Student Loan Information

The median debt for the class of 2018 was $200,000, including undergraduate debt, according to the Education Debt Manager  published by the Association of American Medical Colleges (AAMC). That’s a lot of debt when you are starting your career! Fortunately, there are so many different resources that can help you prepare and face that debt head on.
The Education Debt Manager is an incredible tool that can be downloaded from the AAMC site for free! This financial guide provides information to help future, current, and former students manage educational debt in the medical community. It may also be beneficial for finding a financial professional, who can help you strategize your finances as you start in your new role. They can help you develop strategies to pay off your student loans without adding pressure to meet your living expenses.
Many hospitals, clinics, and health systems offer Student Loan Repayment benefits. The amount you receive can vary widely across the country and depends on your specialty, but the average is $75,000-$100,000. We all know debt for medical students is much higher than the average, but this benefit certainly helps.
The first tip we want you to have is knowing how this will be paid and for how long. Typically, contracts are written with a 2 to 3-year guarantee. During the “guarantee” time frame, you will receive the same salary as when you started. A common benefit is Student Loan Assistance. In most cases, your employer will give you a set amount and make a monthly payment directly to your lender. For example, if you receive $100,000 over a 3-year period, they would be sending $2,777.78 to your lender each month.
Some employers may offer you a $100,000 loan repayment benefit, which is an interest free loan. The employer will take a payment from every paycheck for the term of you guarantee. The only benefit to this type of arrangement is that you save paying interest on $100,000 of your loans. Keep in mind that you will still have to make payments to your lender/lenders for what you still owe, even though you may have consolidated your loans. Therefore, depending on the lender, technically, you could end up making 2 payments per month.
Typically, (but not always) the student loan assistance benefit can be negotiated. It is one of few negotiable items of the contract for a new physician out of residency. However, you need to be ready to sell the employer as to why you deserve more. Employers are being more careful about keeping everything equal. That’s why you need to prove yourself and your experience to deserve more than the offered amount. However, this is not something you should count on.
Doctors Without Quarters or is a free online consultation service to help you with building a strategy for paying your student loans. They can address all avenues that are available. This year, they will partner with medical schools, teaching hospitals and national associations to provide education and support to over 10,000 students and graduates.
The Public Service Loan Forgiveness (PSLF) vs. Private Sector Loan Forgiveness is worth taking a deeper dive to uncover the differences within both programs. Here is an example of a good strategy after you complete your training. This is the most critical loan decision you’ll make if you’ve been using available interest rates strategically during training, particularly if you’re deciding between offers from Public Service Loan Forgiveness (PSLF)-qualified employer and a private sector employer after training.
Case Study:
A graduating resident after 4 years of training with $250,000 in federal student loan debt was comparing:
  • $150,000 directly by a non-profit hospital
  • $205,000 salary from a for profit program

After contemplating the after-tax impact of Public Service Loan Forgiveness and the corresponding reduction in payments required for the next six years, the  $150,000 salary was worth over $240,000 on average for that six-year period.

Only by utilizing Income Driven Repayment during training can you position yourself for this opportunity.