Updated September 2, 2021. The article was updated to correct minor grammatical errors and to update technical details.
Student loan debt is increasing for college graduates every year. But for those who study medicine and health sciences, the numbers are staggering. According to a recent study, graduating medical students are starting their careers with about $164,800 in debt, on average. Even with high starting salaries, that can be an overwhelming amount of student loan debt for any new doctor to manage.
However, if you’re still working your way through medical school, there are steps you can take to minimize your student loan debt. And if you’re already a practicing physician, you can find strategies to pay down your debt faster.
How to manage your student loans during medical school
Although some medical schools are more affordable than others, it can be difficult to transfer if you’ve already chosen a school. Instead, take these steps to avoid taking on more student loans than you need.
Keep your expenses down to a minimum
If the majority of your loans are going toward tuition, it’s essential to keep your personal expenses as low as possible. Don’t underestimate the value of creating a budget and sticking to it. There are several budgeting apps available you can use to get started, such as Mint, Personal Capital, and You Need a Budget.
Also, find ways to cut your monthly expenses. For example, it may be tough to cook a meal after a long day of schooling, but fast food and services like Grubhub and Postmates can get expensive fast. Consider cooking all of your meals for the entire week in one day to save money (and time).
Apply for grants and scholarships
The first step to getting financial aid in medical school is to complete a Free Application for Federal Student Aid (FAFSA). Remember, you’ll need to submit a new FAFSA every year you’re in school. Once the information you submit with the application is passed on to the financial aid office at your school, they will determine your eligibility.
Other organizations and companies may offer research and other types of grants and scholarships. These usually depend on what you’re studying and your background. Here are some organizations you can check out:
Limit other debt
The less debt you have in general, the better, especially when you’re not generating much income as a medical student. Avoid using credit cards while in school unless you’re living on a budget and can pay off the balance in full every month. If you need to purchase a car for transportation, try to find one that’s reliable and budget-friendly.
Lastly, hold off on buying a house if you can. There’s no telling where you’ll end up in residency, and the extra debt can make your student loan burden seem even heavier.
How to pay off your student loans after graduation
For all the medical school graduates and new doctors out there, here are just a few ways you can double down on your student loans.
Join the armed forces
If you’re still applying for residency, the Navy residency program offers an annual grant of $45,000 for up to four years. That’s in addition to normal residence pay. You’ll also get a $2,200 monthly stipend for living expenses for up to four years.
Keep in mind that if you take this route, you’re also committing to serving as an active-duty physician for two or more years. The active-duty period depends on how long you’re in the residency program. If you join later as a practicing physician, you may receive a sign-up bonus of $220,000 to $400,000. The amount will depend on your specialty and the service requirement. Check out this student loan repayment guide for doctors to see if any available military student loan forgiveness programs are right for you.
Volunteer with the Peace Corps
The Global Health Service Partnership is a collaboration between the Peace Corps, Seed Global Health, and the US President’s Emergency Plan for AIDS Relief (PEPFAR). Through the program, you can volunteer to visit medical and nursing schools in sub-Saharan Africa in one-year rotations. In exchange, you’ll receive the following:
● A monthly living stipend
● Allowances for readjustment and professional development.
Seed Global Health also provides up to $30,000 in needs-based assistance. Volunteers can use the money to pay off student loans or other debt.
Check out loan forgiveness programs
Some states offer student loan forgiveness programs for doctors who work in underserved regions. For example, the state of Pennsylvania awards doctors up to $100,000 for practicing full-time for two years in some areas.
In New York, you can receive upwards of $150,000 through different programs, depending on how long you commit to an underserved area.
Consider refinancing your student loans
Depending on your monthly payment and interest rate, you may be able to get a better deal through refinancing. If your credit is good or you have a cosigner, you may qualify for a low, fixed interest rate. You can also choose the length of your repayment period. If you choose a shorter period, your monthly payments will be higher, but you’ll generally qualify for a lower interest rate. Plus, you’ll be debt-free sooner.
If you choose a longer period, you may end up with a higher interest rate, but your monthly payment will be smaller. And if the lender doesn’t penalize you for paying off the loan early, you can make extra payments to get done sooner. Use a prepayment calculator to see how adding more to your monthly payments can save you time and money in the long run.
Be proactive about your student loans
As a doctor, your income potential is high. But unfortunately, so is your potential for massive student loan debt.
As you’re going through medical school and starting your career, avoid going on autopilot with your student loans. Doing so could end up costing you a lot of time and money. Be diligent about minimizing your debt while you’re in school. The more you learn and put those lessons into action, the less you’ll have to worry about after you graduate.
If you’ve already graduated medical school and are hitting the workforce, consider looking into student loan forgiveness or residency programs that offer student loan assistance on top of stipends. Just make sure you pick a program with service expectations that’s right for you. And, if you plan to refinance your student loans, do your homework and shop around. Take a look at some of the top student loan refinancing lenders, then review each one to see which offers the best combination of features for your needs.