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Mike Brown Updated on May 30, 2017

Medicine is a fulfilling profession on many levels, including the prospect of earning a comfortable salary. But before doctors can bring home a six-figure paycheck, most medical students rack up six-figure student loan debt. The average medical school student graduates with $190,000 in student loan debt, according to the Association of American Medical Colleges.

There are steps you can take to make repaying those loans faster and easier, but it’s best to start early. With at least 4 years of medical school, an additional 3–7 years of residency training, and up to 2–3 years of fellowship training, it can be a long road to the big salary. Here at the National Student Loan Union, we’ve compiled the top strategies to tackle medical school debt.

Debt reduction strategies for med school students

Try to avoid forbearance during residency
While it’s common for medical school graduates to put their loans into forbearance while completing their residencies, that can swell your loan balances as interest accrues and gets added to the principal. If at all possible, make at least interest payments during residency. If you have federal loans, consider enrolling in an income-based repayment plan. That can cap loan payments to 10-15% of your discretionary income.

Refinance to a lower interest rate
The interest rate on medical school loans is high – almost double that of undergraduate rates. As soon as you know where you’ll be doing your residency and how much you’ll be earning, it’s a good idea to see if you could save money by refinancing your student loans. Even a few percentage points can make a huge difference over the life of the loan. Note that refinancing federal student loans will make you ineligible for income-based repayment plans and loan forgiveness benefits. However, getting a lower interest rate can have tremendous value and the interest savings may outweigh any potential federal benefit.  Under the Public Service Loan Forgiveness program implemented in July 2009, borrowers must make 120 income-driven repayments while working in a not-for-profit organization to reach loan forgiveness, and only direct loans qualify.

Ask for a physician signing bonus
Physician signing bonuses are becoming more common, due to shortages of providers in many regions and specialties. Primary care doctors, internists, ObGyns, and hospitalists were in greatest demand in 2016, although many other medical, dental, and psychiatric professionals also received employment incentives. Bonuses typically range from $25,000 to $150,000. A large signing bonus could go a long way toward repaying your student debt. But be sure to read your contract carefully and confirm that it is indeed a bonus and not a loan or advance that will be deducted from future paychecks.

Work in an underserved community
The National Health Service Corps Loan Repayment Program offers up to $50,000 in tax-free loan assistance for doctors who serve at least two years in a Health Professional Shortage Area (HPSA). Students in their final year of medical school can earn up to $120,000 in tax-free loan assistance through the Students to Service Loan Repayment Program by committing to serve three years in one of the greatest need HPSAs.

Find out if your state has loan forgiveness programs for doctors
Some states offer medical school student loan repayment incentives to encourage doctors, dentists, pharmacists, and other health care providers to work in underserved areas. Requirements vary by state, but there is generally a service commitment of at least 2 years. In most cases, both federal and private student loans are eligible for tax-free repayment assistance.

Join the military
There are several programs to help doctors in the military with medical school debt. Those in active duty in the Army can earn up to $120,000 in student loan assistance over three years through the Active Duty Health Professions Loan Repayment Program. Members of the U.S. Army Reserve can earn $75,000 in loan assistance over three years, through the Health Professionals Special Pay program. Similar programs exist for the Navy and Air Force.

Be a biomedical researcher for the National Institutes of Health
Medical professionals who get hired by the National Institutes of Health to do biomedical or biobehavioral research can earn up to $35,000 a year in student loan forgiveness through the NIH Loan Repayment Program. Awards are granted for laboratory research as well as patient-oriented clinical research. Some of the areas of study include AIDS, health disparities, pediatric pharmacology, contraception and fertility, and viral outbreaks.

Maintain your student standard of living for a while after graduation
It’s tempting to want to project an image of success and boost your spending once you’re a practicing physician. But raising your standard of living too high too soon can be a big mistake. It’s a lot easier to get out of debt if you live frugally for a few more years, refinance your medical student loans at a low interest rate, and settle in a location with a reasonable cost of living.  

A simple first step

If you can’t picture yourself in the military or a working in a remote community, then refinancing is probably the most significant step you can take to manage your medical school debt. The federal government charges graduate students significantly higher interest rates than other students because, theoretically, they’ll earn enough money to pay it back. These higher returns are supposed to subsidize undergraduate borrowers. But increasingly, medical students are finding that they can get a much better deal by refinancing with private lenders. In a recent analysis, we found that people who refinanced saved an average of $259 a month and $19,231 over the life of the loan.

Recent innovations in the lending industry have made it easier than ever to compare rates.  Modern lenders have streamlined the application process so that, in many cases, it takes less than 5 minutes to get personalized rate quotes, and there’s no need to worry about the effect on your credit. The initial inquiry is considered a “soft pull” and has no impact on your credit score.

As part of the National Student Loan Union’s mission, we regularly review banks that offer student loan refinancing. We judge them on more than 23 criteria, including their interest rates, transparency, product offerings, ease of applying, and customer service. The following lenders topped our rankings for 2017. If you’re thinking about refinancing, we recommend that you start here:

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