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.
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