Through avenues like scholarships, grants, and student loans, there are multiple ways to fund your medical education as you work toward becoming a doctor. But once you graduate, the reality of paying off your med school loans will begin to sink in.
Before you get too bogged down by the idea of the monthly bills after you finish medial school, you should know that there are a number of different ways and common options you can make the process of paying off medical school loans more manageable.
Things to consider when repaying medical school loans
The mounting physician shortage in the United States suggests there will be a continued need for qualified physicians in the coming years. Once you are licensed to practice, you can pursue one of these positions and begin earning a steady income.
But you won’t have to rely on your paychecks alone when it comes to paying off medical school loans. The repayment plans can be broken into two types: traditional repayment plans and income-driven repayment plans. Many doctors commonly use the following for loan repayment:
- Income-based repayment plans allow for a reduced monthly payment on most US federal student loans. These payment plans cap loan payments at 10 or 15 percent of your discretionary income. The monthly payment is adjusted annually and verification of your income and family size is required each year.
- Grace, Deferment and forbearanceb> refer to periods after graduation during which no loan payments are due. Grace is a time period when payments are not required. Although the government pays the interest on subsidized loans, interest continues to accrue on unsubsidized loans. Deferment is a temporary suspension of loan payments. That said, eligibility can be somewhat restrictive. If you get a forbearance, it is a period of time in which you can either delay making payments completely or make payments in lower amount than scheduled while interest still accrues.
It’s helpful to note that as a medical resident, you are entitled to a mandatory residency forbearance that can be used to postpone your payments throughout residency. To qualify, you must clearly identify yourself as a medical resident and complete the required paperwork.
- Debt consolidation is a useful option for those dealing with multiple loans and servicers. Consolidation can simplify repayment by providing one loan, one servicer, and one payment. One of the most prominent benefits of this repayment route is that it provides a single monthly payment, most times with a reduced monthly payment.
- Refinancing is an avenue available to graduates with good credit. Eligible candidates may be able to refinance their existing federal student loans into a private loan. It’s important to note that there are several different variables that will help determine if refinancing is a sensible option for you. The Association of American Medical Colleges (AAMC) has provided the following resource if you’re looking for assistance in evaluating your specific circumstances.
- Public Student Loan Forgiveness (PSLF) is also available through some federal programs for physicians who aspire to work in the public service sector. In addition to a few other requirements, borrowers must be employed full-time in a qualifying public service position during the period in which they make 120 monthly payments.
In other words, physicians who are employed by a qualifying government or nonprofit organization, make all their payments for 10 years, and meet a few other criteria can become eligible to have the remainder of their debt forgiven.
Pay off your med school loans with confidence
You now know some of the most useful methods for paying off medical school loans. But with so many minute details, it can still be hard to grasp it all. Many medical students find it helpful to hear how other physicians have managed it.
Learn about the process firsthand by visiting our article “SGU Alumni Dish on What Paying for Medical School Is Really Like.”
This article has been updated from April 2022 to include current references, facts and figures.
