HR2028-119

What This Bill Does

The REDI Act adds medical and dental internship or residency service to the Higher Education Act deferment rules for Direct Loans. A borrower serving in a medical or dental internship or residency program would be eligible for deferment. During that deferment, periodic principal installments need not be paid and interest does not accrue on the borrower's Direct Loans. The bill is aimed at early-career physicians and dentists whose training salaries are often far below their loan balances and who otherwise can see interest grow while completing required residency or internship training.

Who Benefits and How

Medical residents benefit because they can pause Direct Loan principal payments during residency without interest accrual. Dental residents benefit from the same interest-free deferment while completing required clinical training. Teaching hospitals benefit if lower debt pressure makes residency slots more financially feasible for trainees. Patients in underserved training settings benefit indirectly if debt relief supports physician and dentist workforce retention.

Who Bears the Burden and How

The Department of Education must update Direct Loan deferment rules and servicing guidance. Federal Student Aid servicers must verify internship or residency status and suppress interest accrual during the deferment. Federal taxpayers bear revenue loss from interest that would otherwise accrue during medical or dental training. Borrowers must document qualifying internship or residency service to receive the deferment.

Key Provisions

• Expands Direct Loan deferment eligibility to medical and dental internships and residencies.
• Provides that principal installments need not be paid during the qualifying deferment.
• Bars interest accrual on covered Direct Loans during the deferment.
• Targets the debt burden of physicians and dentists during required clinical training.