5 Tips to Ease the Burden of Student Loan Debt for Doctors

According to the Association of American Medical Colleges (AAMC), medical students in the 2021–2022 academic year faced average costs of $38,947 to $61,023 for public and private institutions respectively, including tuition, fees, and insurance.

In turn, the average debt among medical school graduates was $200,000—and this number does not include any undergraduate debt.

If you’re a medical school student or graduate facing numbers like these, it’s important to get familiar with your options, from student loan forgiveness to deferment, so you can manage your debt and take advantage of any relief programs available to you.

1) Seek Loan Forgiveness Through Public Service Loan Forgiveness (PSLF)

PSLF is a government program available to medical professionals who work full-time at a qualifying nonprofit organization or government entity. The program provides a path to potential federal student loan forgiveness after ten years of qualifying payments (120 payments total) through an income-driven repayment (IDR) plan.

2) Apply for IDR

IDR plans allow federal student loan borrowers to lower their monthly payments based on their income level.

These plans might help borrowers manage their federal student loan repayment if they cannot afford the standard 10-year plan or other payment plans. With IDR plans, borrowers may be eligible for loan forgiveness after 20-25 years, depending on how much they owe when applying for forgiveness.

There are four types of IDR plans that can lower your monthly payments based on your income, including:

Income-Based Repayment Plan (IBR)- You pay 10-15% of your discretionary income for a repayment period of 20-25 years, depending on when you became a borrower.

Income-Contingent Repayment Plan (ICR)- Monthly payments are most often fixed at 20% of your discretionary income with repayment over 25 years.

Pay As You Earn (PAYE)- Payments could be 10% of your discretionary income over a 20 year period—but the payment would never be more than you would pay for a federal 10-year Standard Repayment Plan.

Revised Pay As You Earn (REPAYE)- Both undergraduate and graduate loan borrowers are eligible for REPAYE, which can cap monthly payments at 10% of your discretionary income. The payment period may be up to 20 years for undergraduates and 25 years for graduates.

3) Refinance or Consolidate Your Loan

Refinancing means taking out a new loan with potentially favorable terms, such as a lower interest rate or lower monthly payments. However, consolidating means combining your federal loans into one with an average weighted interest rate of all loans.

Refinancing and consolidation could result in a lower monthly payment or a longer repayment period, making it easier to fit them into your budget.

It is important to note, however, that when you refinance or consolidate a federal loan with a private lender, you may lose certain benefits such as deferment, forbearance, forgiveness, or other helpful repayment programs.

4) Work at an Approved National Health Service Corps (NHSC) Location

The NHSC offers loan repayment assistance programs that can provide up to $50,000 in repayment aid for eligible medical professionals who commit to two years of full-time service at an approved location.

This program requires that healthcare professionals work with patients in underserved areas—but if you meet this requirement, the NHSC could help lighten the burden of student loan debts. You could also secure more funds if you continue with a third year of service.

5) Consider Deferment or Forbearance 

If it is difficult for you to make your monthly loan payments due to unemployment, economic hardship, or other extenuating circumstances, deferment or forbearance might be an option.

With deferment, interest on some types of loans may not accrue during the period. However, with forbearance, interest does continue to accrue during this time—but your lender may reduce or limit interest accrual under certain conditions.

Depending on which type of loans you have from medical school, these options may provide temporary relief from making monthly payments until your financial situation improves. However, keep in mind that many IDR programs can make the same adjustment to your monthly payment without impacting your interest.

Final Thoughts

Confronting the challenge of medical school loans head-on may seem daunting, but knowing your options will equip you with the resources to make educated financial decisions.