How to Pay Off Medical School Debt

Updated on April 9, 2024

Debt is surely not on anyone’s wish list, whether they’re rich or poor. Medical school debt, for example, is one of the things able to make you want to run for the hills in an instant. So, how to pay off medical school debt? This guide will tell you everything you need to know in this regard.

Average Cost of Medical School

The average cost of medical school is around $36,755. It’s not cheap, so you can imagine that any debt will be a horror to think of if you’re behind on your payments. Not to mention that it may seem impossible to know how long it will take you to pay your school debt. While paying it off is possible, it all depends on your financial situation and the solutions you find that suit your case.

How Long Does It Take to Pay Off Medical School Debt?

There’s no definite amount of time to pay off medical school debt for each and every student. Every person accumulates their own amount of debt and has different financial possibilities. In addition, the amount of time it takes will depend on whether you enroll in REPAYE or refinance with it, or if you choose to pursue PSLF.

In general, the repayment plan when it comes to student loans takes 10 years. Meanwhile, the same term is added to the residency time for doctors. REPAYE is a better option for residency than graduates, since it offers lower interest during that time, while graduates may have some extra years added depending on their loan.

There is also the PSLF program, which helps doctors escape the burden of their debt much quicker. Still, even if their loan term would be reduced, they will have to deal with a geographical limitation and a lower salary.

7 Strategies for How to Pay Off Medical School Debt

Figuring out how to pay off medical school debt when you’re already struggling financially is not that simple. After all, you already need a substantial amount of money to live and deal with other urgent payments.

So, if you’re in need of some suggestions, here are 7 strategies to help you pay off your medical school debt.

1. Do Not Defer Medical School Debt During Residency

Even though you may be able to defer medical school debt during residency for a while, it’s not recommended to do so, not if you don’t want to increase the amount. Interest is bound to grow during this time, and you will have to deal with a higher repayment amount when you eventually continue with the payments.

If making payments during this time is difficult, then try to make partial payments so the interest doesn’t add too much to the balance.

2. Utilize Income-Driven Repayment Plans

If you’re unable to do full payments when their time is due, don’t worry – income-driven repayment plans exist for you. They focus on taking a certain percentage of your income and adding it as the payment for your debt. The best thing about this is that your monthly payments will decrease with one of these plans.

Concurrently, it also has the disadvantage that your loan balance will increase. Basically, the payment might not be able to cover all of the interest. Bear in mind that if your income increases, your payments will grow too.

3. Apply for Forgiveness Programs

Luckily, forgiveness plans exist, and they’re a great feature for all medical school students and doctors. Forgiveness plans involve working in underserved areas or the public sector for a while. If you’re a doctor who wouldn’t mind this, then this option may seem convenient, as you may be forgiven for a big part of the sum you have to repay.

Still, you should only consider this as long as your future career has anything to do with this. Otherwise, you shouldn’t push it just because you need to lower your debt.

Additionally, bear in mind that you should be able to combine your loan forgiveness with another strategy if you want to be forgiven for a bigger amount of money. It all depends on whether you have a private or federal student loan.

4. Make Extra Loan Payments

Seeing yourself with some extra cash even when you’re able to make timely payments will be very tempting. You will want to spend it on personal things and entertainment, and while it’s not forbidden to have some fun, sometimes you should abstain and make extra debt payments.

The thought may not be too pleasant. However, you will decrease the amount of cash you owe and get rid of your debt much faster than initially planned. When it comes to how to pay off medical school debt, paying extra whenever you have the chance is one of the best things to do.

5. Live Like You’re Still in Residency

Even if you’re not a resident anymore, you can still live like one. By doing so, you can save some more cash that can go towards your debt, so you can pay it off sooner and get rid of it much quicker.

So, although your dream career may be unfolding as we speak, you could start transforming your life to be the same as it used to be during the period of residency. For this, you have to do a few things before making medical school loan payments. You can invest in a retirement fund such as a 401(k) and pay your debt with high-interest, such as credit cards. Moreover, you can make an emergency fund – for a month or between 3-6 months. The fund can be $500 or more.

6. Use Your Physician Signing Bonus to Lower Debt

If you’re able to make a lump sum payment on your loan, you can considerably lower your debt and have more peace of mind. If you are a physician, you can negotiate in such a way that you may get a signing bonus into your employment contract.

It may not always work, but since physicians are harder to find nowadays, you never know when you may be granted this bonus. Therefore, you can take this bonus and use it to pay off a part of the overall medical school debt.

7. Refinance Your Medical School Loans

Refinancing is a good way to get rid of the actual medical school loans by taking out a new loan with lower interest. It’s probably one of the most convenient options for doctors if you think of how much debt they might accumulate.

Basically, since your interest rate will be much lower, you will save a lot of cash during the period of the loan and thus get to have more money for yourself. However, refinancing isn’t available if you’re in a federal program.

What Is Student Loan Refinancing?

Student loan refinancing refers to the process of taking out a new loan from a new lender, with the purpose of paying off existing debt and lowering monthly payments. In general, the new loan is taken from a private lender and has lower interest rates. It’s a great way to save more money in the long run, especially since you will have to pay less than you used to for the old debt.

How to Pay Off Medical School Debt by Refinancing with Stilt

Stilt gives you a great opportunity to pay off your existing debt by refinancing with one of our personal loans. We want to make sure you can get rid of your medical school debt and live a better life with lower payments.

Before we decide whether to accept your application or not, we will check your educational situation, your employment, credit score, and financial behavior. We will also check to see if you have dealt with any collections, defaults or bankruptcies in the past, as these may be indicators of high-risk.

If everything is alright, you have very high chances of receiving an approval from us. To apply for a refinancing loan, you will have to send us an application on our official site. Complete all necessary fields and you will then receive an update within 24 hours.

When we have all the information we need, a promissory note will be sent so you can sign it. Your signature grants you access to the money transfer, and in only 2-3 business days, you will receive the amount and be able to make payments.

Bear in mind that we may contact you after your application if certain data is missing and we need to collect it.

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Conclusion

Paying off medical school debt seems like a hardly achievable thing, especially if you don’t have a high income and need money for other things as well. But if you follow the methods in this guide, you should be able to figure out how to pay off medical school debt without breaking the bank – whether it’s through refinancing, consolidation or other methods. Hopefully, our information was of help to you.

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Frank Gogol

I’m a firm believer that information is the key to financial freedom. On the Stilt Blog, I write about the complex topics — like finance, immigration, and technology — to help immigrants make the most of their lives in the U.S. Our content and brand have been featured in Forbes, TechCrunch, VentureBeat, and more.

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