Loans are great for medical school students, but they can be a burden when you’re already working two jobs and trying to pay for student loans. If you’re trying to pay off medical school debt, you need a balance transfer credit card. Not all cards will offer the best repayment options, but the one offered by Citibank could be your best bet.
With medical school tuition and expenses growing at an alarming rate, it can be daunting for a medical professional to contemplate paying off his or her debts. While it may seem like a good idea to get a job with a high income immediately after graduation, what most people don’t realize is that medical school can be a long and drawn out process. For physicians who choose to apply for student loans to help pay off their medical school debts, there are a number of options available to them.
It’s worth noting that not all doctors have the financial means to borrow millions of dollars to pay their medical school debt. In fact, most doctors do not borrow the hundreds of thousands of dollars needed for medical school. So in order to help doctors with their debt, there are numerous different options available.. Read more about medical student loan forgiveness and let us know what you think.The profession of medicine can be very rewarding in many ways. But it’s not easy to get there. Medical school is a nerve-wracking experience. And tuition is high. This work continues after closing, when lodging and payments begin. However, there is good news. Physician jobs, potential earnings, and student loan repayment options make medical school debt repayment one of the easiest types of student debt to pay off compared to other higher education programs. But there are many ways to screw it up. Many factors determine the best reimbursement strategy for physicians. However, to pay off your student debt, you need to evaluate two important factors:
- How much do you owe?
- What is your income?
Let’s see what mistakes to avoid and the best way to pay off medical student debt.
What debt do doctors end up with?
According to a survey by the Association of American Medical Colleges (AAMC), the average physician graduates with $200,000 in debt. But we’ve seen numbers much higher than that. At Student Loan Planner®, the average debt of medical school graduates we recommend is $328,000. This figure is more than 60% higher than the results of the AAMC survey. Why is that? For example, we have found that physicians graduate with $200,000 in debt, while PhDs often have debt in excess of $300,000. It’s just college.
The physicians we work with incurred debts after graduation that were deferred and accrued interest. Many have not used the best strategy to get a student loan. Others take advantage of deferrals and installments throughout their studies (more on this later). In any case, multiple six-figure medical student loans can be daunting. Before we answer that question, let’s slow down by discussing some income statistics.
How much do doctors earn?
The question of how much doctors earn can be tricky because it depends on the type of medicine they practice. According to the BLS, there are just over 750,000 physicians in the United States. And doctors’ salaries vary significantly by specialty or specialization. The 750,000 physicians are split about evenly between specialists, who earn an average salary of $344,000, according to the Medscape 2021 Compensation Report, and primary care physicians, who earn $242,000.
On closer inspection, the highest salaries among physicians are found among plastic surgeons and orthopedic surgeons. Each of them earns more than $500,000 on average. Pediatricians have the lowest salaries among physicians, with an average of $221,000. This represents a difference of nearly $300,000 between the best and worst paid specialties. Student loan repayment can also be very different for a radiologist earning $413,000 and a general practitioner earning $236,000 on average. 
Repayment options for borrowers with a medical school debt
At Student Loan Planner®, we have completed 5,500 consultations and advised on over $1.3 billion in student debt. In our experience, there are two optimal ways for doctors to pay back their student loans. These options are at both ends of the spectrum.
Option 1: Aggressive discount
Individuals with debts of 1.5 times their income or less (for example, doctors with a salary of $250,000 and loans of $375,000 or less) and who do not work for a Public Service Loan Forgiveness (PSLF) eligible employer must spend every dollar to pay off the loans as quickly as possible. How long will it take to pay off medical student debt? No more than 10 years. This often involves refinancing in order to obtain a lower interest rate and, where possible, make additional repayments. This strategy is best suited for physicians in private practice, where loan programs are not available.
Option 2: pay as little as possible and save actively
For individuals whose debt is more than double their income (e.g., a physician with a $250,000 salary and student loans totaling $500,000 or more) or who work for an employer that qualifies for the PSLF program, the goal is to move to an income-driven repayment plan that offers low payments and maximum loan forgiveness. Most doctors we work with choose this route when they want to access the PSLF or when they have a spouse with six-figure student debt. Nonetheless, physicians may benefit from beginning their loan repayment as residents with such a low starting salary. After that, they can switch to a more aggressive approach or stay on the PSLF pathway if they become treating physicians.
Repayment of debts relating to medical training of specialised doctors
Loan repayment for doctors in private practice is generally quite easy. Most of them earn more than they would if they worked for an employer eligible for the PSLF program, so their student loan debt is less than 1.5 times their income. Consider Martin, who has $325,000 in student loans at 6.8% and makes $300,000. 
Refinancing is the big winner here. Martin will be debt free in 10 years by refinancing the loan at 4.5% and paying $3,368 per month. The PAYE plan proves to be the most expensive option because the income is high relative to the debt. He eventually pays off the loan at 6.8% before he turns 20. The remaining loans will be cancelled when the child turns 18. In fact, he pays back the entire loan in 15 years.
This will cost him an additional $157,000 in interest on the refinancing. Refinancing can help you save interest. The standard 10-year repayment plan costs $44,000 more because of the additional 6.8% interest on the loan compared to the 4.5% loan. Martin is a clear case of refinancing. By refinancing, he saves tens of thousands of dollars over the next best option. Compare lenders for student loan refinancing and current premiums.
Reimbursement of medical student debt of physicians employed by a government or non-profit entity
The Public Service Loan Repayment Facility (PSLF) is one of the most effective repayment strategies for which many physicians qualify. It may be advantageous for the doctor to pay off part of the loan debt and the remainder is waived tax-free. To qualify for the PSLF, physicians must meet the following three criteria:
- They have direct federal loans: You will see if the loan has Direct or DL in the title (i.e. Direct Stafford, Direct Grad Plus, etc.). The best way to learn more about the different types of loans is to visit the NSLDS website. Not all FFEL or Perkins loans qualify for PSLF, but may become direct loans through consolidation and thus qualify for PSLF. You can consolidate loans on your own without having to pay for them. So beware of people trying to get you to pay for federal loan consolidation.
- Pay according to one of the income-based installment plans (IDR). Only payments made under the IDR plan (PAYE, REPAYE, IBR, ICR) are considered for PSLF credit consumption. In contrast, differential, standard and extended benefit plans do not count.
- Be employed full time by a non-profit or government organization: If you work in a non-profit hospital, in academia or for the government, you may be eligible for the PSLF. Residency and scholarships generally count towards PSLF as well. If your long-term goal is to work for these types of employers, start earning PSLF credits now.
After you make 120 eligible monthly payments, you can request to cancel the remaining loan amount tax-free. These payments need not be made consecutively. Let’s assume that Martin is now looking for a job that qualifies for the PSLF and that he earns $225,000 but still owes $325,000. He decided not to make the payments, but to take advantage of a deferred payment in his home, so he had 10 years to live (a big mistake, which we’ll come back to later). 
Martin uses PAYE and switches to PSLF at the same time. Repayment of the $325,000 loan will end up costing only $210,080. In this case, the refinancing would end up costing $196,000 more than the PSLF projection. That’s a lot of money! This example shows why the PSLF is such an important program to follow. If Martin had started repaying the loan while he was still in school, these PSLF projections would have been much lower because he would have been making payments for three years based on a much lower free disposable income.
Should Martin take a PSLF job to cancel his loans? Certainly not! After making $300,000 in private practice, he will make another $75,000 a year. That’s $750,000 in foregone income over 10 years to save $196,000 in student loans, which would be a terrible trade-off. The good news is that there is a repayment strategy tailored to their needs, depending on the career path they are most attracted to. Check out our PSLF tips to find the best ways to save. Ask me about your medical student loans
Repayment of medical study debt during internship or fellowship
As I mentioned earlier, cohort students can make a serious mistake if they don’t start repaying their loans during their cohort (and possibly during their fellowship) and instead take advantage of deferrals or deferrals. I will give two scenarios as examples: The first is for physicians who want to use the PSLF program. The second will be for doctors in private practice. Let’s look at how starting a home loan payment affects your loan repayment.
Example 1:
Sarah has $325,000 in medical student loans with an annual interest rate of 6.8% and receives a PSLF. She begins her residency with a salary of $60,000 and an annual pay raise of $2,000. She will earn $240,000 when she becomes chief resident in three years, with a 3% increase each year. That’s the difference if she chooses the PAYE system and gets credit for the PSLF immediately after college, not after her cosplay: 
Sarah can save $123,880 in repayments over a 10-year period if she pays off her loans as early as during her stay, rather than at the time she becomes an owner. That’s almost $125,000 in savings! And if she waits to become chief, her pardon is delayed by three years. She can get three years of PSLF credit if her IDR is based on a much lower salary during her stay, instead of all her payments being based on the manager’s salary.
Example 2:
Now think about Michael, who plans to start a private practice and not use the PSLF. He also has $325,000 in student loans for medical school at 6.8% interest. If he refinances his loan at 4.5% or for 10 years, he will have to pay $3,368 per month. That’s not gonna happen on a $60,000 boarding school salary. He decided to delay repaying his loans until he became an executive.
The move to a deferral arrangement means that the interest on the loans will be about $66,300 over those three years. He will then have to refinance $391,300 in student loans if he becomes an attending physician. REPAYE could be a good option for him. It offers an interest subsidy that can reduce the interest on his loan by about $30,000 with affordable payments during his residency, which is well worth it.
Other factors influencing the repayment of loans for medical training
We’ve looked at some common physician reimbursement options, but that’s often not all. For example, in each of the above examples, all debt was assumed to be federal student loans. But if you have private student loans, the whole discussion changes. Private lenders do not offer as many benefits as the federal government. Income-based reimbursement is not an option, nor is PSLF. Therefore, most private student loan borrowers should seek refinancing at the lowest possible interest rate.
And if you are willing to work in severely understaffed facilities for several years, you can also apply for the NSHC loan repayment program. There are many other factors to consider when choosing the best plan. Here is a small sample of the variables that can affect your choice of the optimal repayment strategy for your loan:
- Career paths and aspirations
- Income of spouse and status of student loan
- When you took out your first loan
- Whether or not you live in community of property.
- What monthly payment can you afford
Listen to episode 41 of the Student Loan Planner® podcast about the 26 things that make your loan situation unique.
Doctors need a plan for repaying their study debt
Given all of these factors combined with the amount of debt, physicians should focus on choosing the best strategy for taking out student loans immediately after graduation and almost certainly before their assistantships. Otherwise, you risk losing hundreds of thousands of dollars because you started too late or chose the wrong repayment strategy. We prefer to keep the money in your pocket and help you get closer to financial freedom. The main barrier for clinicians in developing the right strategy is the lack of time and energy to develop it.
Beyond that, there is a sea of questionable figures and misinformation. Instead of sifting through mountains of information, we can provide you with clarity in a short space of time. Student Loan Planner® has completed over 5,500 student loan consultations for clients with over $1.3 billion in student loans. We can help you find the best path for you in a consultation of just one hour. A plan for a student loan Refinance your student loan and receive a bonus in 2021.
Frequently Asked Questions
What is the fastest way to pay off medical school debt?
Would you like to benefit from medical school loans without losing any sleep over them? Do you want to rest easy knowing that your monthly payments will be deducted from your tax refund, and will be gone before you know it? Here’s how it’s done. Medical school is the best investment you can make in your future. However, the financial burden of paying for medical school can be daunting. In this post, we will discuss what the most common strategies for paying off medical school debt are, including the best repayment options for doctors.
How long do doctors pay off medical school debt?
The average cost for medical school is $71,871 (as of May 2017). But that’s not the only kind of school debt you need to worry about. While medical school is a four-year commitment, the number of hours you put in each week (or month) is much more important. If you don’t spend enough time in class and on your assignments, you won’t be able to graduate on time and begin your practice. Here’s how to make sure you can pay off medical school debt in time. In the United States, the average debt for medical school graduates is about $196,000.
Many medical schools have a tuition freeze for this year and ask students to defer payment for the next two years, while others allow students to pay a negligible amount. Some medical schools offer scholarships and loans for medical students who are residents, and others still offer loans. But medical school debt doesn’t just affect doctors; the long-term costs of medical school for a physician’s family also have to be considered.
Will hospitals pay off student loans for doctors?
The Department of Education is funding a pilot program to educate doctors on the best strategies for paying off their student loans. The program, called the Student Loan Repayment Assistance Program, will offer discounted interest rates on federal student loans for physicians entering residency programs that have generous repayment options to help them put a lower number on their debts.
As doctors, we are trained to see the best in people, to see the potential in every ailment and injury. This is a skill that is easy to lose in the day-to-day grind of a medical practice. It is easy to forget that, while every patient is unique, everyone deserves our best treatment. And what does the best treatment look like? It looks like a physician who has paid off their student loans.
