Know Your Medical School Loan Repayment Options

Graduating from medical school is a massive accomplishment. But if you paid for your graduate schooling with loans, you have to start making payments on those loans when you’re just a few months into your residency.

For residents barely making $65,000 per year, that can be difficult 

Whether you’re a first-year resident with all of your loans to repay or a licensed, practicing physician trying to pay off the remainder of your school debt, keep reading.

Here are five different medical school loan repayment options that will help you eradicate your debt.

Pay Your Loans Directly

The most obvious way to pay off medical school loans is to pay them directly from your monthly paycheck. But the more you owe and the higher your cost of living is, the more difficult this can be.

For this reason, many residents and physicians early in their careers choose to refinance their loans. 

Refinancing allows you the opportunity to replace high-interest loans with lower interest loans. Reducing your interest rate by as little as 1% or 2% can save you thousands of dollars in interest over the life of your loans.  

Pay Loans With an Income-Driven Repayment Program

If you owe medical school loans, there are several federal programs in place that allow you to pay your monthly loans in accordance with your monthly salary:




PAYE is the Pay As You Earn program. It caps your monthly loan payments at 10% of your discretionary income. The less you make, the less you’ll have to pay each month. 

IBR is the Income-Based Repayment plan. This plan caps your monthly loan payments at 15% of your discretionary income.

ICR is the Income-Contingent Repayment plan. This plan caps your monthly loan payments at 20% of your discretionary income.

Keep in mind that refinancing your loans can make you ineligible to participate in income-driven replacement programs.  

Seek Out Employers That Offer Loan Forgiveness

Depending on where you work, you may not have to pay your loans at all. There are a variety of employers that offer loan forgiveness and will all or a portion of your loans off for you. 

If you seek employment in a region of the country where there is a physician shortage, the federal, state, or local government may forgive your student loan debt. 

The U.S. military, public and not-for-profit hospitals, and some private employers also offer loan forgiveness to employees. Qualifying for and meeting the eligibility requirements for loan forgiveness programs vary from employer to employer. 

Have the State Pay Your Loans for You

If you’re willing to work in a rural state, you may be able to pay down student loan debt with money from the state itself. Because many rural areas have a difficult time attracting physicians, they sometimes offer to pay a portion of your medical school debt as long as you contract to work in that state for a specific period of years. 

For example, in the state of West Virginia, you can receive up to $40,000 to put towards your student loans if you work as a primary care physician in the state for two years. In North Dakota, you can receive up to $50,000 per year for a two-year commitment to working in the state. 

Check out the Rural Health Information Hub to learn about the various loan repayment programs available in each state.   

Pay Down Loans With Your Signing Bonus

It is common for physicians to receive a signing bonus when accepting a new position, especially when working in a specialty or an area of medicine that’s in high demand. Signing bonuses can range from as little as a few thousand dollars to tens of thousands of dollars, depending on your area of medicine, your level of expertise, and your employer.

While it may be tempting to use that signing bonus to take a vacation, buy a new car, or make a down payment on a home, consider applying it towards your medical school loan payments instead. 

By making large loan payments to your lenders while you’re in the early stages of repayment you can greatly reduce your principal. Eliminating a portion of your principal means you’ll also reduce the amount you’ll spend in interest over the life of the loan.

Want to learn more about how to pay down medical school loans? This article offers additional medical loan repayment tips for current residents and practicing physicians.

In Conclusion

The best way to pay off your medical school loans is to devise a repayment plan when you’re still in medical school. Start thinking about your long-term financial goals, research loan forgiveness, and repayment assistance programs, and create a strategy that you can adhere to.

If you can do that, you’ll have those loans paid off in no time. 

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