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Tax Law (Questions About Taxes)/Student loan repayment and tax obligation


I work at a recruiting firm for physicains.  Many of our clients offer student loan repayment.  Doctors often have $200,000+ in loans.  

If the hospital pays say $100,000 of the loans directly to the company that provided it, would it be considered a taxable income to the doctor?

Many believe that it is not taxed.


Thanks for your question.  

It depends.  If the lender is a qualified lender, which includes the following:
1. The United States, or an instrumentality thereof.

2. A state, territory, or possession of the United States, or the District of Columbia, or any political subdivision thereof.

3. A public benefit corporation that is tax-exempt under section 501(c)(3); and that has assumed control of a state, county, or municipal hospital; and whose employees are considered public employees under state law.

4. An eligible educational institution, if the loan is made:

As part of an agreement with an entity described in (1), (2), (3) under which the funds to make the loan were provided to the educational institution, or

Under a program of the educational institution that is designed to encourage its students to serve in occupations with unmet needs or in areas with unmet needs where the services provided by the students (or former students) are for or under the direction of a governmental unit or a tax-exempt section 501(c)(3) organization.

 Occupations with unmet needs include medicine, nursing, teaching, and law.

Hope this helps.

John Stancil, CPA

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John Stancil, CPA


I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I am Professor Emeritus at Florida Southern College. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a CPA practice, specializing in tax, for over 35 years. I am a member of the National Association of Tax Professionals, The Florida Insititute of CPA's, The NCPE Fellowship. In addition I am a Certified Mentor for SCORE. Visit my website at I also offer seminars and consultations to churches and clergy on their tax issues at Also visit my blog, I am listed on Tax Connections at Prepare and file your own taxes at


I hold a doctorate in Accounting, and am a CPA. My certifications of CIA, CFM, and CMA are inactive. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I have operated a CPA firm for over 37 years and have taught accounting and tax at the college level for over 35 years.

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DBA University of Memphis MBA University of Georgia BS in Accounting Mars Hill University

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