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Up to 100 million Americans struggle with medical debt in 2025, according to the White House. What’s more, health insurance costs, which can help control medical costs, are getting more expensive: The price went up 7% year over year in 2025, and 6% the year prior.

If you’re facing financial challenges due to medical debt, learn some options here.

How Much Do Americans Spend on Healthcare Each Year?

Many people receive health insurance through an employer. And even though employers generally help pay for a portion of the costs, the financial burden can still be significant. A typical household spends $513 per month — or $6,159 per year — on healthcare expenses, according to the U.S. Bureau of Labor Statistics Consumer Expenditure Survey. This includes routine things such as health insurance costs, doctor’s visits, medications, and medical supplies. That reflects an uptick of 7.3% year over year.

How Many Americans Struggle With Medical Debt?

Despite employer-sponsored health plans covering some of the costs, some Americans struggle to pay their medical bills.

In fact, estimates as of early 2025 range as high as 100 million Americans — or almost one in three people — struggling with medical debt. Other surveys say the number is closer to 20 million, which is still quite a high number.

Lower-income earners, Black Americans, those with chronic illnesses, and those between ages 35 and 64 typically have the most debt. As you might guess, medical debt can increase with age.

What Happens If Medical Debt Is Not Paid?

Even if you’re facing an overwhelming amount of medical debt, the worst thing to do is ignore it because you don’t have the cash in your bank account. Depending on the state where you live, a medical provider might charge you a late fee for bills not paid on time and may even charge interest if payments aren’t made at all.

After a few months, if medical bills go unpaid, the provider might choose to pass the debt over to a debt collection agency.

If the medical provider does decide to give the debt to a debt collection agency, the debt might immediately appear on the debtor’s credit report and affect their credit score. The debt collector will take steps to collect the bill. If the debt is not collected, the provider may take it even further and take legal action.

While U.S. laws don’t allow debtors to be imprisoned for unpaid debts, they could face another consequence, such as wage garnishment. If the case goes to court and a judge rules in favor of the medical service provider, there’s a chance the debtor’s wages could be garnished. In simple terms, this means that payment will be taken out of their paycheck and sent to the provider. This means less money will turn up in your checking account and can make paying bills more challenging.

4 Medical Debt Relief Options

While there are no one-size-fits-all solutions to help ease the financial burden of medical debt, the following tips for paying off outstanding debt may be worth considering. It’s also a smart move to contact a professional before taking any action.

1. Medical Debt Payment Plans

Because healthcare services are often costly, contacting medical providers to ask if they offer payment plans might be one plan of action to consider. Some medical providers may offer payment plans to pay off debt in installments instead of paying it off all at once, which might make the debt more manageable.

2. Negotiating Medical Debt

It may feel counterintuitive or inappropriate to negotiate medical bills, but some providers actually expect it. While it may seem awkward at first, negotiating medical bills can help make them more manageable. Additionally, negotiating may even help avoid a credit score ding, or worse, getting sued.

For starters, reaching out to the provider’s billing department directly to see if negotiation of medical debt is possible might be an option. Many providers have financial departments that can determine if patients qualify for discounts or reductions. Remember, when negotiating, try to be as polite as possible. But it can be helpful to be persistent, too.

Another point to remember is that providers may favor cash. So those who can afford to make a lump sum payment might consider asking if the provider offers a discount for a cash payment.

Recommended: What Is Considered a Bad Credit Score?

3. Working With a Nonprofit Advocate

If the medical bills keep piling up, it may be worthwhile to consider finding a nonprofit advocate or reputable credit counseling organization that offers assistance with managing money and debts, creating a budget, and providing resources to help consumers pay off the debt that’s dogging them.

Certified counselors that have been trained to help individuals create a plan to solve financial concerns can be found through the U.S. Department of Justice. These organizations offer counseling and debt management plans and services.

One solution credit counselors may suggest is a debt management plan. These plans may help the borrowers get their debt under control.

With one type of debt management plan, the borrower makes a lump sum payment to the credit organization, and then the organization pays the creditor in installment payments. If you decide to go this route, make sure not to confuse a credit counseling nonprofit organization with a debt settlement company.

In contrast to credit counseling nonprofits, debt settlement companies are profit-driven. They negotiate with creditors to reduce the debt owed and accept a settlement — a lump sum — that’s less than the original debt. However, these companies can charge a 15% to 25% fee on top of the debt settled. While some of these companies are legitimate, consumers are cautioned to be wary of scams.

Some deceptive practices include guarantees that all of a person’s debts will be settled for a small amount of money, that debtors should stop paying their debts without explaining the consequences of such actions, or collection of fees for services before reviewing a person’s financial situation. Researching a company’s reputation can be done through the state attorney general’s office or the state consumer protection agency.

4. Using a Personal Loan

Using a credit card to pay off medical bills doesn’t help anything when you’re trying to reduce your overall debt. Taking out a personal loan could be a way to streamline multiple bills into one monthly payment.

Consolidating medical debt might include a number of benefits. It could help you get a fixed monthly payment and, potentially, reduced interest rates.

It’s important to compare rates and understand how a new loan could pay off in the long run. If your monthly payment is lower because the loan term is longer, for example, it might not be a good strategy, because it means you may be making more interest payments and therefore paying more over the life of the loan.

Recommended: Emergency Fund Calculator

The Takeaway

If you’re steeped in medical bills, you’re hardly alone. While dealing with the debt may not be pleasant, it’s a task you shouldn’t ignore. Otherwise, you may end up with your credit score being negatively impacted or your debt being passed along to a collections agency.

Fortunately, there are some debt relief options you may want to consider. Examples include exploring debt payment plans, negotiating the debt with your provider, enlisting the help of a nonprofit advocate, or taking out a personal loan to help pay off the bills. Having the right banking partner, such as one with favorable interest rates and low or no fees, can be a smart move too.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

FAQ

Is there debt forgiveness for medical bills?

Some hospitals offer debt forgiveness, or what may be called charity care, for certain patients.

How can you handle medical bills you can’t afford?

Options can include negotiating your bill, requesting a payment plan, working with an advocate, looking into debt repayment plans, or taking out a personal loan.

Can you negotiate medical bills after insurance?

Yes, it is a common practice for patients to negotiate the remaining balance after insurance with their healthcare provider’s billing office. Politely explaining your situation and asking for discounts or an accommodation is a path to consider.

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SOBNK-Q225-017

Taking a break from financial obligations can offer some breathing room, but it’s important to understand how deferred payments may affect your credit score.

The 2023 debt ceiling bill officially ended the three-year Covid-19 forbearance of federal student loans. As a result, student loan interest accrual resumed on Sept. 1, 2023, and payments in October 2023.

Although the pandemic-related pause that began in March 2020 is no longer in effect, the Biden administration has implemented a temporary “on-ramp” protection. Any federal student loan borrower who received the Covid-19 forbearance relief will be eligible for the 12-month on-ramp protection automatically. This means you’ll be protected from having your federal student loans reported as delinquent if you fail to make any required loan payments from October 2023 through September 2024.

Below we highlight how the on-ramp protection works and how federal student loan borrowers may also benefit from the Saving on a Valuable Education (SAVE) Plan.

What Is a Student Loan Forbearance Extension?

Congress authorized the initial Covid-19 student loan forbearance in March 2020 when it passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The CARES Act suspended federal student loan payments and federal student loan interest accrual through September 30, 2020.

Two presidential administrations — starting with the Trump administration — extended the Covid-19 forbearance through executive action. The Biden administration issued several extensions to the Covid-19 forbearance up until the 2023 debt ceiling bill ended the practice.

Federal student loan borrowers facing financial difficulties may request a general forbearance, and some borrowers may qualify for a mandatory forbearance. A general or mandatory forbearance can temporarily suspend making loan payments during an approved period.

Federal student loan forbearances typically have 12-month durations, but you can request an extension if you meet the requirements. The cumulative limit on a general forbearance is three years.

Recommended: What Is Student Loan Forbearance?

Will Student Loan Forbearance Be Extended?

The passage of the 2023 debt ceiling bill guarantees the Covid-19 forbearance will not be extended. Federal student loan interest accrual resumed Sept. 1, 2023, and borrowers are now expected to make required payments when due.

So the Covid-19 student loan forbearance will not be extended, and the Biden administration’s one-time student loan forgiveness plan under the HEROES Act will not take effect. The Supreme Court rejected Biden’s broad debt relief plan in June 2023, finding the HEROES Act did not authorize the program.

Although the Covid-19 forbearance will not be extended under the HEROES Act, the Biden administration has implemented temporary “on-ramp” protections.

If you’re covered by the on-ramp, you’re protected from having your federal student loans reported as delinquent or placed in default from October 2023 through September 2024. But federal student loan interest will still accrue during the on-ramp, so failing to pay may increase your student debt burden.


💡 Quick Tip: Ready to refinance your student loan? You could save thousands.

How to Extend or Pause Student Loan Payments in General

If you’re concerned about your ability to resume student loan payments beyond the temporary on-ramp protection, consider talking to your student loan servicer about:

•   General student loan forbearance

•   General student loan deferment

•   An income-driven repayment plan

•   Public Service Loan Forgiveness program

Income-Driven Repayment (IDR)

Based on your income and family size, an IDR plan can set your student loan payments at an affordable repayment amount per month for you. There are four plans, which last for a certain number of years and forgive any remaining balance after that:

•   Saving on a Valuable Education (SAVE) Plan

•   Pay As You Earn (PAYE) Plan

•   Income-Based Repayment Plan

•   Income-Contingent Repayment Plan

The SAVE Plan replaced the former REPAYE Plan in July 2023. If you were enrolled in the REPAYE Plan at that time, you’ve been automatically enrolled in the SAVE Plan.

The SAVE Plan can give you a $0 monthly payment if your income is within 225% of the federal poverty guideline (or less than $32,805 for a single borrower and $67,500 for a family of four in 2023).

Another benefit to the SAVE Plan is that your loan balance won’t grow over time if your monthly payment amount is less than the interest accruing.

Refinancing

It’s possible to consolidate both federal and private student loans into one new loan when you refinance your student loans with a private lender. If an applicant qualifies for a lower interest rate and a shorter term, it could reduce the amount of money paid in interest over the life of the loan. You may pay more interest over the life of the loan if you refinance with an extended term.


💡 Quick Tip: Refinancing could be a great choice for working graduates who have higher-interest graduate PLUS loans, Direct Unsubsidized Loans, and/or private loans.

Alternative Student Loan Financing Options

As you’re thinking about college funding, keep this in mind: You can choose from a number of college financing options, including scholarships, grants, and private student loans:

•   Scholarships. Scholarships are awarded based on merit or need, and students do not need to repay them. Students can get scholarships through businesses, colleges, and other organizations. There are online scholarship search tools that can help you find opportunities you might be eligible for.

•   Direct PLUS Loans. Direct PLUS Loans can help graduate or professional students pay for college. They can also help parents of dependent undergraduate students pay for their child’s college education. You might want to consider a parent PLUS loan refi to a lower rate if you’re repaying a PLUS loan.

•   Grants. Students can get grants from states, the federal government, a public body, and/or other organizations to pay for college.

•   Private student loans. Private student loans are given by commercial lenders, not the U.S. Department of Education. Unlike most federal student loans, you will undergo a credit check and possibly have to get a cosigner to sign on the loan with you.

The Takeaway

The Covid-19 forbearance is no longer in effect and won’t be extended under the HEROES Act. This means federal student loan borrowers are generally expected to make required loan payments when due. (A temporary on-ramp protection from October 2023 through September 2024 may protect you from typical delinquency impacts, but it won’t stop your interest from accruing.)

Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.

FAQ

How do I know when my student loan payments will resume?

Federal student loan payments resumed in October 2023. You may receive billing statements from your federal loan servicer going forward.

What does student loan forbearance mean?

Forbearance means a borrower can temporarily suspend making loan payments during an approved period. There are two main types of forbearance for federal student loans: general and mandatory. This does not include the former Covid-19 forbearance, which ended as required under the bipartisan Fiscal Responsibility Act of 2023.

What are income-driven repayment plans?

An alternative to forbearance, income-driven repayment plans can set your monthly loan payments at an affordable amount for you. There are four plans. Each lasts a certain number of years and forgives any remaining balance after that. Beginning in July 2024, borrowers with original principal balances of less than $12,000 can have their remaining loan balance forgiven after 10 years of monthly qualifying payments under the SAVE Plan.

About the author

Melissa Brock

Melissa Brock is a higher education and personal finance expert with more than a decade of experience writing online content. She spent 12 years in college admission prior to switching to full-time freelance writing and editing. Read full bio.

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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.