5 Tips for Tackling Medical School Debt

5 Tips for Tackling Medical School Debt

If you’re still battling medical school debt, you’re certainly not alone.

In fact, according to the American Medical Student Association, more than 86% of graduates in the medical field end up carrying educational debt.

And with the average amount owed coming in just under $200k, it can be pretty stressful to say the least.

Careers in the health care industry can certainly be lucrative, but not right out of the gate.

As a resident or new practitioner, chances are you won’t be making enough to make much of a dent in your student loans.

The good news is, it’s entirely possible to start chipping away and climbing out of that massive hole now, well before you’re commanding a higher salary.

The following strategies should help make paying off medical school debt faster, easier and much less stressful.

Start making payments now.


It can be incredibly tempting to opt for deferment and postpone your student loan payments while you work toward launching your career, but doing so may not be the wisest option.

That’s because in the interim, those balances will continue to accrue interest, which means that when you do finally start paying on them, they may be thousands of dollars higher than when you first graduated.

For instance, let’s say you chose to pause payments for a period of three years on student debt totaling the national average of $196,000.

While that amount alone may seem astronomical, pushing off your payments will make it even worse. Assuming an average interest rate of 6.25%, you’d be looking at another $37,000 added on, bringing your total owed up to $233,000.

And interest would continue to accrue on that new balance as well.

To avoid this, try to at least make partial payments during your residency.

Deferment and forbearance should only be used as a last resort.

Consider income-driven repayment options.


If you can’t afford full payments in the beginning, you may be able to sign up for a repayment plan that is based on your current income.

These are federal programs that are designed to lower student loan bills for those struggling to repay them.

There are four such programs available which cap monthly payment amounts at a specified percentage of your income, extend the period of repayment to up to 25 years and may even forgive any balance that remains after the repayment period is expired.

With this approach, your monthly payments will be significantly lower.

For instance, with an annual income of $56,000, your loan payments could be as low as $315 a month. To sign up for income-driven repayment, visit studentloans.gov, choose the option you want and complete the application.

It’s important to keep in mind, however, that income-driven repayment may not cover all of the accrued interest on your loan, which means your balance could actually increase.

One option – Revised Pay as You Earn (REPAYE) offsets this by offering a subsidy which waives half of the unpaid interest.

Also note, you must recertify each year, which means your payments will increase as your income does.

Seek loan forgiveness.


When it comes to medical school loans, there are a number of different forgiveness programs, such as Public Service Loan Forgiveness, which benefits doctors who are willing to work in the public sector (or in an area that is underserved) for a specified amount of time.

If your career goals happen to align with one of these types of loan forgiveness programs, this might be a great option for you.

In some instances, combining loan forgiveness programs with other repayment options may be possible to maximize the amount you are able to save.

This typically depends on whether your student loans happen to be private or federal.

If you’d like to find out more about this avenue, here is a list of 8 student loan forgiveness programs that you can look into.



Another great option for paying down your medical school debt faster (and save money at the same time) is to refinance your loans.

If you are able to find a loan with a lower interest rate, for example, you could potentially save yourself thousands of dollars.

And with lower interest, you’ll be able to pay more toward the principal, which means you could theoretically pay down your balances quicker.

There are a few different ways you can approach refinancing your medical school loans.

The first is to go on income-driven payment when you’re first starting out and then refinance once you’ve completed your training and are making more money.

The second is to try and refinance right away and then again whenever it makes sense.

This option can be more challenging, as income is a huge factor for lenders.

An important note: refinanced loans are not eligible for federal programs such as loan forgiveness or income-driven repayment, so before you do so, make sure you’re fully aware of what you’re potentially giving up in the process.

Live a frugal lifestyle.


The fifth tip for climbing your way out of medical school debt involves making some changes to your lifestyle.

How and where you make those changes is up to you, but the goal is to live more frugally.

This can be challenging, especially when you finally start reaping the financial benefits of all your hard work and begin commanding a higher salary.

But, if you can manage to live below your means for a few more years, you’ll have more money to save, invest and, of course, pay off your school loans.

One more word to the wise: before putting extra cash toward your student debt, make sure to also take the following other financial priorities into consideration:

• Establishing an emergency fund (ideally enough money to cover 3-6 months of living expenses)
• Paying down other high-interest debt, such as credit cards
• Investing in a retirement fund


A career in the medical field can be exciting and fulfilling.

The debt that comes along with that career? Not so much.

The five tips above should help you get a better handle on your debt, pay down your loans faster and save money so you can start enjoying life as a health care provider.