According to the Association of American Medical Colleges (AAMC), the average medical school debt for students who graduated in 2020 was $200,000. (Among the class of 2020, 27% graduated with no debt.)
While many med school students eventually may earn six figures or more, they also can expect to graduate with student debt that averages close to a quarter of a million dollars.
That’s just what these graduates owe for their medical school education. Researchers at EducationData.org found that 43% of indebted medical school graduates also have premedical education debt to deal with (for an average of $241,600 in total debt).
Which makes it crucial that aspiring and current medical school students, and graduates, understand their debt repayment options.
Medical School Debt Statistics
Here’s a snapshot of what the average med student debt can look like for graduates, based on a roundup of recent statistics:
• Based on the most recent numbers from the National Center for Education Statistics , medical doctorate completers in the class of 2015-2016 had, on average, $246,000 in total education debt (premed and medical school). Compare that with the average for the class of 1999-2000: $124,700.
• When the AAMC looked at members of the class of 2020 who took out educational loans, it found that:
◦ 5.4% borrowed $1 to $49,999 for premed studies and medical school
◦ 6.1% borrowed $50,000 to $99,999
◦ 8.2% borrowed $100,000 to $149,999
◦ 13.7% borrowed $150,000 to $199,999
◦ 25.1% borrowed $200,000 to $299,999
◦ 11.2% borrowed $300,000 to $399,999
◦ 2.9% borrowed $400,000 to $499,999
• While the cost of medical school is rising by about 2.4% annually, the annual growth rate of medical school debt is 11%, as calculated by EducationData.
What Does This Mean for Borrowers?
It’s important to note that, when it comes to borrowing for medical school, loan interest rates offered by the federal government, along with the terms and conditions, might be different from borrowing as an undergrad.
Some med students may benefit from scholarships and loan forgiveness programs that could cut their costs substantially. But many will end up making loan payments for years—or even decades.
According to the number crunchers at EducationData, the average doctor will ultimately pay from $365,000 to $440,000 for his or her educational loans, with interest factored in.
Medical School Loan Options
Types of federal student loans available to medical students include Direct Unsubsidized Loans, with a limit of $20,500 each year.
Rates for this type of loan are currently lower than for the other type of federal student loan available to those going to medical school, Direct PLUS loans. The current rate for Direct Unsubsidized Loans is 5.28%, while Direct PLUS loans have an interest rate of 6.28% through July 1, 2022.
There isn’t a financial need requirement for either type of federal student loan, so many medical students qualify for both. With Direct Unsubsidized Loans, there is no credit check, but there is a credit check for PLUS loans.
Medical students also can apply for private student loans. Generally, borrowers need a solid credit history for private student loans, among other financial factors that will vary by lender. Private lenders offer different rates, terms, and overall loan programs.
Federal loans come with many student protections and benefits that private loans don’t, such as the Public Service Loan Forgiveness program and income-driven repayment.
Medical students also may choose to defer federal student loans during their residency, which isn’t typically an option with private student loans.
How to Deal With Debt
There are several strategies that medical school graduates with education bills to pay may consider.
If you’ve ever borrowed money—for school or otherwise—you know that two critical factors can influence how much the loan will cost overall.
• The interest rate you’re paying
• How long you take to repay the loan or loans.
The repayment timeline is often extended when medical residents make partial monthly loan payments or no payments at all. Putting off payments may seem like a good idea during a stressful time, but delaying can be costly.
Most federal student loans, when deferred, continue to accrue interest. The problem those in medical fields can face, then, is debt accumulation during their residency, which can last anywhere from three to seven years.
Even while making a modest income—in 2021, the average resident earned $64,000, according to Medscape—the debt would grow considerably.
Part or all of your unpaid interest might be capitalized when you complete your residency. This means the accrued interest is added to the principal of the loan, and that new value is then used to calculate the amount of interest owed.
If you decide to put your loans in deferment or forbearance, making interest-only payments can reduce the amount of interest that could be added to the loan.
Recommended: Understanding Capitalized Interest on Student Loans
An income-driven repayment plan is an option for medical residents who can’t afford full payments. The four plans limit payments to a percentage of borrowers’ income, extend the repayment period to 20 or 25 years, and promise forgiveness of any remaining balance.
In general, borrowers qualify for lower loan payments if their total student loan debt exceeds their annual income. Payments are based on discretionary income, family size, and state.
Refinancing medical school loans is an option during residency, after residency, or both.
Refinancing with a private lender might help save you money if you can get a lower interest rate than the rates of your current student loans.
Student loan refinancing means paying off one or more of your existing federal and private student loans with one new loan, which has one monthly payment.
If you refinance your student loans and get a better rate, you could choose a term that allows you to pay off the loan more quickly if you’re able to shoulder the payments, which should save you in interest.
Again, refinancing isn’t a good fit for those who wish to take advantage of federal programs.
Recommended: Student Loan Refinancing Calculator
The federal government offers Direct Consolidation Loans, through which multiple eligible federal student loans are combined into one. The interest rate on the new loan is the average of the original loans’ interest rates, rounded up to the nearest one-eighth of a percentage point.
If your payment goes down, it’s likely because the term has been extended from the standard 10-year repayment to up to 30 years. Although you may pay less each month, you’ll also be paying more in interest over the life of your loan.
Schools With the Highest Student Debt
When it comes to student debt, all medical programs are not equal. According to U.S. News and World Report’s “Best Grad School” rankings, the range can be extensive. Out of 118 medical schools listed, the three that left grads with the most debt in 2020 were:
• Midwestern University in Glendale, Arizona: $340,620
• Midwestern University in Downers Grove, Illinois: $335,960
• Nova Southeastern University Patel College of Osteopathic Medicine (Patel) in Fort Lauderdale, Florida: $308,321
On the other end of the spectrum, the schools that graduated students with the least amount of debt in 2020 were:
• Stanford University in Stanford, California: $89,739
• Columbia University in New York, New York: $97,891
• University of North Texas Health Science Center in Fort Worth: $101,209
Public vs. Private Medical School
The cost of attending a private medical school is typically higher than a public school.
According to the AAMC, these were the median costs of tuition, fees, and health insurance for first-year medical students during the 2020-2021 school year.
• Private school, in-state resident: $64,053
• Private school, nonresident: $64,494
• Public school, in-state resident: $39,150
• Public school, nonresident: $63,546
According to EducationData, however, the average public medical school graduate leaves school owing a higher percentage of the cost of attendance (77.3%) than the average private school medical school graduate (65.3%).
There’s no doubt that studying medicine can lead to a lucrative career, but the route can be daunting, in every way. When the average medical school debt tops $240,000, some aspiring and newly minted doctors look for a remedy, stat.
If you’re leaning toward refinancing, SoFi has a program specifically for medical residents. Potential borrowers might benefit from a low rate or low monthly payments during residency.
SoFi Student Loan Refinance
If you are looking to refinance federal student loans, please be aware that the White House has announced up to $20,000 of student loan forgiveness for Pell Grant recipients and $10,000 for qualifying borrowers whose student loans are federally held. Additionally, the federal student loan payment pause and interest holiday has been extended to December 31, 2022. Please carefully consider these changes before refinancing federally held loans with SoFi, since in doing so you will no longer qualify for the federal loan payment suspension, interest waiver, or any other current or future benefits applicable to federal loans. If you qualify for federal student loan forgiveness and still wish to refinance, leave up to $10,000 and $20,000 for Pell Grant recipients unrefinanced to receive your federal benefit. CLICK HERE for more information.
Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income-Driven Repayment plans, including Income-Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.
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