Large sums of graduate debt are a harsh reality of practicing medicine for the majority of new physicians.
With almost $200,000 in median debt, managing student loans in a smart manner can save you tens of thousands of dollars. The complex and changing variety of loan repayment programs presents a unique challenge for many physicians. Fortunately, loan repayment is much simpler than the Krebs cycle, and is understandable with a little education.
Public Service Loan Forgiveness (PSLF) is a government program that is designed to incentivize a wide range of professionals to work for nonprofit and government organizations. Specifically, it states that if you make 120 payments while working at a qualifying 501(c) organization, the remainder of your student loans will be forgiven.
There is a lot of debate about the program and whether or not it will last, but this information is accurate as of the writing of this article.
With the shift of many physicians from private practice to employed status for hospitals and other nonprofit organizations, there has been a rapid growth in the number of physicians who qualify for PSLF, at the same time that loan debt has exploded from tuition inflation that is twice the rate of inflation and three times the rate of physician salary increases.
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This increase in eligible jobs, along with the ability to make several years of small repayments in residency, has made this a very attractive proposition for new graduates and those that have a very large debt-to-income ratio.
Loan Repayment Plans
It is very important to remember that aggressively paying off your loans is the first and simplest way to get out of debt. Physicians have a very high debt burden but are still relatively well-positioned to dig themselves out of the situation with an average salary of $195,000 for primary care1 and $284,000 for specialists1.