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Paying Off Medical School Debt During Residency



Residency can be both exhilarating and terrifying. You survived med school and are officially a doctor. You’re finally practicing medicine in the real world. But behind the excitement and responsibility is stress.

As a resident, you’re working crazy hours, running on minimal sleep, all while trying to save lives and make no mistakes. On top of all that, many residents are acclimating to life in a new city. And trying to figure out how to pay off a boatload of medical school debt in residency.

Looking for help paying off debt during residency? These tips can help you set yourself up for financial success during your residency and beyond.

Don’t Ignore Your Student Loans

When you’re working 80-hour weeks, trying to keep your patients healthy while you exist on a diet of coffee and protein bars, the last thing you want to think about is your student loans.

But it is essential to get your financial health in order so that you can focus on your job. To start off, set up automatic payments on your student loans so it’s one less thing to think about. This way nothing gets lost in the shuffle. As an added incentive, some loan servicers will offer to reduce your interest rate when you enroll in auto-pay.

If possible, avoid missing a student loan payment at all costs. If you do miss a payment, call your loan servicer. Sometimes a direct phone call can solve the problem without impacting your payback schedule or credit score.

Juggling several different loans? Some lenders are happy to arrange payment due dates on the schedule that works best for you, so you can either pay all your loans on the same day or spread them out throughout the month.

Whatever you choose, the important thing is to make sure that you’re taking an active role in medical school loan repayment, even when all you want to be doing is finally getting some sleep after a 20-hour shift.

Think Twice Before Deferring Your Loans

The average medical resident salary in 2017 was $59,300 . When you factor in the average debt of $180,000 that many residents carry, the relatively low salary can create serious financial strain for residents trying to repay student loans and pay for standard living expenses.

On top of already sizeable medical school loans, the power of compounding interest can inflate the principal balance of your loans after graduating from medical school. If you have federal loans, you may have the option to put your loans in deferment or forbearance, which allows you to temporarily pause or lower your monthly payments.

While temporarily stopping your loan payments can be a helpful option if you are facing serious financial issues, you may be responsible for paying accrued interest on the loan during deferment or forbearance. This can then be capitalized on the loan, which means you’ll end up with a larger principal balance on your loan when the deferment or forbearance period ends.

If you can’t make your payments, student loan deferment or forbearance are a better alternative to defaulting on your loans, but be sure to consider all of your options before applying for deferment or forbearance.

If you’re worried about being able to make your loan payments during residency, consider calling your student loan provider to see what they can offer you before you decide to defer and to confirm how much you’ll owe after your deferral period is over.

Read Next: Using a Personal Loan for Residency Relocation Costs

Review All Your Repayment Options

If your student loans payments are too high, you can see if you can adjust your payment schedule. If you have federal loans, you may also want to consider student loan consolidation or an alternative repayment plan that bases your payments on what you can afford. If you hold exclusively federal student loans, you can change your repayment plan at any time.

The federal government offers a loan repayment estimator that can guide you through the different loan repayment options available to new doctors paying off debt during residency.

For example, if you’re on a traditional fixed student loan repayment plan, you may be making more substantial payments in order to ensure that your debt is paid off within 10 years, but other student loan repayment options like an extended repayment plan or an income-based payment may offer smaller monthly payments.

There are downsides to these types of payment plans, however. Smaller monthly payments may mean that your loan term is extended and that you end up paying significantly more in interest over the life of your loan.

Consider Refinancing Your Student Loans

If you have a mix of private and federal student loans, consider refinancing your student loans during residency. Refinancing is a process by which you take out a new loan (hopefully with better terms and interest rates) and pay off your remaining student loans, effectively consolidating your outstanding loans into one new loan with favorable repayment terms that meet your needs.

Refinancing your student loans while you’re a resident may help you reduce the number of monthly payments you have to make, or it could lower your monthly payments. Refinancing isn’t right for everyone, especially if you may want to leverage any federal student loan repayment or forgiveness programs in the future.

When you refinance with a private lender, you lose access to all federal loan benefits. So those who may qualify for a federal loan forgiveness program should think twice about refinancing. However, if you aren’t planning on using your federal loan benefits, refinancing can help lessen the burden of debt while you complete your residency.

As a resident, your focus is on learning, taking care of your patients, and making it through long hours at the hospital. Don’t forget to take care of your financial health while you’re saving lives. Being financially healthy means taking charge of loan repayments to make a plan that works for you. That way, you can focus on the real task at hand: learning how to be a great doctor.

Learn more about how refinancing your medical school loans with SoFi can help you take control of medical school debt in residency.

Learn More


The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
The minimum monthly payment of $100 while in the Residency Period may not pay all of the interest due each month, which will likely result in negative amortization and a larger principal balance when you enter the Full Repayment Period. Dental residents and fellows are unable to receive additional tuition liabilities for the duration of their Residency Period; see SoFi.com/eligibility for details. See medical and dental resident loan refinancing rates and terms.
SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE or REPAYE. In addition, federal student loans offer deferment and forbearance options that are not available for SoFi Lending Corp. Medical or Dental Resident Refinance Loan borrowers.

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