MD Cents: Student Loans Stink, Wouldn’t It Be Great to Not Have Any?

Some people are blessed to graduate from undergraduate and medical school without student loans. This may be from smarts, talent, generous family members, hard work, or other reasons. I was not fortunate enough to graduate without student loan debt. The average amount of student loan debt after medical school is $180,000!

Let’s say that again–$180,000. That is the average–meaning that half of graduates have more than $180,000 in student loan debt.

What can you do to avoid having a second mortgage in student loan debt when you graduate? First, live frugally to minimize the amount of loans you take out. For the people reading this blog, that ship has sailed. You are already a fellow or attending so what’s done is done. Let’s talk about options once the loans are there.

  1. Refinance your loans with one of the many loan refinancing companies
  2. Public service loan forgiveness
  3. Military service
  4. Have your employer pay them
  5. Paying them off the old fashioned way

Each of these strategies has its advantages and disadvantages.

Refinancing your loans requires that you have a good credit score. There are many companies that would love to refinance your loans for you. This is a good strategy for those who will want to pay off their loans but save on interest costs. Rates now range from 1.9% to 7+%. Good credit scores and shorter terms will get you lower rates, which can save you thousands over the course of paying off loans. Refinancing with one of these companies requires that you get underwritten for the loan just as you would for a mortgage, meaning that you will need to provide financial information and the companies will decide what rate and other terms of the repayment schedule.

Public service loan forgiveness comes in a couple of flavors: Income based repayment and pay as you earn and working for an entity like the National Health Service Corps . Each has different requirements for when your loans were taken out, how much of your income you pay and when your loans will be forgiven. In a nutshell, if you work for a non-profit you can get the balance of your loans forgiven in 10 years as long as you make monthly payments for those 10 years. These programs could be the best deal out there for you. I say could be because no one has had any loans forgiven yet as the first loans will be forgiven in 2017. Also, often the payments in these programs do not cover the interest on the loans as you go forward, meaning that your balance actually goes up over time. This means that your loan balance will increase through many years of the program. One could see where this is a problem if the government decides to not honor this program as they are not obligated to honor it going forward.

You don’t have to imagine much to see how this headline would play in the media: “Government to subsidize student loans of some of the richest 2% in America.”

Military service can also lead to payment of your loans and gives the benefit of serving your country. The downsides to this include that your salary as a military physician will be less than civilian counterparts and the inherent risks in military service.

Some lucky folks can negotiate loan repayment into their contract, although this is usually just a portion of your overall salary. For example, you may be able to make $150,000 but if your employer offers loan repayment they may pay you $120,000 and $30,000 of loan repayment per year.

Paying them off the old fashioned way just doesn’t make much sense unless you have a low loan balance or want to pay them off over only 10 years and don’t want to try to lower your interest rate on your loans. The other instance where it makes sense to pay off your loans is if your loan balance would make IBR payments high enough that you would pay them off before 10 years of payments anyway.

What do you think? Will you take advantage of your options to lower your student loan bill? Why or why not?

No part of this document should be considered to be offering legal, tax, investment, or any other advice.  Please consult a licensed professional regarding your personal situation.

Brian Wagers

Brian Wagers

Assistant Professor of Emergency Medicine at Indiana University
Brian's academic interests include injury prevention, quality improvement, and global health. He is from Cincinnati, Ohio (go Reds and Bengals). Brian loves to travel, run, and is interested in the intersection of business, medicine, and health policy.
Brian Wagers
Brian Wagers

Brian Wagers

Brian's academic interests include injury prevention, quality improvement, and global health. He is from Cincinnati, Ohio (go Reds and Bengals). Brian loves to travel, run, and is interested in the intersection of business, medicine, and health policy.


  1. Don’t forget about NIH loan repayment. As long as you are engaging in 50% research in your job (including years 2-3 of PEM fellowship) you can receive loan repayment. It’s not easy to get, but if you do, it is great! They paid $55K of my loans during fellowship!

    • Andrea–Thanks for that addition! That is a wonderful opportunity for folks going into fellowship. Congrats on having a chunk of your loans taken care of.

Comments are closed.