Physician Job Search: Tips and Advice

Student Loan Debt Reduction Strategies for Medical Students

Student Loan Medical Debt

According to the Association of American Medical Colleges, the average medical student has a median loan debt of $200,000 when they graduate. While that amount may sound astronomical, it does not even account for the added interest that will also accrue on the loan before it is finally paid off, bringing the grand total to over $400,0002. If this news sends you to despair, do not give up hope, for there are some debt reducing strategies a med student can use to help decrease their student loan burden.

Pay Down Your Principal

An effective and easy way to decrease your debt load over time is by paying down your loan principal. Try setting aside some money each month so that by the end of the year you have enough to send in an extra payment. By sending in an extra loan payment each year you can decrease the length of your loan by up to 7 years1. Making this small adjustment can make a big dent in your debt load over the long haul.

Evaluate Federal and State Loan Repayment Program Options

There are multiple medically focused federal and state loan repayment programs available for those interested in practicing in approved settings.

  1. National Health Service Corp (NHSC) provides up to $50,000 for a 2-year service commitment at an approved practice site.
  2. The Armed Forces provide various loan repayment programs based on service commitments.
  3. National Institutes of Health (NIH) has a loan repayment program for up to $35,000 a year for Physicians interested in pursuing research careers with the NIH.
  4. State Repayment Programs are found in most states and frequently involve practice commitments in underserved areas within each state.

Refinance

If you find yourself like many students, juggling multiple loans to fund your schooling, then refinancing may be a worthwhile option to pursue. Refinancing your loans may be especially beneficial if you have high interest rates on your current loans. Consolidating multiple loans when refinancing can also decrease your interest rates while simplifying your monthly bookkeeping by reducing the number of creditors you pay each month. Although lowering interest rates and simplifying your bill paying sounds great, refinancing may not be the best option for everyone. If you have federal student loans, refinancing them may cause you to lose certain benefits conferred with their use. If federal student loans are refinanced with private lenders you can no longer use federal income-based repayment plans, deferment, or forbearance. If you wish to consolidate and refinance your loans federally you can use a Direct Consolidation Loan. This type of loan can adjust your time to payoff while changing your benefits. The U.S. Dept. of Education has a great resource to explore this topic.

Employer Loan Repayment

Due to the healthcare shortages in America, Physicians are in high demand and often have the advantage when negotiating contracts. To capitalize on this advantage when negotiating the terms of your employment, consider asking for loan repayment incentives in your contract. These incentives are often found in annual lump sum payments or monthly reimbursements that can give you an added boost when paying off your loans.

References:

1 “Should you pay down your mortgage principle?”. Military.com.

2 https://store.aamc.org/downloadable/download/sample/sample_id/240/ American Association of Medical Colleges.

Federal Student Aid- U.S. Dept. of Education. https://studentaid.ed.gov/sa/repay-loans.

National Health Service Corp.  https://nhsc.hrsa.gov/loanrepayment/.

National Institutes of Health. U.S. Dept. of Health and Human Services. https://www.lrp.nih.gov/

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