Published: July 24, 2019

Medical school debt is at an all-time high.

According to the Association of American Medical Colleges, the average med school debt in 2018 was $243,902 for public school students and $322,767 for private school students. That puts minimum payments around $2,000-$3,000 a month. Even with an average annual income of $299,000, that bill’s enough to make any physician feeling financially concerned.

Don’t worry: We’re here to help. Here are 5 ways to pay off medical school loans faster.

1. Start making payments during residency

Many physicians forbear their student loans during their 3-7 years of residency, not paying anything toward the debt until after. The problem with this is that thousands of dollars of interest accrues during this time, leaving you with a much higher bill than you originally had.

That’s why it’s smart to start paying toward your debt during residency.

There are a number of ways to do this. One way is to forbear your loans but still paying whatever you can (ideally at least the interest amount, so your total debt doesn’t get larger during residency). Another is to get on an income-driven repayment plan, which bills you a percentage of your current discretionary income, so you can afford it.

Both of these options are better than paying nothing.

2. Get your loans forgiven

We’re not talking about complete loan forgiveness, which is only currently available in extreme cases like a closed school, permanent disability, or death. But there are a number of ways to get partial loan forgiveness, including:

  • The Public Service Loan Forgiveness Program
    • How it works: Federal student loans are forgiven after 120 payments (10 years) of working at a nonprofit hospital, a registered 501(c)(3) medical facility, the military, or in academia.
  • PAYE (Pay As You Earn)
    • How it works: Your monthly payment is capped at 10 percent of your discretionary income (unless that’s more than what’d you pay under a standard 10-year plan, in which case you don’t qualify). Then after 20 years, your debt’s forgiven.
  •  REPAYE
    • How it works: Like PAYE, REPAYE (Revised Pay As You Earn) caps monthly payments at 10 percent of your discretionary income and forgives med school loans after 20 years. However, you can qualify regardless if this monthly amount is greater than what you’d pay under a standard 10-year plan.

Some hospitals also offer their physicians loan forgiveness, so be sure to check with your employer to see if that’s an option.

3. Keep living like a broke college student

You can always speed up the rate of your debt repayment by living as frugally and throwing as much money at your debt as possible.

Many physicians delay becoming debt-free by living like well-off doctors instead of like they did as broke college students. Of course, they are well-off doctors, but if they throw a good chunk of their high salary at debt rather than spending it, they could greatly speed up the process, according to Dr. James Dahle, founder and editor of The White Coat investor, in a Forbes interview.

To do this, you’ll first need to create a written budget, so you can look at all your monthly expenses and “tell your money where to go,” wrote financial coach, Dave Ramsey. Doing this will show you just how much money you might be wasting so you can keep expenses to an absolute minimum while paying off debt (this means eating out less, traveling less, and holding off on buying a nice car).

Then you can choose how to tackle the debt. If your loans are scattered across many lenders, you’ll want to choose between paying them off in order of smallest amount to largest amount (the “debt snowball”) or highest interest to lowest interest (the “debt avalanche”).

Both ways require throwing as much money toward one debt as possible while paying the required minimum amounts on the other debts. The benefit of the debt snowball is that you see progress sooner and that may motivate you to pay off more debt faster. The benefit of the debt avalanche is you pay less interest overall, though it may take longer to see initial progress, which may discourage some people.

Whichever route you choose, you’ll be sacrificing fun for a while, but you’ll be debt-free sooner.

4. Refinance

Refinancing is a great way to speed up your debt repayment. It allows you to find terms that are most suitable for your situation. That can mean a lower monthly payment or even lower interest rates, which could result in you paying less overall.

Refinancing, like consolidation, can also take your various loans (assuming you have more than one) and combine them, allowing you to pay only one lender instead of many.

Some refinancing companies worth looking into are SoFi, Laurel Road, Link Capital, and Splash Financial.

5. Earn more income

There are a couple of ways you can earn more income.

One is to work more. This can be done at your current place of employment (by working longer hours or moonlighting shifts), a different hospital, or a different job altogether. Some great side hustles for physicians, according to MD Magazine, are:

  • Public speaking
  • Writing
  • Direct sales
  • Medical device instruction
  • Teaching
  • Chart review
  • Expert witness

Another way to earn more income is to negotiate a higher salary.

According to neurologist and president of Physician Advocates LLC, Dr. Robert A. Felberg, physicians can earn as much as an additional $80,000 a year through good negotiating tactics. He wrote on KevinMD, “This ‘free’ money, which you earned through negotiation and not actual labor, will easily cover your monthly debt service payment. In fact, you may even start interest-free early prepayment of principal.”

There are many great articles on how to negotiate a higher salary, including this one from Inc.com.

Regardless how you go about paying off your med school loans, it’s likely going to take many years to accomplish. Don’t worry, though: You’ll get through it with the strategies listed here. But if you need some encouragement along the way, read how other doctors did it in this article by St. George’s University. Good luck!

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