Managing Student Debt While Pursuing a Medical Degree

Earning a medical degree like becoming a doctor or dentist is a noble yet intensive undertaking requiring vast investments of money, time, and energy. With average medical school debt now exceeding $200,000, managing loans is essential for aspiring physicians.

Navigating repayment and minimizing interest costs both during schooling and after graduating from medical school is key to avoiding being overwhelmed.

Follow these tips to strategically manage medical school debt:

Understand the Costs of Medical School

From tuition to textbooks to board exams, the expenses of medical training add up quickly. Before borrowing, get clear on the total costs:

• Tuition – For 2021-2022, average annual tuition was $37,556 at public medical schools and $62,194 at private schools.
• Fees – Books, health insurance, equipment, licensing exam fees, background checks, immunizations, etc. often cost $5,000-$10,000+ extra per year.
• Living Costs – Housing, transportation, food, and other living expenses, especially if relocating for school. Budget approximately $20,000-$30,000 annually.
• Residency Applications – Application fees, interview travel expenses, relocation costs. Estimate $5,000-$10,000.

Medical school costs can total $200,000-$300,000+ for the full journey. This necessitates strategic borrowing and repayment.

Lean on Federal Student Loans First

Government-backed federal student loans should be utilized first before private loans due to lower interest rates and excellent protections like income-driven repayment (IDR), deferment, and forgiveness options.

Max out Direct Unsubsidized Loans each year ($40,500 limit) plus any available Direct PLUS Loans (up to cost of attendance). While not subsidized, the set interest rates on federal loans are preferable.

Borrow federal first, then private to fill any gaps.

Research Loan Forgiveness Programs

Loan forgiveness programs like Public Service Loan Forgiveness (PSLF) and National Health Service Corps (NHSC) forgive medical school debt for physicians working full-time in underserved communities or public institutions after residency.

PSLF forgives federal loans after 120 on-time monthly payments on an IDR plan while working for an eligible employer like a public hospital, clinic, or tribal facility.

NHSC provides tax-free loan repayment assistance of up to $50,000 for two years of service.

Look Into Military Options

Becoming a military doctor through programs like the Air Force’s Financial Assistance Program or the Army’s Health Professions Scholarship Program can cover 100% of medical school costs in return for service time commitments after residency.

This allows graduating med students to begin careers debt-free. Just be sure you are comfortable with all program terms and requirements.

Live Minimally As Possible

Seriously minimizing living costs and avoiding debt accumulation from lifestyle inflation in medical school will pay off enormously long-term.

• Split rent and share resources with roommates.
• Buy used textbooks, equipment, and scrubs.
• Cook at home and pack lunches rather than eat out.
• Avoid impulse purchases that aren’t critical for school.
• Use public transportation whenever possible.

Find free or discounted events for socializing rather than costly activities. Every dollar saved reduces future repayments.

Make Interest Payments While In School

Unlike federal loans, interest accrues on private loans immediately once disbursed rather than after graduation. Making small payments on unsubsidized loans while still in school reduces overall interest costs.

Even $25-50 monthly can save thousands long-term by preventing compound interest accumulation. Set up automatic transfers from checking accounts.

Sign Up For Student Loan Rewards

Some lenders like Laurel Road and Splash Financial offer student loan cashback rewards programs that return money directly against student loan balances for on-time payments and opening savings accounts. This accelerates debt payoff.

For example, Laurel Road’s MOHELA Rewards provides 1% cashback for on-time payments on refinanced student loans.

Get a Side Job in Medical School

While intense, working part-time gigs like tutoring undergraduate students for $20-50 per hour or driving for a rideshare service during nights and weekends can provide extra income to pay down accruing interest and keep debt lower.

Medical students are highly valued in the job market for their advanced expertise. Use it to your advantage.

Refinance Private Loans After Graduating

Once finished with medical school, consider refinancing higher-interest private student loans through lenders like Earnest, SoFi, or Splash Financial to improve rates. This reduces long-term interest expenses.

Just be sure to not refinance federal loans and lose borrower protections like IDR and forgiveness programs. Refinance private loans only.

Live Like a Resident After School

It’s tempting to ramp up lifestyle spending after graduating once salaries increase. But disciplined physicians committed to rapid debt repayment live frugally like a resident for 1-3 years post-training to maintain focus on eliminating loans first before lifestyle inflation.

Staying in residency mode by living with roommates, limiting eating out, and following a written budget accelerates payoff timelines.

Make Debt Repayment A Top Priority

Commit to making student loan payments a consistent monthly priority in budgets for 10-25 years until eliminated. Consider signing up for automatic payments to stay on track.

Consistently paying loans early and in full prevents growing interest costs from snowballing balances out of control. Knock them out steadily.

Final Thoughts

The investments of time, money, and hard work required to become a physician are massive. But strategic borrowing, savvy repayment, and disciplined budgeting make high medical school debt manageable.

Utilize federal loans first, make interest payments in school, pursue forgiveness programs, refinance strategically, and maintain a repayment focus early in your career to accelerate payoff.

While medical loans are challenging, they are certainly not insurmountable obstacles for dedicated students on the path to impactful medical careers.