There are lots of good reasons to become a doctor. Being a physician means you can help people in one of the most direct ways possible: By doing your best to restore their health.
In this career, how you help others could literally be life-changing. Other benefits of a medical career might include the wide variety of opportunities in an array of specialties, from pediatrics to geriatrics, medical research, and more.
But what about the cost of getting there? The catch, of course, is that becoming a doctor is expensive, and student debt levels have risen significantly over the years. The number of graduates who have medical student debt may seriously surprise you.
Medical school debt continues to rise. The 2019 average debt for medical students was around $200,000 , a 2.7% increase over the 2018 amount of $195,000.
Even with the rising debt, people are still pursuing this career as medical school might be considered a safe investment in the future as well, with the possibility of a high salary in a chosen field. According to the United States Department of Labor’s Bureau of Labor Statistics , in 2019, nine out of the top 10 highest-paid professions were in the field of medicine.
Medical Professionals and Their Salaries
According to the Medscape Physician Compensation Report 2020 , physicians’ incomes are increasing. For example, Public Health & Preventive Medicine physicians saw an 11% increase in salary compared to last year. Additionally, Allergy & Immunology saw a 9% increase in salary.
Looking at the spread of salary, the lowest-earning doctors (pediatricians and public health & preventive medicine) bring in around $230,000 a year, while the highest earners (orthopedists) make over $500,000.
Salaries may also vary by state, with these five having the highest overall in 2020 so far:
• Kentucky: $346,000
• Tennessee: $338,000
• Florida: $333,000
• Alabama: $332,000
• Utah: $328,000
The Cost of Medical School
As lucrative as a medical career can be, the commitment to medical school is significant, and the educational journey can be pricey. According to the Association of American Medical Colleges (AAMC), here were the average costs of tuition, student fees, and health insurance for medical students during the 2019–2020 school year (costs include discounts from stipends, scholarships, or grants):
• Public school, resident: $37,556
• Private school, resident: $60,665
• Public school, nonresident: $61,858
• Private school, nonresident: $62,230
How Many Grads Have Med Student Debt?
Although the costs of attending medical school are significant, the number of medical school students who are graduating with no debt continues to rise, with the AAMC noting that, in 2019, 28.7% of students completed medical school with no student loan debt. In 2018, the figure was 27.7%.
Another study of medical students and corresponding student loan debt was conducted by researchers who have inferred that more and more students entering medical schools come from wealthy backgrounds. This implies that some students might be discouraged from pursuing medicine, based on financial considerations alone.
Also, students incurring a lot of debt might feel pressured to specialize in more lucrative fields, because when they have student loan debt, cardiology (with a 2019 average salary of $430,000) might look better than endocrinology (with a 2019 average salary of $236,000) simply because cardiologists make so much more.
Schools with the Highest Student Debt
When it comes to debt, not all medical programs are equal. According to U.S. News and World Report’s “Best Grad School ,” the range can be quite significant. Out of 114 medical schools listed, the three that left its grads with the most debt in 2018 were:
• Rocky Vista University in Parker, Colorado: $364,000
• Nova Southeastern University Patel College of Osteopathic Medicine (Patel) in Fort Lauderdale, Florida: $272,764
• Western University of Health Sciences in Pomona, California: $272,311
On the other end of the spectrum, the schools that graduated students with the least amount of debt in 2018 were:
• Johns Hopkins University in Baltimore, Maryland: $104,016
• Stanford University in Stanford, California: $104,988
• Baylor College of Medicine in Houston, Texas: $107,469
Medical School Loan Options
Note that, when it comes to borrowing for medical school, loan interest rates offered by the federal government, along with their terms and conditions, might be different from borrowing as an undergrad.
Types of federal student loans available to medical students include Direct Unsubsidized Loans, with loan limits up to $20,500 each year.
Rates for this type of loan are currently lower than for the other type of federal student loans available to those going to medical school—Direct PLUS loans. The current rate for Direct Subsidized Loans is 4.30, while Direct PLUS loans have an interest rate of 5.20% for the 2020-2021 school year.
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 can also apply for private student loan funding, with different private lenders offering different rates, terms, and overall loan programs. Typically, you need a solid credit history for private student loans, among other financial factors that will vary by lender.
Federal loans do come with many important student protections that private loans typically don’t, such as loan forgiveness for working in public service, income-driven repayment, and deferment programs; some medical students defer federal student loans during their residency, which isn’t typically an option with private student loans.
High Medical Debt Loads—and Compound Interest
Unfortunately, debt doesn’t necessarily pause when deferred. There are some federal student loans that, when deferred, will 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 depending on the specialty.
Here’s a very high-level, simplified example. Say, for instance, a med student defers loan payments on a $180,000 Direct PLUS Loan with an annual percentage rate (APR) of 7%. If the student defers payments for a seven-year residency, this could lead to a debt increase of around $88,200. With a 6% interest rate, debt could still increase by around $75,600.
Even while making a modest income—in 2019, the average resident earned just under $61,200 —the debt would grow substantially.
Other than deferral, the federal government does offer additional income-driven payment protections for federal student loans—for example, certain programs are offered during the years of residency, lowering payments to match current income so monthly loan payments are more manageable.
The Revised Pay As You Earn Repayment Plan (REPAYE), for example, caps payments at 10% of discretionary income for qualifying borrowers. If you are married, the government will factor in a spouse’s income when determining monthly payments.
Options for Paying Back Medical School Debt
Once you are ready to get serious about paying back student loans, and federal programs don’t feel like the right fit for you, refinancing with a private lender might help save you money. Although refinancing your federal student loans does mean forgoing government protections such as loan forgiveness and income-driven repayment, some lenders may offer refinance interest rates that are lower than federal rates for well-qualified borrowers.
The bottom line: Student debt should not be the thing standing between you and your goals. Between a variety of repayment plans, federal loan consolidation, or refinancing with a private lender, there are ways to repay your debt that could be more manageable.
Loan Consolidation vs Loan Refinancing
The word “consolidating” can have more than one meaning in connection with student loan refinancing. The federal government, for example, offers Direct Consolidation Loans, through which eligible federal student loans are combined into one, with the interest rate on the new loan being a weighted average of each of the original loans’ interest rates (rounded up to the nearest eighth of a percent).
When the word “consolidating” is used by private lenders, though, multiple loans are combined into one, but you get a brand new interest rate, not a weighted average, based on personal financial factors. This means that when you “consolidate” student loans with a private lender such as SoFi, you’re also refinancing them.
If you consolidate your federal loans via a Direct Consolidation Loan with the government, and your payment goes down, that’s likely because the term has been extended from the standard 10-year repayment to 20 or even 25 years. This means that although you may be paying less each month, you’ll also be paying more in interest over the life of your loan.
If, though, you refinance your student loans with a private lender, and you get a better rate, you could choose a term that allows you to pay your loan off more quickly, which should save you in interest.
Again, refinancing isn’t right for everyone—especially those who have federal student loans and may wish to take advantage of Public Service Loan Forgiveness, income-driven repayment, Direct Consolidation Loans, and other federal benefits and protections.
Medical Resident Refinance
If it’s time to refinance and you are interested in exploring a private lender, SoFi has created a student loan refinance program that’s specifically for medical residents. Potential borrowers can quickly and easily find their interest rate online and might benefit from low rates or low monthly payments during residency.
SoFi Student Loan Refinance
IF YOU ARE LOOKING TO REFINANCE FEDERAL STUDENT LOANS PLEASE BE AWARE OF RECENT LEGISLATIVE CHANGES THAT HAVE SUSPENDED ALL FEDERAL STUDENT LOAN PAYMENTS AND WAIVED INTEREST CHARGES ON FEDERALLY HELD LOANS UNTIL THE END OF SEPTEMBER DUE TO COVID-19. 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. 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.
SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs.
SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.
SoFi Loan Products
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External Websites: 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.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
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