Student loan debt is one of the hottest topics of conversation these days. It’s no wonder as student debt nears $2 trillion dollars. The average student loan debt is over $40,000, and more than a third of students take on debt to go to college.
As staggering as these numbers are, the average student loan debt is primarily made of students that attend a four-year degree program.
What if you’re going into medical school? You’ll have an additional four years of medical school, plus several years in residency.
You can sense the average medical school debt is extremely high, can’t you? You could end up using medical school loans to pay for 10 years or more before you become a doctor.
Do you want to know what the average debt is and how to pay off medical school debt? Keep reading because you’re going to find out the answer.
How Much Is the Average Medical School Debt?
If you graduated from medical school in 2021, you’re likely to have over $200,000 in debt. The average medical school debt is $203,000. About 20% of graduates have over $300,000 in student loan debt.
What’s more, 73% of graduates have medical school debt. They carry credit card debt and personal loan debt to get through residency programs and pre-med school.
What does that look like for a doctor’s finances? A $200,000 loan with a 7% interest rate carries a monthly payment of $2,300.
That’s right, you have a mortgage payment that goes to student loan debt every month.
How to Avoid Medical School Debt
If you want to go to medical school, it makes you think twice about being tied to so much debt right out of school.
There are a few ways to reduce the amount of medical school debt and lower the amount of money you owe out of school.
Look for scholarships and grants when you apply for medical school. You don’t have to pay these back as you do with student loans.
As long as you apply them towards your medical school expenses, you can lower the amount of loan money you need to survive medical school.
The other option is to enroll in the military. You can get training in the medical field and potentially qualify for the G.I. Bill, so you don’t have to worry about paying for medical school with student loans.
If you’re in a gap year between medical school and undergraduate work, don’t run off to Europe. Get a job in the medical field that will give you experience and cash to put toward medical school.
How to Pay Off Medical School Debt
Even with the strategies to avoid medical school debt, you could end up using student loans to pay for part of medical school.
If you want to buy a house or start a medical practice, you need to get these loans paid off as quickly as possible. There are a few ways to pay off medical school debt quickly.
Start paying off your debt while you’re still in residency. You can defer your student loan payments, but if you can pay down the loan amount during this period, you lower the amount you need to pay when you begin your new career.
Be wary of how you pay off your student loan debt. You don’t want to take out another loan or put the loan payments on your credit cards.
Look Into The NHSC
The National Health Service Corps is a government organization that recruits medical professionals to work in underserved communities.
You might work in a rural area or work to help fight the opioid epidemic. You have to be willing to travel and live in a location that you might not want to live in.
It’s possible that you won’t get to practice your preferred specialization of medicine at first.
On the upside, you’ll get $50,000 in tax relief for a two-year agreement. If you’re in the last year of medical school, you can get as much as $120,000 for a three-year commitment.
Maintain the Med School Lifestyle
When you become a doctor, it’s tempting to create the lifestyle that goes with a high salary. Unfortunately, you’re going to have to hold off on those perks for a few years.
Prioritize your student loan payments. Live comfortably, but don’t overdo it. You can live in a modest home and drive a modest car while you pay off your medical school debt.
Make Smart Investments
As you have more money to put towards medical school debt, you should make investments at the same time. That allows you to grow your money and pay off your loans quickly.
Where should you invest? The stock market is always a good choice, even though it’s volatile. Read this advice from Botto Financial to learn how to deal with the ups and downs of the stock market.
Leverage Repayment Plans
Paying off medical school debt is a little more manageable, thanks to repayment programs. If you have loans through the Department of Education, you can leverage plans to lower your monthly payments.
The Income-Driven Repayment (IDR) plan reduces your payments to 10% to 20% of your discretionary income. You’ll pay a lower amount based on your income.
After 20 or 25 years, the loan becomes eligible for student loan forgiveness.
Private loans aren’t eligible for these repayment plans. You may get offers to refinance your medical school debt. If you do refinance with a private lender, your loans are no longer eligible for these programs.
Think carefully about that before you decide to refinance.
How Much Debt After Medical School?
How much medical school debt should you expect to have after medical school? The average medical school debt is over $200,000. Your monthly payments can become unmanageable shortly after starting your new career.
The tips in this article showed you how to pay off medical school debt. Use them and you’ll be in a great financial position in a few years.
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