The Medical School Debt Repayment Guide for New Doctors

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Graduating from medical school is a huge achievement that speaks to your hard work, dedication and skill. But rather than celebrating your success, you might feel like there’s a major weight holding you down. With the massive student loan debt that comes with a medical degree, it’s easy to feel overwhelmed.

You’re certainly not alone. The median medical school debt was $196,250 for 2018 graduates, according to the Association of American Medical Colleges (AAMC). Worse, many students have more debt from their undergraduate studies, too.

If you have the average med school debt or even more than that, find out if you qualify for these medical school repayment options and loan forgiveness for doctors. Specifically, let’s look at:

3 best ways to manage medical school debt
Student loan forgiveness for doctors
Military programs for medical school loan repayment assistance
Indian Health Services Loan Repayment Program
National Institutes of Health Loan Repayment Programs
National Health Service Corps loan repayment assistance
Medical school loan repayment assistance programs by state

3 best ways to manage medical school debt

It’s fairly common for medical graduates to put their student loans into forbearance while they complete their residency. However, doing so can cost you later on. Your loans will grow thanks to interest charges, causing your debt balance to grow over time. By the time you’re ready to make payments, you could owe thousands of dollars more than you originally borrowed.

Making payments during your residency — even if they’re small — can help keep total interest charges under control. Here are three medical school loan repayment ideas you can use to better manage your debt without wrecking your budget:

1. Refinance your medical school loans

Student loan refinancing is a tool you can use to lower the interest you pay on your loans. Through refinancing, you can take out a new loan with a private lender and use those funds to pay off your existing loans. The new loan will have different repayment terms, including minimum payment.

If you have high-interest loans, refinancing could help you save a significant amount over the length of your loan. In fact, it’s a strategy that some practicing physicians have used to save thousands of dollars over the life of their loans.

For example, if you owed the average medical school debt of $196,250 at 7.00% interest, you’d pay over $77,000 just in interest payments by the time you paid off your loan over the 10 years of a standard plan.

By contrast, if you refinanced your debt and qualified for a loan with a 5.50% interest rate, you’d pay about $59,000 in interest.

You also can look into refinancing options specific to where you are in your career. For example, SoFi has a refinancing product for physicians.

However, refinancing is not for everyone. There are some potential drawbacks, such as losing certain federal loan benefits. Make sure you understand all of the pros and cons of refinancing before moving forward with your loan application.

2. Enroll in an income-driven repayment plan

On a standard 10-year plan, monthly payments for the average medical school debt of $196,250 at 7.00% interest could be nearly $2,300 per month.

Meeting this financial obligation could be a stretch for doctors right out of medical school — especially on the small salary of a first-year resident.

If you have federal student loans, consider switching to an income-driven repayment (IDR) plan to keep up with your payments on a smaller income. These programs set monthly payments to match your income and cost of living, keeping them affordable.

For example, under the Pay As You Earn (PAYE) plan, first-year residents could have monthly payments below $350, according to the AAMC.

Using an income-driven repayment plan for medical school loans won’t be the fastest or cheapest way to pay off this debt. But unlike forbearance, PAYE will help fight the balance creep from accrued interest.

Keep in mind that eligibility requirements and repayment structures vary. So make sure you get to know each plan before deciding on one.

3. Negotiate a physician signing bonus

Signing bonuses are a common way employers attract the medical professionals they need, and they’re growing. In fact, signing bonus amounts for doctors recruited through the Medicus Firm, a health care recruiting company, increased by nearly 13% in 2018 over the previous year.

If for example, you got a $20,000 bonus and used it to make an extra payment on your loans, you’d save almost $18,000 in interest on the average medical school debt balance of $196,250 (assuming a 7.00% interest rate and a standard 10-year term), according to our lump sum extra payment calculator.

If you know you want to join a practice or hospital instead of setting up your own office, look for these opportunities to get extra cash to put toward student loans.

Carefully read your contract and verify the details and conditions of your signing bonus. A signing bonus often requires a commitment to remain with the employer for a certain tenure. And make sure your signing bonus is just that — a bonus — rather than an advance or a loan you’ll repay through future paychecks.

If you can negotiate a large signing bonus, it can be a great start to your medical school loan repayment. You might be able to knock out a quarter of the average medical school debt in one payment, greatly reducing the amount of interest you’ll owe over time.

Student loan forgiveness for doctors

In addition to using clever repayment strategies, physicians might look into student loan forgiveness for doctors. It can be a lifeline for physicians who struggle with the average medical school debt or owe even more.

That’s probably why 34% of physicians completing a residency in 2019 cited student loan forgiveness as a major concern, according to a survey by health care research firm Merritt Hawkins.

The trade-off, however, is fewer employment choices. You’ll likely have to work in an area of high need or for a nonprofit hospital to qualify for programs that offer loan forgiveness for doctors. Staying eligible for student loan forgiveness through these programs also 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 nonprofit 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.

Military programs for medical school loan repayment assistance

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 can be combined, while others are an either/or choice. Any of them can take a large chunk out of the average medical school debt.

Ensure that you understand these programs and their service requirements before enrolling.

Army doctor student loan assistance

Several student loan repayment assistance options for Army physicians exist and can help you manage your medical school student loans.

  • The Financial Assistance Program awards grants of up to $45,000 per 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 toward repaying medical school loans. Physicians must be on active duty to qualify, and the benefit is paid out in $40,000 annual disbursements over three years.
  • The Health Professionals Special Pay bonus program offers up to $75,000 to both active-duty physicians and doctors who are members of the 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 minus federal income taxes, which are typically about 25%. It’s open to medical students or residents and Navy physicians.
  • The Navy Financial Assistance Program offers grants of up to $45,000 per year for up to four years for medical students or residents. It also covers your tuition, reimbursements for books and supplies as well as a monthly living stipend of around $2,000.
  • Practicing physician sign-on bonuses offered by the Navy are also impressive. They can be between $220,000 and $400,000, depending on your specialty and experience.

Air Force medical school loan assistance

The main way 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 debt. 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 funds plus an additional year.

Indian Health Services Loan Repayment Program

The Indian Health Service (IHS) 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 their debt is repaid.

National Institutes of Health Loan Repayment Programs

While many programs offer medical school repayment assistance for practicing doctors, the National Institutes of Health (NIH) 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 nonprofit organization in the U.S. or a government entity.

Participants can qualify for $50,000 per year in student loan repayment. It also can be applied to most undergraduate, graduate and medical school debt.

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 loan repayment programs for clinicians. One assists clinicians from a disadvantaged background, and the other assists clinicians who are conducting health disparity research.

National Health Service Corps 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 also can serve as primary care medical or mental/behavioral health clinicians. What’s more, the student loan payout is tax-free.

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 Loan Repayment Program

For medical students in their last year of school, the NHSC offers a Students to Service Loan Repayment Program that provides up to $120,000 toward educational costs and student loans.

In return, the med student commits to providing primary health care at an NHSC-approved site for three years after 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 student loan repayment assistance plans (LRAPs) for physicians. Most often, these plans offer student loan repayment or special pay for doctors who commit to practice in medically underserved areas.

Finally, there are student loan assistance programs available in each state (excluding state loan repayment programs that are currently unfunded or otherwise inactive). Some states also might have SLRPs that are unlisted and administered through the NHSC.

Andrew Pentis contributed to this report.

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2.39% – 6.01%Undergrad
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1.99% – 5.61%5Undergrad
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Visit CommonBond

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1 Important Disclosures for Earnest.

Earnest Disclosures

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 2.98% APR (with Auto Pay) to 5.79% APR (with Auto Pay). Variable rate loan rates range from 1.99% APR (with Auto Pay) to 5.64% 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 July 31, 2020, and are subject to change based on market conditions and borrower eligibility.

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The information provided on this page is updated as of 7/31/2020. 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 [email protected], or call 888-601-2801 for more information on our student loan refinance product.

© 2020 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

All credit products are subject to credit approval.

Laurel Road began originating student loans in 2013 and has since helped thousands of professionals with undergraduate and postgraduate degrees consolidate and refinance more than $4 billion in federal and private school loans. Laurel Road also offers a suite of online graduate school loan products and personal loans that help simplify lending through customized technology and personalized service. In April 2019, Laurel Road was acquired by KeyBank, one of the nation’s largest bank-based financial services companies. Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. All loans are provided by KeyBank National Association, a nationally chartered bank. Member FDIC. For more information, visit www.laurelroad.com.

As used throughout these Terms & Conditions, the term “Lender” refers to KeyBank National Association and its affiliates, agents, guaranty insurers, investors, assigns, and successors in interest.

  1. Checking your rate with Laurel Road only requires a soft credit pull, which will not affect your credit score. To proceed with an application, a hard credit pull will be required, which may affect your credit score.
  2. Savings vary based on rate and term of your existing and refinanced loan(s). Refinancing to a longer term may lower your monthly payments, but may also increase the total interest paid over the life of the loan. Refinancing to a shorter term may increase your monthly payments, but may lower the total interest paid over the life of the loan. Review your loan documentation for total cost of your refinanced loan.
  3. After loan disbursement, if a borrower documents a qualifying economic hardship, we may agree in our discretion to allow for full or partial forbearance of payments for one or more 3-month time periods (not to exceed 12 months in the aggregate during the term of your loan), provided that we receive acceptable documentation (including updating documentation) of the nature and expected duration of the borrower’s economic hardship. During any period of forbearance interest will continue to accrue. At the end of the forbearance period, any unpaid accrued interest will be capitalized and be added to the remaining principle amount of the loan.
  4. Automatic Payment (“AutoPay”) Discount: if the borrower chooses to make monthly payments automatically from a bank account, the interest rate will decrease by 0.25% and will increase back if the borrower stops making (or we stop accepting) monthly payments automatically from the borrower’s bank account. The 0.25% AutoPay discount will not reduce the monthly payment; instead, the discount is applied to the principal to help pay the loan down faster.

Assumptions: Repayment examples above assume a loan amount of $10,000 with repayment beginning immediately following disbursement. Repayment examples do not include the 0.25% AutoPay Discount.

Annual Percentage Rate (“APR”): This term represents the actual cost of financing to the borrower over the life of the loan expressed as a yearly rate.

Interest Rate: A simple annual rate that is applied to an unpaid balance.

Variable Rates: The current index for variable rate loans is derived from the one-month London Interbank Offered Rate (“LIBOR”) and changes in the LIBOR index may cause your monthly payment to increase. Borrowers who take out a term of 5, 7, or 10 years will have a maximum interest rate of 9%, those who take out a 15 or 20-year variable loan will have a maximum interest rate of 10%.

KEYBANK NATIONAL ASSOCIATION RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.

This information is current as of September 9, 2020. Information and rates are subject to change without notice.
 


3 Important Disclosures for SoFi.

SoFi Disclosures

  1. Student loan Refinance: Fixed rates from 2.99% APR to 6.28% APR (with AutoPay). Variable rates from 2.25% APR to 6.28% APR (with AutoPay). Interest rates on variable rate loans are capped at either 8.95% or 9.95% depending on term of loan. See APR examples and terms. Lowest variable rate of 2.25% APR assumes current 1 month LIBOR rate of 0.18% plus 2.32% margin minus 0.25% ACH discount. Not all borrowers receive the lowest rate. If approved for a loan, the fixed or variable interest rate offered will depend on your creditworthiness, and the term of the loan and other factors, and will be within the ranges of rates listed above. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. See eligibility details. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. *To check the rates and terms you qualify for, SoFi conducts a soft credit inquiry. Unlike hard credit inquiries, soft credit inquiries (or soft credit pulls) do not impact your credit score. Soft credit inquiries allow SoFi to show you what rates and terms SoFi can offer you up front. After seeing your rates, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit inquiry. Hard credit inquiries (or hard credit pulls) are required for SoFi to be able to issue you a loan. In addition to requiring your explicit permission, these credit pulls may impact your credit score. Terms and Conditions Apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. 

4 Important Disclosures for Splash Financial.

Splash Financial Disclosures

Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet applicable underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates are reserved for the highest qualified borrowers. If approved, your actual rate will be within a range of rates and will depend on a variety of factors, including term of loan, a responsible financial history, income and other factors. Refinancing or consolidating private and federal student loans may not be the right decision for everyone. Federal loans carry special benefits not available for loans made through Splash Financial, for example, public service loan forgiveness and economic hardship programs, fee waivers and rebates on the principal, which may not be accessible to you after you refinance. The rates displayed may include a 0.25% autopay discount.

The information you provide to us is an inquiry to determine whether we or our lenders can make a loan offer that meets your needs. If we or any of our lending partners has an available loan offer for you, you will be invited to submit a loan application to the lender for its review. We do not guarantee that you will receive any loan offers or that your loan application will be approved. Offers are subject to credit approval and are available only to U.S. citizens or permanent residents who meet applicable underwriting requirements. Not all borrowers will receive the lowest rates, which are available to the most qualified borrowers. Participating lenders, rates and terms are subject to change at any time without notice.

To check the rates and terms you qualify for, Splash Financial conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, the lender will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

Splash Financial and our lending partners reserve the right to modify or discontinue products and benefits at any time without notice. To qualify, a borrower must be a U.S. citizen and meet our lending partner’s underwriting requirements. Lowest rates are reserved for the highest qualified borrowers. This information is current as of September 10, 2020.


5 Important Disclosures for CommonBond.

CommonBond Disclosures

Offered terms are subject to change and state law restriction. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900), NMLS Consumer Access. 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 0.16% effective Sep 1, 2020 and may increase after consummation.

Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print to help you understand what you are buying. Be sure to consult with a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time.