THE BLOG
12/19/2014 05:45 pm ET Updated Feb 18, 2015

How Doctors Can Save $150K on Their Student Debt

The cost of a medical education can surpass $300,000. Every day at Credible, we witness many physicians seeking better ways to manage their medical school debt, despite often having high salaries. Through our experience helping physicians with loan repayment options, we have found two strategies that can save physicians over a hundred thousand dollars each.

Refinance your student loans

On average, a physician will accrue $180,000 in student loans to fund their medical and premedical education. The majority of these loans are federal loans that likely have higher interest rates than the current market rates. When physicians come to Credible to refinance their loans with stable employment and several years of repayment history, we have seen savings of around $55,000 over the course of their loan repayment timeline. The borrower also has the ability to choose the length of their loan term and adjust their monthly payment amount accordingly. If you currently are participating in a forgiveness program or looking to take part in a repayment option, consider refinancing after completion of the program in order to maintain all your benefits.

Take advantage of government repayment programs

The Association of American Medical Colleges (AAMC) details several repayment plans that physicians can sign up for post-residency. At current federal graduate loan interest rates (Direct and Direct Plus), a physician will likely have to pay around $30,000 per year on a standard ten-year repayment plan to pay off his or her student debt, while many federally backed programs can save physicians significantly more annually.

For physicians specializing in primary care medicine, state and federal physician loan repayment programs offer great incentives to help recruit and retain physicians in disadvantaged communities. Many of these programs get overlooked, but the payback is significant -- in some cases over $50,000 per year. Participants in these programs are still offered competitive salaries, and are further incentivized with these generous yearly forgiveness sums. The combination of standard loan repayment with service incentives creates the opportunity for significant debt reduction over the course of the service commitment.

There are more than 60 physician loan repayment programs offered on a state and federal level. Here are the top ten state repayment programs that can save you over $100,000 in student loans.

1. South Dakota: Recruitment Assistance Program
Service commitment: 3 years
Award maximum: $172,172
Repayment (Annual award): $57,390

2. Pennsylvania: Primary Care Loan Repayment Program
Service commitment: 2 years
Award maximum: $100,00
Repayment (Annual award): $50,000

3. Alabama: State Loan Repayment Program
Service commitment: 2 years
Award maximum: $100,000
Repayment (Annual award): $50,000

4. Iowa: State Loan Repayment Program
Service commitment: 2 years
Award maximum: $100,000
Repayment (Annual award): $50,000

5. Delaware: State Loan Repayment Program
Service commitment: 2 years
Award maximum: $100,000 advanced practitioner and 70,000 mid-level
Repayment (Annual award): 50,000 and 35,000

6. Texas: Physician Education Loan Repayment Program
Service commitment: 4 years
Award maximum: $160,000
Repayment (Annual award) = $40,000

7. New Jersey: Primary Care Loan Redemption Program
Service commitment: 2 years (4 max)
Award maximum: $120,000
Repayment (Annual award): $30,000

8. California: Steven M. Thompson Physician Corps Loan Repayment
Service commitment: 3 years
Award maximum: $105,000
Repayment (Annual award): $35,000

9. Minnesota: Urban Physician Loan Forgiveness Program
Service commitment: 2 years (4 max)
Award maximum: $100,000
Repayment (Annual award): $25,000

10. Montana: State Loan Repayment
Service commitment: 5 years
Award maximum: $100,000
Repayment (Annual award): $20,000

Source
"Medical Student Education: Debt, Costs, and Loan Repayment Fact Card." AAMC First. October 2014. Web. 17 Dec. 2014

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