diversity is minimal, and cultural tolerance can be limited. Professional isolation is an unfortunate side effect as well. Working spouses will have a very difficult time finding work as compared to larger centers. Resources for subspecialized physicians are limited to nonexistent in small towns.

    Don’t get me wrong: I am all for lowering medical school tuition burden; it is astronomical, and it does leave out those students who weren’t born to the Lucky Sperm Club. And, as a physician, it is really hard to relate to the populace when you’ve never suffered poverty or lack, or have never lived an “ordinary” life. But don’t think that doing so will increase rural physician retention.

    The only way to increase rural physician retention is by offering incentives. If as a family doc the pay is 100% greater in Marathon than in Toronto, you’d bet there’d be no shortage of physician access there.

  • George F. says:

    well needed article before OMSA lobby day! encourage diversity in medicine by reducing the amount of accumulated debt is just one part of this – I think physician well-being and mental health is something that will also be majorly impacted if the stress of debt can be somewhat relieved.


Melanie Bechard


Melanie Bechard is the Vice-President of Government Affairs for the Canadian Federation of Medical Students.

Jesse Kancir


Jesse Kancir is the president of the Canadian Federation of Medical Students.

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