What comes to mind when you think of doctors? Your first thought probably isn’t lots of student loan debt.
But most doctors are saddled with a mountain of student debt. In fact, the median medical school grad racks up $183,000 of student loans, according to the Association of American Medical Colleges.
To find out how new doctors deal with their student loans, I spoke with emergency room doctor Stacie Solt. Here’s how Stacie refinanced medical school loans to get her $200,000 of student debt under control.
Graduating from medical school $200,000 in debt
Stacie attended Stanford as an undergraduate before going on to medical school at the University of California, San Francisco.
“I went into med school without a tremendous amount of debt,” says Stacie. “Unfortunately, I left med school owing a little less than $200,000, and this was after obtaining scholarships.”
Stacie returned to Stanford to complete her residency in emergency medicine, as well as a fellowship in addiction medicine. “In residency, I paid off the bare minimum amount each month,” she says. “During my one-year fellowship, I was able to defer.”
For many young doctors, deferment or income-driven repayment is the best way to deal with student loans. As a resident, you might not have the income yet to handle standard payments. By reducing your payments — or pausing them altogether — you’ll avoid default.
Then, when you’re earning a higher income, you can ramp up your monthly payments and pay your loans off ahead of schedule. That being said, you’ll have a lot more interest to pay than what you started with. So make sure you understand the consequences before you defer.
Consolidating and refinancing student loans
Deferment doesn’t last forever, and Stacie needed a plan of action after her fellowship. To figure out next steps, she consulted a financial advisor. “I am good at medicine, but managing money and debt is not my forte,” says Stacie.
Her advisor recommended simplifying her debts by applying to refinance medical school loans. Stacie refinanced multiple loans and consolidated them into one new loan in the process. “Refinancing was relatively easy,” she says. “There were a few hoops to jump through, but I was able to consolidate pretty easily through the online application.”
Stacie refinanced and consolidated three different student loans into one new one with SoFi. Not only did she simplify her payments, but she also lowered her monthly bills from $2,000 to $1,500. “SoFi saves me about $500 a month,” Stacie says.
By applying to refinance medical school loans, Stacie also lowered her interest rate. Her 6.80% rate dropped to 6.24%. After 10 years of repayment on a $200,000 loan, that reduction in interest saves her $6,842.
If you’re a medical professional and would like to refinance medical school loans, you could be in luck. Doctors are often desirable candidates for student loan refinancing, as they have relatively high and steady incomes. As long as you can obtain a decent credit score, you could qualify for a new student loan with a competitive interest rate.
Making extra payments to get out of debt faster
After years of deferment and minimum payments, Stacie’s student loans racked up a lot of interest.
“After leaving medical school I was finally earning a paycheck … and I spent more than I should have in general,” says Stacie. “I could have paid off some of my loan debt rather than making … minimum payments.”
Today, Stacie makes extra monthly payments to pay back the debt as fast as possible. “For the past few months, I’ve been able to add an additional $1,500 payment, so it’s been $3,000 per month recently,” Stacie says.
At the same time, she must balance paying off student loans with saving for other goals. “I’m always in a quandary over whether to use my ‘extra money’ to pay down my debt or save up,” says Stacie. “I’m still a renter and would love to buy a piece of property in the Bay Area.”
Stacie is still finding the balance between debt payoff and saving, but she reminds herself to take the long view. “It’s helpful to keep the big picture in mind that the debt will get paid off … eventually,” says Stacie.
For now, she continues to make extra payments when she can. “If you are in a position to do so, I think pay off the debt as fast as you can afford,” advises Stacie. “It feels like a huge burden to owe that much money!”
Make a plan of action for your student debt
Many doctors leave medical school with an immense amount of student debt. Stacie’s advice is to come up with a plan of action as soon as possible. “Have a … financial plan from early on, such as when starting residency,” says Stacie. “Spend wisely and budget for less than you earn.”
Once you have a steady income, applying to refinance medical school loans might also be a savvy money move. Refinancing your medical school loans like Stacie did could be the solution you need to get ahead of your student debt.
Explore all your options so you know the best approach for your medical school loans. For even more strategies, check out the complete guide to student loan repayment for doctors.
Interested in refinancing student loans?Here are the top 6 lenders of 2018!
|Lender||Variable APR||Eligible Degrees|
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1 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 6.97% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 6.30% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of Month/Day/Year, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 08/21/18. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at firstname.lastname@example.org, or call 888-601-2801 for more information on ourstudent loan refinance product.
© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
APR stands for “Annual Percentage Rate.” Rates listed include a 0.25% EFT discount, for automatic payments made from a checking or savings account. Interest rates as of 11/8/2018. Rates subject to change.
Variable rate options consist of a range from 3.27% per year to 6.09% per year for a 5-year term, 4.64% per year to 6.14% per year for a 7-year term, 4.69% per year to 6.19% per year for a 10-year term, 4.94% per year to 6.44% per year for a 15-year term, or 5.19% per year to 6.69% per year for a 20-year term, with no origination fees. APR is subject to increase after consummation. The variable interest rate will change on the first day of every month (“Change Date”) if the Current Index changes. The variable interest rates are based on a Current Index, which is the 1-month London Interbank Offered Rate (LIBOR) (currency in US dollars), as published on The Wall Street Journal’s website. The variable interest rates and Annual Percentage Rate (APR) will increase or decrease when the 1-month LIBOR index changes. The variable interest rates are calculated by adding a margin ranging from 0.98% to 3.80% for the 5-year term loan, 2.35% to 3.85% for the 7-year term loan, 2.40% to 3.90% for the 10-year term loan, 2.65% to 4.15% for the 15-year term loan, and 2.90% to 4.40% for the 20-year term loan, respectively, to the 1-month LIBOR index published on the 25th day of each month immediately preceding each “Change Date,” as defined above, rounded to two decimal places, with no origination fees. If the 25th day of the month is not a business day or is a US federal holiday, the reference date will be the most recent date preceding the 25th day of the month that is a business day. The monthly payment for a sample $10,000 loan at a range of 3.27% per year to 6.09% per year for a 5-year term would be from $180.89 to $193.75. The monthly payment for a sample $10,000 loan at a range of 4.64% per year to 6.14% per year for a 7-year term would be from $139.65 to $146.76. The monthly payment for a sample $10,000 loan at a range of 4.69% per year to 6.19% per year for a 10-year term would be from $104.56 to $111.98. The monthly payment for a sample $10,000 loan at a range of 4.94% per year to 6.44% per year for a 15-year term would be from $78.77 to $86.78. The monthly payment for a sample $10,000 loan at a range of 5.19% per year to 6.69% per year for a 20-year term would be from $67.05 to $75.68.
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the variable rate will decrease by 0.25%, and will increase back up to the regular variable interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
3 Important Disclosures for SoFi.
4 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
5 Important Disclosures for CommonBond.
Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown.
All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 2.28% effective October 10, 2018.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.47% – 6.99%3||Undergrad & Graduate|
|2.47% – 6.30%1||Undergrad & Graduate|
|2.51% – 8.09%4||Undergrad & Graduate|
|3.02% – 6.44%2||Undergrad & Graduate|
|2.69% – 7.21%5||Undergrad & Graduate|
|2.79% – 8.39%6||Undergrad & Graduate|
Saving big on medical school loans doesn't have to be brain surgery
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