4 Money Tricks Doctors Can Use to Pay Down Student Loans Faster

It’s no secret that the average doctor is saddled with tons of student loan debt when starting practice. In fact, according to the Association of American Medical Colleges, the average doctor graduates medical school with $190,000 in student loans—6x the national average.

Having a strategy to quickly and efficiently pay down your student loans is critical to long-term financial success, so we’ve put together a few personal finance tips and tricks for doctors to help them pay down student loans faster in 2017. These tips are relevant to all doctors, regardless of specialty or income.

1. Put less than 20% down when purchasing a house

Between undergrad, med school, and residency, most doctors have spent a significant amount of time paying rent, and are itching to build up equity in a house. You may think you need to put the traditional 20% down on a home to avoid paying mortgage insurance, but many lenders offer mortgage loans with more flexible down payment requirements. SoFi for example, offers 10% down on loans up to $3 million.

These niche mortgage products, often called doctor loans, are available to physicians, dentists and other healthcare professionals that may not qualify for a conventional mortgage due to a high amount of student loan debt.

It may sound counter-productive to have a smaller down payment, but think about it—if you had the option to allocate money to paying down student loans or putting money down for a house, the financially-savvy thing to do is to pay down the higher interest rate student loans.

If you forgo a higher down payment, you get the benefit of eliminating higher interest rate debt as well as the potential tax benefits from the mortgage interest you pay on your home. Not having to purchase mortgage insurance is a major added bonus.

2. Refinance your student loan debt for a lower rate

No matter how long you’ve been out of school, you can still try refinancing your student loan debt for a lower rate, which could lead to paying your debt off much faster.

Doctors especially benefit from this move, as it can save them a good amount of money in the end. For more information on the benefits of refinancing, check out SoFi’s Guide to Student Loan Refinancing.

3. Take advantage of disability insurance discounts while training  

Many insurance companies offer discounts, including “Multi-Life” and “Association” discounts, which are locked for the life of the policy. Finding an insurance agent that can provide these discounts can help you save a significant amount on the cost of your insurance policy.

By purchasing disability insurance before you start practice, you can use the extra cash flow from savings to apply to your student loan payments.

For more information, see the Ultimate Guide to Disability Insurance for Physicians and Dentists.

4. Maintain your training lifestyle when you start practice

One of the hardest things for doctors is to exercise financial restraint when they start practicing. Typically, your income is increasing five-fold, and after living on scraps for several years, the desire to upgrade your standard of living is enormous.

Maintaining a frugal lifestyle in your early years of practice will significantly change the trajectory of your finances in the future. Let’s look at the impact if your monthly expenses during training looked something like this.

Monthly rent and utilities: $1,500

Car payment: $200

Groceries: $300

Misc: $750

Total Expenses: $2,750

If you can maintain this relative level of spending while you start practicing, you could have some serious savings left over at the end of each month you can use to pay off your loans.

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