Student-loan interest adds up—quickly.
According to the U.S. Department of Education, a $10,000 loan at 6.8% interest accrues about $1.86 in interest each day. With resident physicians graduating medical school with a median debt load of about $205,000, the daily interest on the initial loan balance is going to be more than 20 times that figure.
Recently introduced bipartisan, bicameral legislation introduced in Congress could offer resident physicians a much-deserved financial lifeline.
The Resident Education Deferred Interest (REDI) Act (S. 942/H.R. 2028) is co-sponsored by Reps. Brian Babin, DDS (R-Texas) and Chrissy Houlahan (D-Pa.) on the House side and Sens. John Boozman (R-Ark.) and Jacky Rosen (D-Nev.) in the upper chamber. The legislation would allow physicians to qualify for interest-free deferment on their federal student loans during residency.
Freezing a loan’s balance
In 2024, 71% of medical students graduated with a median debt of $205,000, according to the Association of American Medical Colleges. Handling that debt load is especially difficult for residents and fellows who have relatively low pay during their time in graduate medical education.
Residents who do not want to make payments during residency are entitled to forbearance and deferral programs that can, in some cases, span the entirety of training. The deferral or forbearance routes can offer resident physicians—often stretched thin on a salary that is usually much lower than what they will earn after completing training—an avenue to stretch their money. However, deferral and forbearance options bring with them an enormous disadvantage, which is that even if a resident qualifies to have their payments suspended during residency, their loans continue to accrue interest. This cycle can lead to tens of thousands of dollars of additional debt due to interest accrual.
This accumulated interest capitalizes—adding to the principal balance—once repayment resumes, increasing a resident's total debt. The REDI Act would change this by allowing residents to defer payments without accruing additional interest. This means a resident’s loan balance would remain unchanged throughout training, easing the financial burden during their transition into practice.
A targeted and reasonable legislative solution, the REDI Act could end an interest-accrual cycle that leads to tens of thousands of dollars of additional debt.
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“The AMA is dedicated to identifying long-term strategies to mitigate the debt burden of medical students and believes that the REDI Act is a positive step towards ensuring the financial solvency and well-being of our young physicians and dentist,” AMA Executive Vice President and CEO James L. Madara, MD, wrote in a letter to the bill’s Senate co-sponsors (PDF). An identical letter of support was also sent to the House co-sponsors.
The AMA Thriving in Residency series has guidance and resources on navigating the fast-paced demands of training, maintaining health and well-being, and handling medical school student loan debt along with other essential tips about succeeding in graduate medical training.
Dive deeper:
- Key steps to help effectively manage debt during residency
- Retirement planning tips for resident physicians—what to do now
- You made it—will your wallet? How to budget in GME
- AMA member exclusive: Medical student loan repayment options and forgiveness consultation
- Untangling 5 confusing terms related to physician personal finance
Also a win for patients
In addition to saving physicians thousands of dollars in loan interest and reducing financial strain during residency, the REDI Act could have far-reaching benefits for America's patients.
By alleviating debt burdens, the legislation would grant physicians more career flexibility, making it easier for them to practice in rural or underserved areas. The REDI Act is one of the key bills associated with the AMA’s federal advocacy efforts related to medical students, residents, and physician workforce improvements. The bill has been met with widespread support from physicians and future physicians. To date, more than 30 bipartisan Senators and Representatives have cosponsored this crucial legislation. In March, close to 300 medical student AMA members visited Capitol Hill to discuss the legislation in Washington, D.C., as part of the 2025 AMA Medical Student Advocacy Conference.
The AMA is joined by nearly 40 other medical and dental organizations in support of the REDI Act.
