The physician financial trap: 'You don't know what you don't know'

Physicians are among the highest earners in the American workforce. They are also, by many measures, among the most financially stressed.

That tension sits at the center of Panacea Financial's 2026 customer survey, "The Financial Lives of Doctors," which found that financial confidence among physicians barely budges across career stages — rising from just 2.33 out of 5 in medical school to 3.27 among practicing doctors. More than half of respondents said they would not choose medicine again, or were unsure if they would, if federal student loans were capped at $200,000. Nearly two-thirds cited tax complexity as a top career challenge.

Medical Economics spoke with Michael Jerkins, M.D., M.Ed., president and co-founder of Panacea Financial, and Jillian Vestal, J.D., head of legal services at Panacea Legal, about what's driving those numbers — and what physicians at every stage can do about it.

The following transcript has been edited for style and clarity.

The survey found that 53% of respondents said they would not choose medicine again, or were unsure if they would, if federal student loans were capped at $200,000. When you saw that number, what was your reaction, and what does it suggest about where the profession is headed?

Jerkins: I think it confirms that being a physician is tough. Training is tough mentally, physically and financially, and it is probably going to get a bit tougher, at least in the short term, with this change.

At the same time, there are still reasons for optimism. We recently saw a record number of medical students enter the Match, and 2024 was a record year for allopathic medical school matriculants. To me, and maybe not everyone would say this, being a doctor is still the coolest job you can have. A lot of that is because of the purpose involved in helping people when they need it. There is a sacred aspect to being a doctor, and there is also a financial side that can be rewarding.

Now, I do think there is a point at which the financial burden could make more people reconsider. I do not know exactly where that point is, but despite the headwinds, there is still strong demand from people who want to enter the profession.

The other thing to remember is that the loan cap only affects people who need loans. About 25% of medical students do not need lending at all. So there are real downstream effects here. If 75% of students are more financially stressed because of the cap, then you may end up with a greater share of medical students coming from wealthier backgrounds or backgrounds where loans are less necessary. That has implications for who goes into medicine, where they practice and who ultimately receives care.

Nearly half of respondents, 49%, said understanding whether their compensation is competitive is a top career challenge. From where you sit reviewing physician contracts, how common is it for physicians to come to you without any real baseline for what fair pay actually looks like?

Vestal: Extremely common. I see it all the time, especially with people coming right out of training. Their point of reference is often limited to what their peers are seeing in terms of offers. They do not necessarily know what data sources to look at, how to read compensation data or even how to fully understand what their contract is actually saying.

A physician may see a number and assume that is the number, but they do not know what is behind it. Is it guaranteed? For how long? Are there productivity incentives? Quality bonuses? Call pay? Required call that is unpaid? If you have two contracts with the same salary number but one requires 10 days of call without additional pay and the other starts paying for call immediately, those contracts are not equal. Unless you really dig into the contract, you are not going to find that.

It is also common for physicians to come in with a number in their head that they have heard somewhere and assume that is what they should be making. Sometimes that is actually harder to work through, because then we have to step back and ask where that number came from and whether it is even comparable to the contract in front of them.

Honestly, I think the 49% figure may be low. My guess is there are doctors who do not even know that they do not know. A lot of my work ends up being educational, and I really enjoy that. But it is still surprising how little information physicians often have about their own compensation and what they should be asking for.

Jerkins: Residencies and fellowships do a great job training you to be a strong clinician, but they are not training you to make strong employment decisions right out of training. I did not really understand that until I engaged with an attorney after residency and realized how many basic things I had no understanding of.

And to be fair, it is not necessarily that the hospital is trying to make things confusing. But once they start laying out the methodology of how productivity ties into pay, especially in a large system, it can get complicated very quickly. Some people call it “funny money.” It may all be there in a spreadsheet, but that does not mean it is easy to understand. That is why it helps so much to have someone who has been on the other side walk you through it.

Financial confidence barely moves across career stages, from 2.33 out of 5 in school to 3.27 in practice. Why is earning more not translating into feeling more financially secure?

Jerkins: I think financial confidence is a little different from financial security. Once you are in practice, you are making four or five times what you made in residency or fellowship, so you may feel more secure because you can absorb some mistakes. But that does not mean you feel confident about long-term planning, tax strategy, retirement savings or how to structure things well.

Doctors are busy trying to practice medicine and figure out how to do their jobs. Their time and mental bandwidth are spent on clinical care, clinical decision-making and administrative work. It is hard to step back, breathe and either learn these topics yourself or find someone who can really teach you.

46% of doctors in the report said they do not fully understand their own repayment, forgiveness or refinancing options. How does that knowledge gap bleed into contract negotiations?

Vestal: Physicians absolutely make employment decisions without fully accounting for their debt, and contract negotiations are a big part of that.

First, doctors are often leaving money on the table in terms of support that could be provided, whether that is a signing bonus, student loan assistance or community-based support programs that the employer could help connect them with. I always encourage doctors to explore every option that exists.

Then there is the contract itself. If student loan support is being offered, how is it going to be paid? Is it paid directly to the doctor or to the lender? Is it a lump sum or monthly? What documentation does the physician have to provide? What commitment is required in return?

A physician may say, “I’m getting $100,000 in student loan forgiveness,” but when you ask how long they have to stay, how the money is paid or what happens if the contract ends early, they often do not know.

That is where the contract really matters. If the physician leaves, or if the employer ends the agreement, who is responsible for repaying that money? I always want to see those outcomes handled differently depending on who ends the contract. If the employer says, “We’re overstaffed,” or “We’re closing this service line,” I do not want the doctor suddenly on the hook for tens of thousands of dollars. I also want repayment obligations to be prorated rather than all-or-nothing.

Even if we cannot negotiate every piece, just understanding what is in the agreement matters. Awareness itself can have a major financial impact.

70% of respondents struggle to balance loan repayment with other life goals, and 37% of those are already in practice. What does that mean in practical terms for a physician trying to make decisions like buying a home or starting a family?

Jerkins: I think the survey shows that student loans are the elephant in the room in almost any financial decision a doctor makes.

When you graduate with $200,000, $300,000, $400,000 or even $500,000 to $600,000 in student debt, then every question about buying a house, how large that house should be, when to start a family or how much to save for retirement should be influenced by your student loan plan.

I also think this is psychologically difficult because when you finish residency or fellowship, you are looking at peers your age who took different career paths. They have had weekends off, taken vacations, bought homes and built a different kind of life while you were still in training. So when you finally start earning more, there is a natural tendency to feel like you deserve the nice house, the vacation and everything else — and in some ways, you do.

But that is also the period when doctors are most at risk of making financial mistakes. That is why it matters so much to know what your student loan strategy actually is. Should an extra dollar go toward your loans, some other debt or investing? That depends on whether your strategy is forgiveness, aggressive payoff or something else. Those should not be month-to-month decisions made in a vacuum. They should be made in the context of a broader plan.

That is why I think it can be very helpful to work with someone who understands physician loans and repayment strategy. There are certified student loan planners, or CSLPs, who focus specifically on this. It is not simple, and it is only getting more complicated.

Tax complexity was the most cited career challenge at 67%, and it was nearly evenly split between trainees and physicians already in practice. What makes physician compensation so difficult to navigate from a tax standpoint?

Vestal: Tax law is extremely complicated in general, and I think for high earners it only gets more complicated.

One issue I see a lot is that employers often structure signing bonuses, stipends or other upfront incentives as loans. That lets them pay the money upfront while preserving the ability to recoup it if the physician leaves. But what that can mean is the doctor receives the money one way, and then it is taxed later under totally different circumstances, maybe in another tax bracket and even in another state.

That is not always obvious to the physician. They may not realize they are going to be taxed on it later, or how that is going to happen. Relocation reimbursements are another example. Even when it is reimbursement, the Internal Revenue Service still counts that as taxable income. So there are all these pieces that can seem small relative to the base salary, but when you add them up, they create a real tax burden. Doctors often are not expecting to see all of that show up on a W-2 in the first year.

Jerkins: The other thing I would add is 1099 work. A lot of physicians who are otherwise W-2 employees take short-term contracts or locums work and have no idea what to do from a tax standpoint. Then they get hit with a huge bill at the end of the year and learn the hard way. That is a growing segment of physician work, and it is a totally different tax situation that people really need to understand before they take that first contract.

What does the financial services industry consistently get wrong about physicians as a financial demographic?

Jerkins: A few things.

One is the assumption that doctors are careless with money. I do not think that is true. I think most of the time doctors are just busy and often uninformed, not irresponsible. Unfortunately, there are people in financial services who see “doctor” and see a dollar sign and take advantage of the fact that physicians may be distracted by work or may not have had good guidance.

Another thing traditional financial services often get wrong is access. Doctors are way more likely than the general population to be working at 6 a.m., midnight, weekends and holidays. But the industry still largely operates on an 8-to-5 schedule. That makes it much harder for physicians to actually get help when they need it.

And then there is risk modeling. Early-career doctors or trainees can look risky on paper because they have huge debt loads and maybe limited credit history. But that does not reflect the actual long-term risk of lending to doctors. At the same time, doctors also have a weird life cycle. There may be temporary income gaps between training and practice or between jobs, and traditional lenders often do not know what to do with that. A physician may have a signed contract to start a stable, well-paid job in a few months, but because there is not current income coming in, the bank just cannot process that.

That mismatch is a big part of why Panacea exists. We are not trying to understand everybody. We are trying to understand one group well.

If a physician in their first year of practice is reading this, carrying significant debt, feeling behind and not sure where to start, what is the single most important thing they can do right now?

Jerkins: First, it is not too late to educate yourself. You are not alone, and you are not automatically behind just because you do not understand all of this yet.

Second, do not assume appearances tell the full story. You may see peers who look like they have everything together — nice house, great lifestyle, perfect social media — but you do not see their retirement balance or their debt payments. Doctors make enough money to look like they have it all together while still making a lot of financial mistakes.

Ultimately, that can lock you into a cycle where you are always trading time for money and never really controlling your own time because you are stuck on a debt treadmill, including avoidable debt.

So I would say: educate yourself, or if you do not have the time, find a fiduciary financial advisor who has experience working with doctors. Ask hard questions. Ask for references. Be meticulous about it. We are very detail-oriented in clinical decision-making, and we should be that way in financial decision-making too.

Vestal: I would add that part of that education can be having your contract reviewed, even if you have already signed it and even if you have no intention of leaving the job.

Make sure you understand it. Make sure what is happening is what is supposed to happen. I have reviewed contracts for doctors who were already practicing and discovered they were supposed to receive money they never got. They took the contract back, and they got the checks.

So even if you are already in the middle of the arrangement, the contract can still be part of your financial education.

Is there anything else from the report or from your work with physicians that you think is important for doctors to keep in mind?

Jerkins: One thing I would say is: do not underestimate your worth as a physician, whether that is in negotiations with an employer or in broader conversations about reimbursement.

One mistake I see a lot is physicians assuming the first offer is the best offer and not getting more than one offer from different employers. You really want at least two or three offers if possible, because that helps keep people honest about what you are actually worth.

I do not think physicians do a great job, in general, of understanding their worth and then advocating for it. That is something we need to get better at.

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