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Navigating Student Loans for Physicians

You’ve conquered the challenging medical school path and now embark on a rewarding career.  However, along with your medical degree, you might also carry a substantial student loan debt burden.  But don’t fret; you’re not alone in this journey.

We will navigate the often-complex world of student loan repayment tailored to physicians.  By the end, you’ll have a clear roadmap to manage your student loans effectively.

Understanding the Student Loan Landscape


Before diving into repayment strategies, let’s take a moment to understand the student loan landscape.

As of 2023, total U.S. student loan debt has reached a staggering $1.71 trillion.  For medical professionals like you, the average student loan debt hovers around $196,000, significantly higher than the national average.  This substantial debt can be a financial obstacle as you start your life as a physician.

You would much rather spend your hard-earned money on rewarding things, such as a new home or car, investing in your retirement, or a medical business.  However, your medical student loans can hold you back.

But fear not; strategies and programs designed to make student loan repayment more manageable, and we’ll explore them in detail.

Types of Student Loans


First, let’s distinguish between the two primary types of student loans: federal and private.

Federal Student Loans

The government issues federal student loans, which are generally more flexible and have more benefits than private ones.  They come with various repayment options and protections such as deferment and forbearance.  Here are some key features:

Grace Period: After leaving school, federal loans typically offer a six-month grace period before you begin repayment.

Income-Driven Repayment Plans: Federal loans offer income-driven repayment plans that base your monthly payments on your income.  This can be a considerable advantage for medical residents with low or no income.

Public Service Loan Forgiveness (PSLF): If you plan to work in the public sector or nonprofit organizations, you might be eligible for PSLF, which forgives your remaining federal loan balance after 120 qualifying payments (usually ten years).

Direct Loans: These loans come in two forms: subsidized (interest paid by the government while you’re in school) and unsubsidized (interest accrues while you’re in school).

Direct Consolidation Loans: These loans allow you to consolidate multiple federal loans into one, making them eligible for PSLF.

Private Loans

Banks or private lenders provide private loans.  They typically can be at lower interest rates yet offer fewer borrower protections.  Private loans can be more flexible with the loan amount, but they lack the benefits of federal loans, such as income-driven repayment plans and loan forgiveness options.

Student Loan Repayment Options

Public Service Loan Forgiveness (PSLF)

One of the most attractive options for physicians is the Public Service Loan Forgiveness (PSLF) program.  Here are the basic requirements:

You must have federal direct loans (if not, you can consolidate your loans into direct loans).

Make 120 qualifying payments (usually ten years).

Work full-time for a qualifying public service or nonprofit employer.

PSLF can be a game-changer for doctors planning to work in public health, military service, or any public service roles.  It offers substantial loan forgiveness, and the forgiven amount is tax-free.

Physician Education Repayment Loan Program (PELRP)

The State of Texas administers this program and provides loan repayment funds for physicians who agree to practice in a Health Professional Shortage Area (HPSA) for at least four years.  The physician agrees to provide four consecutive years of service in a Federally designated HPSA and direct patient care to Medicaid and Texas Children’s Health Insurance Program (CHIP) enrollees.

For other State of Texas programs, please click the link below.  

Income-Driven Repayment Plans


For many physicians, income-driven repayment plans are a lifeline during residency and fellowship years when income is low.  Here are some options:

1.  Revised Pay As You Earn (REPAYE)

Monthly payments are 10% of your discretionary income.
Undergraduate loans get forgiven after 20 years; graduate loans after 25 years.

2.  Pay As You Earn (PAYE)

Monthly payments are 10% of your discretionary income.
Loans get forgiven after 20 years.

3.  Income-Based Repayment (IBR)

Monthly payments are 10% to 15% of your discretionary income, depending on when you borrowed.
Loans get forgiven after 20 to 25 years.

4. Income-contingent Repayment (ICR)

Monthly payments are less than 20% of your discretionary income or what you would pay on a fixed 12-year plan.
Loans get forgiven after 25 years.

5.  Savings for Valuable Education (SAVE) – New!

A newer addition to income-driven plans, SAVE offers reduced monthly payments and expanded forgiveness options.  The program is designed to make loan repayment more manageable, especially for medical professionals.

Refinancing and Consolidation


If you read the above and say, “I do not want to wait 20-25 years to have my loans paid off,” I agree!  Refinancing your loans can be wise if you have private or high-interest federal loans.  It involves taking out a new loan from a private lender to pay off your existing loans.  Here’s what you need to know:

Interest Rate: You could qualify for a lower interest rate, reducing your overall repayment amount.

Single Payment: Consolidating multiple loans into one simplifies your monthly payments.

However, refinancing federal loans means losing federal protections like income-driven repayment plans and PSLF eligibility.   Also, death and disability could pay off the loans or pause them until you are no longer disabled.  It’s essential to weigh the pros and cons before refinancing.

Sign-On Bonuses and Employer Assistance

Many medical employers, especially hospitals and healthcare systems, offer sign-on bonuses or loan repayment assistance as part of their compensation packages.  These financial incentives can significantly alleviate your student loan burden.

Military Service

Consider serving as a physician in the military.  The Armed Forces offer programs that provide substantial loan repayment assistance in exchange for your service.  It’s a noble path that not only helps your country but also your financial health.

Crafting Your Student Loan Repayment Strategy


As a physician, I know your unique circumstances require a customized repayment strategy.  Here are steps to help you craft your plan:

1.  Know Your Loans:

Determine the types of loans you have (federal, private, or a mix).
Understand the interest rates, grace periods, and terms of each loan.

2.  Assess Your Financial Situation:

Calculate your monthly income and expenses.
Consider your future income growth as a physician.

3.  Choose the Right Repayment Plan:

If you have federal loans and plan to work in public service, PSLF may be your best option.
Income-driven plans like REPAYE can ease your financial burden during residency and fellowship.
Evaluate the long-term benefits of each plan, factoring in the tax implications of forgiven loans.

4.  Explore Refinancing:

Refinancing could save you money if you have private or high-interest federal loans.
Research and compare offers from different lenders.

5.  Maximize Employer Benefits:

Take full advantage if your employer offers sign-on bonuses or loan repayment assistance.

6.  Consider Military Service:

Explore military service options if you strongly desire to serve your country and simultaneously reduce your student loan debt.

7.  Stay Informed:

Keep track of changes in student loan policies and forgiveness programs.
Consult a financial advisor or student loan expert for personalized advice.


Traversing student loan repayment as a physician may seem daunting, but you can manage your debt effectively with the proper knowledge and strategy.

Remember that student loans are an investment in your future, enabling you to pursue a fulfilling medical career.  By choosing the repayment path that aligns with your goals and diligently following it, you’ll secure your financial well-being and your peace of mind as you focus on providing exceptional care to your patients.


About The Author

Jordan Benold, CFP® provides fee-only financial planning and investment management services in Frisco, TX.  Benold Financial Planning serves clients as fiduciaries and never earns a commission or sells a product.

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