Student Loan Repayment Guide for Doctors

Posted by Rohit Mittal

With ever increasing costs and decline in doctor’s reimbursements, student loan repayment is taking a toll on health care professionals. It is time all physicians take time to research and consider their student loan repayment strategy.


Medical School Loan Repayment Strategy


A lot of medical school graduates put their loans in forbearance during their residency. But doing so will add to your interest and debt. To keep your debt under control, it would be wise to avoid forbearance at all. Here are some medical school loan repayment ideas to keep your debt in check.


Income-driven Repayment Program


Income-driven medical school loan allows you to set your monthly payments based on your income and cost of living. Using an income based repayment plan is not the fastest or cheapest way to pay off your medical school loan, but it is definitely the most convenient, practical approach to avoid forbearance.

There are four income driven loan repayment choices available in the market; Income-based Repayment (IBR), Income-contingent Repayment (ICR), Pay as you Earn (PAYE) and Revised Pay as you Earn (REPAY). You can choose a plan from among these, based on the eligibility criteria and their repayment structures.


Medical Student Loan Refinancing


Student loan refinancing can be advantageous for many medical school graduates, as it allows you to take a new loan with a private lender to pay off your existing loan.

Creating a new debt will allow you to adjust your current repayment schedule at revised interest rates. But you may have to meet the eligibility requirements based on your current income and credit history, to attain a lower rate of interest.

You will also have to forego the current benefits you received from the original loan, i.e., switching from federal loans to private loans will result in foregoing forgiveness for doctors. It is therefore most sensible to refinance high interest debts, especially if you are being offered a much more attractive interest rate by the private lender.

Refinancing is a worthwhile strategy for those who benefit from it. Therefore, check all available options before jumping the gun.


Negotiate a Signing Bonus


Negotiate your way into a good bonus or incentive, before you sign a contract with your potential employer. Be extremely vigilant to make sure you land a decent bonus, as it can help you go a long way with your repayment strategy.

If you are able to negotiate a good bonus, which is a possiblity due to shortage of primary care doctors, you can knockout a third, to a quarter of your medical school loan in one go. This will greatly reduce your interest rate burden as well.


Student Loan Forgiveness


Student loan forgiveness for doctors is a common practice for doctors working towards the betterment of the society. This is only available for doctors working in the area of high need or for a non-profit hospital or facility.

Staying eligible for student loan forgiveness will limit your employment choices, not to mention, choice of pay, specialty, location and employer. For those who are willing to make this sacrifice, student loan forgiveness can pay off big time in the long run.


Public Student Loan Forgiveness


Physicians working in the area of ‘public service’ are eligible for public student loan forgiveness. Public service requires full time employment by tax-exempt non-profit or public institution. It also includes working in areas that are under served or high in need for medical professionals.

Borrowers must make 120 monthly payments for 10 years, while performing the qualified work. The federal government will then forgive the remaining debt. It is still unclear if the borrowers will owe any taxes on the forgiven debt or not.


Military Program for Repayment Assistance


For doctors in service, the military may offer help with tuition. There are many benefits being offered by various military programs, such as, Army doctor student loan assistance which offers various repayment benefits to army members enrolled in an accredited residency. Similarly, there is navy medical school loan repayment assistance and Air force medical school loan assistance, offering repayment benefits to their members.


Indian Health Services Repayment Program


The Indian Health Service is a federal health program for American Indians and Alaska Natives, that offers a Loan Repayment Program for health professionals. You need to be based in HIS facilities with greatest needs, to be eligible for this program.

In lieu of a two-year commitment, the IHS may repay up to $40,000 in medical school loans. You can renew your contract for additional repayment, until the medical school debt is paid in full.

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State Assistance for Medical School Loan Repayment

There are many state-sponsored programs that help physicians and doctors repay medical school loans. Some states also have their own separate student loan repayment plans for physicians, especially working in underserved areas.

All in all, there are many options available to repay your medical school loan with a good strategy.


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