That’s the typical medical school debt balance for 2015 graduates, according to the Association of American Medical Colleges.
What’s more, a third of graduates also have debt from their undergraduate studies, with an average balance of $24,000.
Yet with ever-increasing costs and a decline in physician reimbursements, student loan repayment is something all physicians should take the time to research and consider.
But where should you start? Here’s our guide to medical school repayment options and loan forgiveness for doctors.
Medical school loans repayment strategies
It’s fairly common for medical graduates to put student loans into forbearance while they complete a residency.
But doing so can quickly rack up interest and add even more to already-overwhelming medical school debt.
If you can avoid forbearance, it can help keep your debt under control. Here are some medical school loan repayment ideas that can be used to manage these debts.
Income-driven repayment programs
On a standard 10-year plan, monthly payments for the average $180,000 balance are over $2,000 a month.
Meeting this financial obligation could be a stretch for doctors right out of medical school. Especially when the average first-year resident is earning just $52,200 annually, as of 2015.
Physicians might want to consider switching to an income-driven repayment plan to help them keep up with federal student loans on a smaller income. These programs set monthly payments to match your income and costs of living, keeping them affordable.
Under the Pay As You Earn (PAYE) program, for instance, first-year residents in 2015 would have approximate monthly payments of just $290, according to the AAMC.
Using an income-driven repayment plan for medical school loans won’t be the fastest or cheapest way to pay these debts. But unlike forbearance, making payments in this way will help fight the balance creep of added interest.
Med school graduates might be able to use these four federal income-driven repayment plans:
- Income-Based Repayment (IBR)
- Income-Contingent Repayment (ICR)
- Pay As You Earn (PAYE)
- Revised Pay As You Earn (REPAY)
Keep in mind those eligibility requirements and repayment structures vary between each. So make sure you get to know each plan before deciding on one.
Refinance medical school loans
Student loan refinancing might also be an advantageous option for some medical school graduates.
Through refinancing, you can take out a new loan with a private lender and use these funds to pay off existing loans.
Because you’re creating new debt, you’ll have the chance to adjust your repayment schedule and even get a lower interest rate. But you’ll most likely also have to meet certain eligibility requirements based on your current income and credit history.
Switching med school debt from federal loans to private loans also means that you forego access to federal repayment plans. That includes loan forgiveness for doctors.
Refinancing will make the most sense for medical school debt with high interest. Especially since private lenders are likely to offer some great interest rates on refinanced student loans (if you qualify).
For instance, it may be possible to knock out as much as 5 points off a student loan interest rate through student loan refinancing. That’s a huge source of savings when it comes to a high balance of medical school debt.
In fact, you might even opt to refinance only your medical school loans with highest interest rates. This way, you have a new loan that accrues less interest. But, you still keep federal protections for student loans with already-decent rates.
All things considered, refinancing is definitely a worthwhile strategy. However, make sure it’s right for you before deciding on a plan of action.
Want to get a sense of whether you might qualify to refinance? Take our refinancing eligibility quiz!
Negotiate a physician signing bonus
Many employers offer a signing bonus to physicians as an incentive to work for them.
So, if you know you want to join a practice or hospital instead of setting up your own office, look for these opportunities. Remember, everything in a contract is negotiable.
According to the Modern Medicine Network, signing bonuses are becoming more and more common with the current shortage of primary care doctors. In 2013, they often ranged from $24,000–$150,000.
Be extremely vigilant when reading your contract. And make sure that your signing bonus is just that — a bonus — rather than an advance or loan you’ll be repaying through future paychecks.
If you can negotiate a large signing bonus such as $50,000, this can be a great start to your medical school loan repayment. You could knock out a third to a quarter of your student loan burden in one payment, greatly reducing the amount of interest you will owe over time.
Student loan forgiveness for doctors
In addition to using some clever repayment strategies, physicians might look into student loan forgiveness for doctors. This can be a lifeline to med school graduates struggling with huge student loan burdens.
That’s probably why about 40 percent of 2014 med school graduates planned to take advantage of student loan forgiveness, reports MD Magazine.
The tradeoff, however, is fewer employment choices. You’ll likely have to work in an area of high need or for a non-profit hospital. Staying eligible for student loan forgiveness through these programs might limit your choice of pay, specialty, location, and employer.
If you’re willing to make these sacrifices, student loan forgiveness programs can pay off in the long-run.
Public Student Loan Forgiveness (PSLF) for doctors
Physicians whose work qualifies as “public service” can qualify for the Public Student Loan Forgiveness program.
This is largely determined by their employer. Public service includes full-time employment by a 501(c)(3) tax-exempt non-profit or public institution (which many hospitals are). It also includes working in areas that are underserved or have a high need for medical professionals.
Borrowers must make 120 payments (monthly payments for 10 years) while carrying out PSLF-qualified work. Then, the federal government will forgive the remaining debt.
PSLF for doctors can help them tackle their student loan debt. However, doctors should not necessarily expect PSLF to be a silver bullet for their student loans.
That’s because the federal government is still hammering out some of the details of the program. And, it’s still unclear whether borrowers will owe taxes on forgiven balances.
President Obama has also proposed capping PSLF balance forgiveness at $57,500 in recent budget proposals, which would affect future enrollees of the program.
Military programs for medical school loan repayment assistance
The branches of the military offer help with tuition for medical students who are service members. But even doctors who have already graduated and are practicing can enroll in military service and get student loan assistance.
Some of these benefits may be combined, while others are an either/or choice. Make sure you understand these programs and their service requirements so you know what you’re signing on for.
Army doctor student loan assistance
Several student loan repayment assistance options exist for Army physicians that can help manage medical school student loans.
The Financial Assistance Program award grants of up to $45,000 a year, as well as a monthly stipend of $2,000 or more, to army members enrolled in an accredited residency.
The Active Duty Health Professions Loan Repayment Program offers up to $120,000 towards repaying medical school loans. Physicians must be on active duty to qualify, and the benefit is paid out in $40,000 disbursements over three years.
Health Professionals Special Pay offers up to $75,000 to both active duty physicians and doctors who are members of the U.S. Army Reserve who have completed a residency in a qualifying specialty. Payments of up to $25,000 are made over the three years.
Navy medical school loan repayment assistance
Members of the military serving as Navy physicians can take advantage of similar incentives. Here are some Navy medical loan repayment assistance options.
The Health Professions Loan Repayment Program (HPLRP) offers a yearly maximum payment of $40,000 directly to medical school loans, after federal income taxes that are typically about 25 percent. This is open to medical students or residents, and Navy physicians.
The Navy Financial Assistance Program offers up to $275,000 in assistance to medical residents. This is paid in grants of up to $45,000 a year for up to four years. It also includes monthly living stipends of $2,200 or more for up to 48 months.
Practicing physician sign-on bonuses offered by the Navy are also impressive. They can be between $220,000 and $400,000, depending on the physician’s specialty and experience.
Air Force medical school loan assistance
The main way that the Air Force helps its members pay for medical school is through its Health Professions Scholarship Program. However, this is mostly for students who have yet to complete a degree.
The Air Force Financial Assistance Program (FAP), however, can help physicians in the Air Force pay their medical school debts.
Similar to the Navy’s program, it offers a $45,000 grant for each year of your residency. And, has a monthly stipend of $2,000.
Once you complete your residency, you’ll be obliged to complete a year of service for each year you receive FAP, plus an additional year.
Indian Health Services Loan Repayment Program
The Indian Health Service is a federal health program for American Indians and Alaska Natives that offers a Loan Repayment Program for health professionals. Those who take advantage of this program will be based in IHS facilities with the greatest need.
In exchange for a two-year service commitment, the IHS Loan Repayment Program will repay up to $40,000 in medical school loans. Physicians can renew their contract for additional student loan benefits until debts are repaid.
National Institutes of Health (NIH) Loan Repayment Programs
While many programs offer medical school repayment assistance for practicing doctors, the National Institutes of Health offers awards to health professionals in research careers.
To qualify for the NIH Loan Repayment Programs, participants must agree to a minimum two-year contract to perform research funded by a non-profit organization in the U.S.
Participants can qualify for $35,000 a year in student loan repayment. This can also be applied to most undergraduate, graduate, and medical school debts.
The NIH Loan Repayment Program includes eight total plans. Through these programs, health researchers can receive student loan assistance while employed with the NIH (Intramural programs) and eligible organizations outside the NIH (Extramural programs).
The NIH also has two loan repayment programs for clinicians. One provides assistance to clinicians from a disadvantaged background, and the other assists clinicians conducting health disparity research.
National Health Service Corps (NHSC) loan repayment assistance
The National Health Service Corps (NHSC) offers loan repayment assistance to doctors and medical professionals.
NHSC Loan Repayment Program
The first option is the NHSC Loan Repayment Program. Participants commit to working at least two years at an NHSC-approved site.
This program can earn licensed health care providers up to $50,000 toward student loans. Participants can also serve as primary care medical or mental/behavioral health clinicians.
The student loan payout is tax-free and disburses at the beginning of the service commitment in order to maximize interest savings. What’s more, program participants can apply to extend this benefit beyond the initial two years.
The length and level of assistance provided by the NCHS will depend on the area of service, with high-need areas qualifying for larger loan repayments.
Students to Service Program
For medical students in their last year of school, the NHSC offers a Students to Service Program that provides up to $120,000 toward educational costs and student loans.
In return, the med student commits to provide primary health care at an NHSC-approved site for three years post-graduation.
Medical school loan repayment assistance programs by state
There are many state-sponsored programs that help physicians and doctors repay medical school loans.
Many are offered through the NHSC’s State Loan Repayment Program (SLRP). It provides incentives for doctors to practice in federally-designated Health Professional Shortage Areas (HPSA).
These areas are listed in the AAMC’s database of state-level loan forgiveness and repayment programs for medical school.
Some states also have their own, separate student loan repayment assistance plans (LRAPs) for physicians. Most often, these offer student loan repayment or special pay for doctors who commit to practice in medically underserved areas.
Here are the student loan assistance programs available in each state (excluding state loan repayment programs that are currently unfunded or otherwise inactive). Some states might also have State Loan Repayment Programs that are unlisted and administered through the NHSC.
SHARP offers awards such as repayment of qualifying education loans and payment of direct incentive to attract primary care physicians to medically underserved Alaska communities.
Arizona State Loan Repayment Programs includes the Primary Care Provider Loan Repayment Program and the Rural Private Primary Care Provider Loan Repayment Program.
Both of these programs require physicians to commit to a minimum two-year contract. Ultimately, $65,000 is awarded for that time. A third year of service will get $35,000 and the fourth year will get $25,000.
Physicians practicing in an HPSA in Arkansas can qualify for up to $50,000 in loan repayment assistance for a two-year contract. This is administered through the NHSC state loan repayment program.
The Community Match Rural Physician Recruitment Program offers an incentive of up to $80,000 for a four-year commitment to practice in a rural community in Arkansas.
The California State Loan Repayment Program requires a commitment of two years for full-time work. Or, four years of half-time work in an HPSA.
Health Professions Education Foundation highlights “Golden Opportunities” for medical school loan repayment assistance in California.
The Colorado Health Service Corps offers awards up to $90,000 for physicians that commit to a three-year contract practicing in an HPSA in the state.
Delaware State Loan Repayment Program grants awards to doctors practicing at approved sites in HPSAs in the state. Based on experience and specialty, practitioners can get up to $100,000 toward student loan assistance with a two-year contract.
The Rural Areas Assistance Program in Georgia offers up to $25,000 a year in student loan repayment for each 12-month commitment to practice medicine in a rural community. Doctors could receive a$100,000 total for up to four years.
The Hawaii State Loan Repayment Program offers repayment of educational loan debt to health care professionals who make a two-year commitment to provide service at an approved site.
Idaho State Loan Repayment Program awards $5,000 to $25,000 a year for a two-year commitment to work for a nonprofit or public employer in a health professional shortage area.
Additionally, the Rural Physician Incentive Program in Idaho provides repayment of up to $100,000 over four years for primary care, family, internal and pediatric physicians serving in shortage areas in Idaho.
The Illinois State Loan Repayment Program requires a two-year commitment to provide health care services in a health professional shortage area. In exchange, program participants receive up to $25,000 a year in loan repayment ($50,000 total).
Iowa’s Primary Care Recruitment and Retention Endeavor (PRIMECARRE) offers full-time physicians up to $50,000 per year in return for a two-year commitment working at a nonprofit or public employer in an HPSA.
The Rural Iowa Primary Care Loan Repayment Program is limited to medical students of Des Moines University College of Osteopathic Medicine or the University of Iowa Carver College of Medicine. It offers up to $40,000 a year toward student loans.
Additionally, this program requires a minimum five-year commitment to work in an Iowa eligible commitment service area.
The Kansas State Loan Repayment Program offers $25,000 a year to physicians making a two-year commitment to working in an ambulatory outpatient setting.
Additionally, the Kansas Bridging Plan offers up to $26,000 in loan forgiveness to residents of Kansas programs. Participants must commit to practicing medicine full-time in a rural community for 36 continuous months after completing their residency.
The Kentucky State Loan Repayment Program offers loan repayment assistance for primary care doctors committed to working in HPSAs for at least two years.
The Louisiana State Loan Repayment Program incentivizes physicians to practice in HPSAs with up to $30,000 a year in loan repayments. A three-year commitment is required.
In Maryland, the State Loan Repayment Program (SLRP) awards physicians up to $50,000 a year in medical school loan repayments for a two-year commitment to practice in an HPSA.
With the Massachusetts Loan Repayment Program for Health Professionals, doctors can receive up to $50,000 for a two-year contract serving in an HPSA in the state.
The Michigan State Loan Repayment Program requires a commitment to practice in an HPSA for at least two years. Participants can get up to $200,000 in student loan repayments over eight years.
There’s also the Minnesota Rural Physician Loan Forgiveness Program. It requires a minimum of three years working in a designated rural area in Minnesota. Participants are awarded up to $25,000 a year toward educational loans, with a maximum of $100,000 for four years of service.
Participants of the Minnesota Urban Physician Loan Forgiveness Program can get up to $25,000 a year toward medical school loan repayment (maximum $100,000 for four years). This requires a three-year minimum commitment to practicing in an underserved urban community.
The Missouri Health Professional State Loan Repayment Program offers up to $50,000 toward student loans for two years of service in HPSAs.
The Montana NHSC Student Loan Repayment Programs offer physicians up to $15,000 per year for two years practicing in an HPSA.
The Nebraska Loan Repayment Program offers up to $60,000 a year in loan repayment assistance to physicians who practice in state-designated shortage areas. A three-year obligation is required, and the physician must accept Medicaid.
The Nevada Health Service Corps offer loan repayment assistance with a commitment, typical of two years, to practice in a state-designated area currently under-served. Awards are based on available funding and vary by individual applicant.
The New Hampshire State Loan Repayment Program requires a minimum commitment of three years practicing in an underserved area. The medical school loan repayment award is up to $75,000 for three years, with an option to get another $40,00 for a 24-month extension of service.
The Primary Care Practitioner Loan Redemption Program of New Jersey requires a two- to four-year commitment working in an HPSA or state-designated underserved area. It provides up to $120,000 over four years toward repaying qualified educational loans.
The New Mexico Health Professional Loan Repayment Program will pay off up to $25,000 a year in medical school loans if a physician commits to practicing for two years in a designated medical shortage area in New Mexico.
Doctors Across New York provides an additional payment of up to $150,000 over a five-year commitment to doctors practicing in underserved areas.
Additionally, the Regents Physician Loan Forgiveness Award Program grants up to $10,000 per year to physicians practicing in physician shortage areas for two years. What’s more, those who have more than $20,000 in eligible expenses may apply for an additional two-year award.
North Carolina has loan repayment assistance up to $100,000 for a four-year commitment practicing in underserved rural communities.
The North Dakota State Loan Repayment Program offers participants up to $50,000 a year for a two-year commitment practicing at public or nonprofit sites in areas of need.
North Dakota’s Health Care Professional Student Loan Repayment Program participants can get up to $150,000 toward student loans for a five-year commitment to serving in a defined area of need in the state.
The Ohio Physician Loan Repayment Program places physicians in high-need areas. Up to $25,000 a year towards medical school debt will be granted for a two-year commitment. For an additional two-year commitment, the award is bumped up to $35,000 a year.
The Oklahoma Medical Loan Repayment Program awards a $160,000 maximum towards student loans over four years: $25,000 for the first year, $35,000 for the second, $45,000 for the third and $55,000 for the final year.
A two-year minimum commitment to working in a rural or underserved area is required for this program. The commitment can also be extended to a maximum of four years.
The Oregon Partnership State Loan Repayment is a two-year service commitment to an HPSA in Oregon. In exchange, participants will receive payments of up to 20 percent of total qualified educational debts each year.
There’s also a Medicaid Primary Care Loan Repayment Program. Physicians in underserved Oregon areas who serve Medicaid patients. A minimum three-year commitment can get a physician an award of up to $105,000 toward educational debt.
The Pennsylvania Primary Health Care Loan Repayment Program offers physicians up to $100,000 toward student loans in exchange for a two-year contract to practice at an approved site.
Rhode Island Health Professionals Loan Repayment Program grants student loan assistance to approved physicians who make a two-year commitment to practice in an HPSA in the state.
The South Carolina Rural Physician Incentive Grant is for primary care providers who practice in rural or underserved areas of South Carolina. It awards $60,000 to $100,000 for a four-year contract is required.
South Dakota’s Recruitment Assistance Program offers primary care physicians an incentive of more than $196,000 for a three-year commitment to practice in an eligible rural community.
The Tennessee State Loan Repayment Program provides up to $50,000 in student loan assistance for a two-year commitment. There’s also an option to renew the contract for an additional $20,000 per year award. This is open to primary care practitioners working at eligible practice sites.
Texas’s Physician Education Loan Repayment Program (PELRP) offers up to $160,000 for over four years of practice in a Texas HPSA.
There’s also the St. David’s Foundation Public Health Corps Loan Repayment Program which requires four years of service at eligible sites. Awards of up to $30,000 are granted to physicians each year, up to four years.
And, the Rural Communities Health Care Investment Program (RCHIP) offers partial student loan reimbursements up to $10,000 for physicians practicing in medically underserved Texas communities.
Utah’s Rural Physician Loan Repayment Program matches loan assistance awards provided by qualifying rural hospitals in rural areas. The total matched amount physicians can receive is up to $15,000 a year.
Vermont Educational Loan Repayment Program for Health Care Professionals offers annual awards up to $20,000 for health care primary care practitioners. They must work at a medically underserved site or area for a required 12- or 24-month commitment.
The Virginia Student Loan Repayment Program (VA-SLRP) requires physicians to make a minimum two-year commitment. Participants can be awarded up to a total $140,000 toward educational loans for a maximum of four years of practicing in a Virginia HPSA.
Washington’s Federal-State Loan Repayment Program (FSLRP) awards up to $70,000 for physicians who contract to work for two years at a qualifying site in an HPSA.
The Health Professional Loan Repayment Program (HPLRP) is a state-funded program that commits health service providers to a minimum of three years practicing in an eligible site as determined by the state. Participants can be awarded up to $75,000 in return.
Health Professions Loan Assistance Program offers up to $100,000 in student loan assistance. That’s $50,000 a year for a two-year commitment practicing in a Wyoming HPSA.
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