3 Residents Tell Us What Medical School Debt Means for Their Future

As a medical school student, you learn to deal with annoyances you didn’t see coming when you applied for the program. Like working through sleep deprivation after a night shift. Or ending the day with bodily fluids on your clothes. Or navigating the maze of student loan payments.

Most people you know are probably in debt from college. But medical school graduates’ loans can be staggering.

I talked to three resident physicians about their experiences with student loans. Corey is a first-year family practice resident; Kirby is a second-year internal medicine resident; and Kelsey is a third-year dermatology resident. 

Here’s what they think you should know about student loans.

1. You’ll pay more than your friends who aren’t in medical school

Medical school is expensive. 

Borrowers with bachelor’s degrees typically owe between $20,000 and $25,000, according to the Federal Reserve. But, according to the Association of American Medical Colleges, medical school graduates owe an average of $200,000. 

Corey owes around $300,000. Because he’s a first-year resident whose payments are based on last year’s income, his monthly payments are $0. As a second-year resident, Kirby owes $280,886 with monthly payments of $264.

Looking to Kelsey, the third-year resident, may give you the best understanding of how your payments will look down the line. 

She owed around $250,000 when she graduated. But thanks to interest, a.k.a. the monkey on every borrower’s back, she now owes $307,788. Her monthly payments are $437, but her debt grows by $507 every month from interest.

As you can imagine, high monthly payments could make it hard for you to spend as freely as friends who have not acquired debt to attend medical school.

2. Your loans can affect how you think about common expenses

While your friends might feel comfortable going out for drinks or planning a weekend getaway, you’ll probably think about things differently — especially until you start making big bucks as a doctor.

Kelsey views every purchase she makes as having a 5.85% interest rate, because any money she doesn’t put toward loan payments costs her 5.85% in interest.

“This is especially true with big purchases, such as vacations and traveling to see my family,” she says. “This makes it hard to spend on recreational activities, as these purchases delay loan repayments and lead to a higher total balance.”

Kirby feels the same way, especially during the holiday season. 

“When you're spending that much more on gifts for friends and family, it's always there,” he explains. “Sometimes you feel guilty because, deep down, this money would be ‘better’ spent on loan repayment versus items [and] gifts.”

3. You’ll probably use the PAYE or REPAYE programs

As a resident physician, you’ll probably choose one of two repayment programs for federal loans: Pay As You Earn (PAYE) or Revised Pay As You Earn (REPAYE).

Both are income-driven repayment plans. To qualify for PAYE, you must demonstrate financial need, but anyone with federal loans can qualify for REPAYE.

The main difference is that you can still use REPAYE if your monthly payments would be higher than on the Standard 10-Year plan, but not with PAYE.

Corey, Kirby and Kelsey all use REPAYE. “The actual monthly payment for a normal payment plan is completely unattainable for a resident,” Corey says, referring to a 10-year standard repayment plan. “Unless you have other income sources, every resident in the country uses PAYE or REPAYE,” he guesses.

As a resident, you won’t earn that fancy doctor salary yet, so using an income-driven repayment plan can help you snag lower payments until you are. But there’s another big advantage to REPAYE: Its interest rate subsidies are better than those of other repayment plans.

For the first three years after you leave school, REPAYE covers the full cost of interest on subsidized loans and half the cost of interest on unsubsidized loans. After that, it covers half the interest of both. Interest still accumulates, but you’ll pay much less than you would under another repayment plan.

4. Make use of your deferment period

When you graduate from medical school, you get a six-month deferment period before your monthly student loan payments become due. Sure, you could join your friends for nights out before payments take over your life. Or you could be more strategic. 

Kirby used his deferment period to save money and create an emergency fund. This way, if he needs to replace his car brakes, for example, while making payments early in his career, it won’t destroy him financially.

Kirby was actually able to score a little extra deferment time. He deferred for six months, just like anyone else, and was originally signed up for the standard 10-year repayment plan. “I did not select the REPAYE plan until my first payment on the original plan was due,” he explains. “When switching between payment plans, they give you 60 days to provide documentation before the next plan takes effect.”

As a result, Kirby had a couple extra months to save money before making payments (although interest still accrues on unsubsidized loans during this period!).

5. Student debt might affect your career choices

The three residents have different takes on how student debt will affect their careers.

Kirby didn’t initially pursue medicine for the money. But now he finds that finances are affecting his career path.

He feels pressure about his job choice. Certain medical positions pay more than others, and he finds that reality hard to ignore. “It really pushes me to find the highest paying job that will give me the quickest path to financial freedom over the best job that would possibly be the most rewarding [or] the best personal fit,” he says.

At this point, Corey doesn’t feel pressure to take a high-paying job to pay off loans more quickly. “I am going into family medicine, one of the historically lowest paying medical fields,” he says. “And yet, my starting salary [based on the national average] will be around $230,000 per year.”

Corey believes that as long as he makes smart financial decisions, even a “low-paying” medical job will allow him to pay off loans relatively quickly. That knowledge reduces a lot of stress.

Like Corey, Kelsey says her loans aren’t affecting her career plan yet. That could be because dermatology is one of the highest-paying medical fields. Dermatologists’ average compensation in 2019 was $419,000, according to Medscape.

How will student loans affect your life after medical school?

Medical school student loans can be a burden. But if you know what to expect and how to strategize, the process may be more manageable.

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