How This Doctor Is Crushing $110,000 in Medical School Debt

paying off medical school debt

Three out of five Americans expect to be paying off their student loans in their 40s, according to research from Citizens Financial Group.

Dr. Brad Venghaus, however, will be out of debt much, much sooner. Instead of letting his $110,000 debt hang over his head, Brad found a way to pay it all off in five years.

Plus, he saved thousands of dollars on interest in the process. Now, Brad shares the personal finance lessons he learned on his blog, InvestingDoc.

If you’d also like to say goodbye to student loans once and for all, read on for Brad’s journey to financial freedom.

Graduating from medical school with $110,000 in student loans

Unlike the average college graduate who leaves school with more than $37,000 in student loans, Brad earned his bachelor’s degree without getting into debt.

He chose the University of Texas at Austin, which offered him a full-tuition scholarship for all four years. Plus, he worked part-time jobs during college and won a number of smaller scholarships to cover textbooks and living expenses.

Graduating from medical school, however, was a different story. “I attended a medical school in Texas and subsequently matched into an internal medicine residency program in Houston,” says Brad. “I graduated with $110,000 in student loans at 6.80% interest.”

Although that’s a massive amount of debt, it’s actually lower than average for medical school graduates. According to a recent study, the average doctor in the Class of 2016 left school with $190,000 in student loans.

Brad was able to keep his overall costs down in two ways:

“I was awarded over $35,000 in scholarships to attend medical school,” he says. “I also chose the least expensive medical school to attend in the state of Texas at the time. While tuition could be upwards of $40,000 at some private medical schools, my tuition averaged around $15,000 per year.”

Brad’s debt could have been worse, but $110,000 was still a heavy burden. As he learned more about personal finance, Brad searched for ways to lighten it.

Refinancing student loans to save money

Brad didn’t wait long to take control of his student debt. “About a month after I graduated from medical school, I received a letter in the mail about being auto-enrolled in a 10-year repayment plan,” says Brad. “I looked at the interest rate of 6.80% and went on a search for any potentially better methods for repayment.”

Through his research, Brad learned about student loan refinancing. “I stumbled upon numerous banks that would refinance physician medical school debt,” he says. Through refinancing, he could snag a lower interest rate with a new lender.

Brad’s first step was to go rate shopping. “I applied to about four or five of the big-name banks that refinance medical student loans,” says Brad. “They all gave me a quote for their best offers and I compared each of them.”

The most attractive offer came from a credit union. It reduced his 6.80% interest rate to 3.30%. Instead of spending over $41,906 on interest over 10 years, Brad would only pay $19,296. In effect, the simple process of refinancing saved him $22,610.

“The process of refinancing was quite easy,” says Brad. “Refinancing my loan saved me $10,500 just in residency.” With that kind of success, it’s no wonder why Brad refinanced again a few years later.

Refinancing again to save even more money

During residency, Brad set up a system of interest-only payments for his student debt. But once he graduated, he decided to pay off his loans even faster. In search of a lower interest rate, Brad decided to refinance again.

“I refinanced with SoFi for a five-year variable term at 2.80%,” he says. “My monthly payment increased to $1,700 after this refinance.” Because he cut his repayment term in half, Brad’s monthly payments increased.

Plus, he decided to pay even more every month to crush through his debt in two years instead of five. Now, he’s looking at a payoff date just a few years after graduating.

“My student loans will be paid off five years after graduating from medical school,” says Brad. “It feels good to pay them off … ahead of schedule.”

There’s no limit to how many times you can refinance your student loans. If you find a better offer with a lower interest rate, you could repeat the process to save money. However, be careful to do the math and ensure it’s the right choice for you.

Student loan refinancing also has some downsides

As Brad found out, refinancing student loans can save you thousands of dollars. Plus, it lets you choose a repayment term that better fits your budget. You might even pay off your loans ahead of schedule.

But refinancing isn’t without its drawbacks. For one, most lenders require a strong credit score and high income. Without these credentials, you might not qualify for low interest rates — or get approved at all.

Secondly, refinancing a federal loan turns it into a private one. As a result, you’ll lose access to income-driven repayment plans and the Public Service Loan Forgiveness program.

“For those new graduates with very high student loan debt, determine if public student loan forgiveness is an option or desire for you,” advises Brad. “Refinancing your loans will forgo any option of student loan forgiveness.”

If you’re banking on these federal programs, refinancing might not be for you. But if your priority is saving money on interest, refinancing could help.

Brad is working toward financial independence

Once Brad got past the hurdle of his student loans, he was able to ramp up his other money goals. “Each payment toward my student loans was one step closer to financial freedom,” he says.

Now, Brad invests a large portion of his income in tax-advantaged retirement savings accounts. He’s on a path to reach financial independence within six years. Plus, he shares the lessons he’s learned on his blog.

“The greatest tip I have for medical students and new doctors is to learn the basics [of] personal finance and investing,” says Brad. “Most training programs have little to no training about financial matters.”

Besides taking control of your debt, Brad recommends investing as soon as possible. “Learn what a tax-advantaged retirement account is — such as a 401(k) — and start investing early,” he says. “You have time on your side to build a large amount of wealth.”

Balance saving with your other goals

Now that Brad has eased the burden of his student loan debt, he can focus on building the life he wants for himself. Through his efforts, he’s learned to find a balance between personal and financial well-being.

“My career has taught me that if you have good health, that’s worth more weight than any amount of gold one can buy,” says Brad. “[My focus is] staying healthy, happy, and building a good financial foundation for whatever tomorrow may bring.”

By paying off student loan debt and saving for your future, you can be prepared for whatever financial challenges come your way.

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