6 Ways Students Can Pay Off Their Medical School Debt

Being a doctor means you have a very fulfilling and lucrative career, but what did it take to get to that point? A lot of hard work, sleepless nights, and tons of debts. A report from the Association of American Medical Colleges has shown that three-quarters of students from the class of 2018 alone have a staggering student loan debt of $196,520, average.

Many fresh graduate doctors scurry to find options for them to pay off their medical student loan debts. But if you just know where to look, there are several options that are available to you. And since you’re already reading this one, you’re on the rick rack. This article will aim to provide you with a couple of ways to help you pay off your medical school debt.

Here are 6 strategies that you can do to pay off your debt faster.

1.Loan Forgiveness

PSLF or Public Service Loan Forgiveness is the fastest way that a fresh grad doctor can pay their medical school debt. A Federal student loan may be discharged after 10 years when you work for a nonprofit organization that’s registered under 501(c)(3), academia, or the military.

All you have to do is to enroll in the PAYE program, which is to keep your monthly payments as low as possible while maximizing the amount forgiven. After 120 months of successful payment, the rest of your student loan is forgiven.

2.Don’t postpone medical school debt during residency

Most medical school students opt to defer their student loans during the duration of their residency, which basically halts repayments. What they don’t know is that, although the payments are temporarily stopped, the interest rate would keep accruing on their unsubsidized loan – which will shock them when the deferment ends.

If you have the ability to repay your loans while still live comfortably, then, by all means, keep doing so. But if not, you don’t have any other choice but to defer in order to avoid defaulting on your loan. When you do defer your loan, make sure that you pay the accrued interest, doing so will keep your balance from ballooning.

Either way, you need to weigh your options properly before committing to one. There are tons of student loan deferment calculators available online, which determines how much interest rate would accrue during your deferment period.

3.Tackle Your Debt Early

You might be busy learning about anatomy or about euthanasia and its moral dilemma, but tackling your debt while still in med school is the best course of action if you want to get rid of your student loan as soon as possible

Yes, it can be overwhelming and it will take a lot of dedication from your part. But when you prioritize your student loan repayment, you can shave years off of it – saving you money in the long run. Yes, it can be daunting to manage to repay your student loan and medical school, but trust me, you’ll thank yourself for doing so.

4.Refinance

Interest rates on any debt are one thing that’s not desirable at all – especially in medical school debts.

Even when federal student loans on graduate programs have been reduced, the interest rate is still a percent or two higher than an undergrad student loan.

Because of medical student loan debts usually have high balances as well as interest rates, the chance to save money is high. Some of the best lenders, especially if you have an outstanding credit rating, can refinance your loans with an APR of as low as 1.81%. Since you have a high DTI or debt-to-income ratio, the chances of you getting that kind of loan are big.

5.REPAYE

The easiest and cheapest way to go about repaying your medical school debt is by enrolling yourself in REPAYE during your residency. And then you refinance when you officially start practicing.

What’s great about REPAYE is that your monthly repayment will depend on your discretionary income – 10% to be precise. To top it off, any interest that you might accrue, the government pays it for you.

Just remember, though that the REPAYE benefits would be null and void the moment you become an attending physician due to the increase in salary. Before that happens, take preventive steps such as refinancing your loan.

6.Make Extra Payments

Sure, paying your student loan is hard as it is. But when you’re earning a little bit more and have the chance to pay more than what your monthly payment is, it can go a long way. When you pay extra, you’re not just cutting your payment term short, you’re also lowering the amount of interest you’ll pay. In short, paying more means your debt will cost less.

Look for online calculators, which calculates whether that’s a viable option with your current salary or not.

This article does not necessarily reflect the opinions of the editors or management of EconoTimes.