From residency to repayment: What new doctors need to know in 2025

Andrew Paulson, CSLP © The White Coat Investor

As new doctors transition from medical school and residency to attending roles, they face a daunting financial reality: managing significant student loan debt in a rapidly evolving policy landscape. According to Education Data, the average student loan debt for medical graduates in 2025 is a staggering $243,483. This substantial debt, combined with uncertainty, legal challenges, and shifting repayment and forgiveness options, makes it critical for new doctors to understand repayment strategies, forgiveness programs and refinancing options.

Here are must-know strategies to lay the groundwork for a debt-free, financially secure career.

PSLF: A promising path with considerations

Public Service Loan Forgiveness (PSLF) remains a cornerstone of student loan strategy for many new doctors, particularly those employed by nonprofit hospitals, academic medical centers or government entities. PSLF promises tax-free loan forgiveness if you follow these steps:

1. Work at least 30 hours per week for a qualifying employer (e.g., a nonprofit, 501(c)(3) or government entity; California and Texas have exceptions)
2. Have direct federal student loans
3. Enroll in an income-driven repayment (IDR) plan
4. Make 120 on-time qualifying payments

Nearly 5 million Americans, many of them physicians, work for nonprofit hospitals. As a result, PSLF plays a key role in reducing debt burdens. Many physicians will choose a career in public service specifically to achieve PSLF.

Income-driven repayment: Navigating the options

For new doctors, selecting the appropriate IDR plan is critical for getting a good start on your repayment journey. There are currently four income-driven repayment plans:

• Pay As You Earn (PAYE)
• Income-Based Repayment (IBR)
• Income-Contingent Repayment (ICR)
• Saving On Valuable Education (SAVE)

Each IDR plan has nuances, and most early-career docs should look into the IBR or PAYE plan. The aforementioned SAVE plan was the most generous but is unlikely to remain a repayment option moving forward.

Refinancing: A strategic choice for some

Refinancing federal loans into private loans can reduce interest rates, saving thousands over the loan term, but it eliminates access to federal benefits like PSLF and IDR. For new doctors with debt-to-income ratios below 1.0 and no plans to work for a nonprofit employer, refinancing may be advantageous. However, it’s usually best to stay in IDR while in training to keep your options open, as career plans may change.

If you are considering refinancing, remember to do the following:

• Refinance private student loans: Refinancing student loans that are already private is a great idea if you can lower the interest rate.
• Determine work setting post training: Nonprofit employment = PSLF, private practice/group = refinancing.
• Assess debt-to-income ratio: If attending income exceeds your student loan balance, you may be best off refinancing. Those with longer training periods (five-plus years) could be an exception to the rule and may hold off on refinancing for PSLF.
• Use vetted lenders: Platforms like White Coat Investor offer negotiated refinancing deals with cash rebates and competitive rates.

In 2025, new doctors face a complex student loan landscape with legal, administrative and legislative uncertainties. By understanding PSLF, IDR and refinancing, physicians can craft strategies that minimize debt burdens and maximize financial security.

Andrew Paulson, CSLP, is co-founder and lead student loan consultant at StudentLoanAdvice.com, a White Coat Investor company. Andrew combines firsthand experience with deep financial expertise to offer practical, results-driven advice.