Though medical careers are profitable, doctors don’t always start that way. Medical school graduates owe, on average, over $205,000 in student loan debt, and nearly 20% of grads leave with debts exceeding $300,000.
While managing your medical student loan debt can be challenging, certain strategies, such as income-drive repayment, employer assistance, and forgiveness programs, can help. There’s no universal solution for paying medical school debt, but the following tips are worth a try.
Income-Driven Repayment
Doctors’ salaries differ depending on specialty, location, and time in practice. If you aren’t yet making a sizable salary, the federal government’s income-driven repayment plans may make monthly payments more affordable.
An income-driven repayment plan is designed for government-provided student loans, and payments are based on household size and earnings. If you aren’t working, you may pay nothing—but you’ll need to do a yearly income recertification.
Forgiveness
Doctors can gain student loan forgiveness in several ways. PSLF or Public Service Loan Forgiveness is a popular option; here, physicians in the public sector can get their loan balances wiped out after 120 payments. Apply and check eligibility using the government’s online help tool.
Other student loan forgiveness programs are available for new doctors. The National Health Services Corps, the military, and individual states all offer help, but you may have to fulfill a certain role or work in a high-need area to qualify.
Paying During Residency
Most loans offer residency deferments, which means no payments are required—but interest still accrues. The monthly payment on a $250,000 unsubsidized loan at 5% interest and a ten-year repayment term will increase by almost $400 by taking the deferment. Large payments are hard for residents to handle, but paying something during this time will prevent loan balances from rising sharply.
Seeking Employer Assistance
Medical professionals will always be in demand. The United States may face a 124,000 physician shortage by 2034. The more need there is for doctors in your area of specialty, the more likely it is you’ll be able to negotiate.
When signing on with an employer, ask about year-end bonuses, yearly raises, and loan repayment help. Employers can make a yearly tax-free student loan repayment contribution of up to $5250 per employee. It may not seem like much, but it adds up.
Refinancing
Refinancing medical school debt may lower the monthly payment or interest rate while consolidating loans into one bill. Lenders typically require stable income and good credit, and you may need a co-signer if you have neither.
Refinancing student loans is only wise if there are savings to be had. If you can’t reduce the interest rate or monthly payment, it won’t make sense—and you may lose out on deferment, income-driven repayment, PSLF, and other federal benefits.
Repaying Student Loans: How Long It Takes
The length of time required to repay medical student loans depends on the amount owed, what you can afford to pay each month, and your other bills. The standard plan for federal loans lasts ten years, but that’s not feasible for everyone. Graduates with federal student loans can use direct consolidation to extend the term up to 30 years, or they can enroll in a 20- or 25-year income-driven repayment program.
Our Take
With school debts rising into the six figures for most medical school graduates, it may seem like forever until those loans are repaid, but there’s help available. If you struggle to repay medical school debt, these tips may get you on the right path.
