Seeing your medical school expenses go up like clockwork might make you feel feverish. According to the AAMC’s 2019 Education Debt Manager report, over 80% of graduating students had medical school debt. The report goes on to state that on average, graduating students had debts that account to $196,520, up from $190,694 in 2018.
Looking at these numbers, you’d probably want to rethink a career in medicine. For passing out students, this debt can seem like a huge mountain that’s blocking an otherwise promising career ahead. If you are about to begin the climb or have already begun your journey, we are here with solutions that will help you cut down on those annoying payments.
Loans can be confusing with multiple payment methods, tenures, and interest figures. In this blog post, we give valuable insights into what goes on behind the scenes. This post will also try and take the complicated bits out of medical student loans. If you are looking to change your repayment strategy, we have just the thing for you. Read on to know all these tips and strategies to give you a head-start.
Knowing the Average Medical School Debt
AAMC in the 2018-19 report, said that a resident pays an average of $36,755 in a Public School while in a Private school, a resident pays $59,076. These figures consider tuition, fees, and health insurance costs. However, there are significant factors like lodging and boarding and other little expenses that pile up. AAMC Medical School Graduation Questionnaire gives us another interesting statistic: 32% of individuals fall in the category with average medical school debt ranging from a whopping $150,000 to $300,000. The respondents were 15,000 in number.
Simple Tips before you take up Complex Strategies
1. Live Simple – We put this on the top of the list because this strategy can be quickly adopted. It involves zero research, and you can save a lot of money. Lifestyle inflation happens when you start earning more. It doesn’t have to be so. Lower your monthly expenses and avoid certain expenses – this alone can help you go a long way. Frugal living for a while is not bad; it can help you get the load off quicker. Pay extra money, i.e., more than the minimum monthly payment towards your principal loan amount. This can help you get rid of medical school debt quicker.
2. Give Away any Extras you Receive – If you get a signing bonus on joining a healthcare facility, consider putting it towards your loan repayment. This is a great thing to do if you want to pay your loan faster.
3. Make Timely Payments – You can avoid not only late fees but also get on-time payment discounts sometimes. These are little steps, but they all take you higher up the mountain we talked about in the beginning.
4. Clone the Resident Life – Create an emergency fall-back option for yourself. Devote some money to an emergency fund on alternate months. You should prioritize paying high-interest loans like your credit card outstanding balance. These are vigilant ways to ensure that you have more resources for savings, as well as loan repayment.
How to Develop a Loan Repayment Strategy for Medical Debt?
Though student loan forgiveness is the fastest way to pay off your medical school debt, not all have it as an option. Your financial goals may vary, and you may be looking for fast methods that comply with those goals. Remember that you can always change your strategy if you think the current one isn’t effective. However, we suggest that you do your best research before making up your mind. Sticking to a good student loan settlement strategy is one of the best things you can do for your loan repayment.
STEP 1 – Know Your Loan – Do you have a private loan, federal loan, or a mixture of both? Contact your loan servicer if you have a federal loan. Servicers handle the payments. Thus, it’s important to know about your servicer and their policies and payment methods.
STEP 2 – Research Student Loan Repayment Plan Options – From a standard 10-year payment plan to income-driven repayment, there are a variety of options available. Do thorough research. Know which ones you are eligible for and weigh the pros and cons of each. You can also opt for PAYE (Pay as You Earn) or REPAYE (Revised Pay As You Earn) Methods.
STEP 3 – Estimate Monthly Payment – We recommend that you use our Student Loan Repayment Calculator for this purpose. Bigger Loans with a higher interest rate should be targeted for repayment first.
STEP 4 – Choose add-ons from the next section to speed up the repayment of loans.
STEP 4 – Develop a personal budget – Using the simple tips we just gave you; you can arrive at an effective personal budget.
Add-on Strategies that can Help in Paying Medical School Debt Faster
1. Lower Your Interest Rate – We highly recommend consolidating your loans and opting for one with lesser interest on the consolidated one. Doctors have lucrative earning potential and tend to get credit on better interest rates. This is a smart move in many ways. Student Debt Consolidation also makes everything un-complicated once it’s done. Just a reminder – if you don ‘t opt for direct loan consolidation, you cannot benefit from PSLF (Public Service Loan Forgiveness) anymore.
2. Deferment Isn’t Good for You – We don’t suggest pausing your repayment. Forbearance doesn’t help you to end loans faster and can prove to be a more significant burden. Moreover, your debt will still accrue interest and capitalize significantly later. We recommend making loan payments even during your residency. Sometimes, the delay is necessary when you earn low. Even if you opt for deferment, pay some portion of the accrued interest during the deferment.
3. Work in a Loan Repayment Program – Are you not eligible for PSLF? There are many other loan repayment programs that you may qualify for. Here are a few:
· State Loan Repayment Program – AAMC provides a searchable database of state and federal programs available to medical professionals. They offer scholarships, repayments and loan assistance, and forgiveness as well.
· National Health Service Corps Loan Repayment Program – You have to serve for two years in a Health Professional Shortage Area, and you can avail up to $50,000. Primary care physicians are eligible.
· Military loan repayment program – U.S military provides loan repayment options as well.
· National Health Service Corps Students to Service Loan Repayment Program – Fourth-year medical students who work full-time for three years at a Health Professional Shortage Area can avail benefits from this program. This is a good option as you can get experience and practice medicine on challenging patients while repaying your loans!
· National Institutes of Health Loan Repayment Programs – For doctors in research careers, this is another program that can prove helpful.
Student Loans Resolved to the Rescue
Medical Loan repayment may be tiring, but it doesn’t have to take the life out of you. For you to reap all the benefits of your medical profession, a loan can be a severe setback. It is especially true when there are housing costs, dependency costs to look forward to. The strategies in this segment are helpful tools you can resort to and pay your Medical School Debt in a jiffy.
We at Student Loans Resolved provide you resources, guides, and latest updates for all your loan knowledge and advice needs. Head over to us to know everything you must about loans and how to repay them.