Here’s How You Might be Able to Pay Your Medical School Debt Effectively

An average medical student graduates with debt 6 times larger than any other college graduate [1]

Therefore, regardless of how well-paid doctors might be, most doctors have to bear the woes of debt repayment. 

On top of all that, doctors are often never given the kind of financial education needed to tackle debt effectively. 

As a result, paying off their ever-increasing student loans tends to become one of the biggest contributors to a physician’s professional burnout [2]

And when working a job as demanding as a doctor’s, burnout may be the last thing you want. 

Therefore, it might help to explore ways to get your student loans under control and prevent them from taking a toll on your financial health or professional performance. 

In this article, we are sharing some tried-and-true debt repayment strategies to potentially help you step closer to a debt-free life.   

Your Debt Repayment Action Plan – Get Rid of Debt and Live the Life You Deserve

79 to 89% of medical school graduates have student loans [3], most of them leaving with a whopping six-figure debt [4]

This debt tends to either push physicians into financial distress or hold them back from enjoying the comfortable lifestyle their profession promises. 

Here are our top picks of tailored debt repayment strategies that might help you reorient your financial situation and get a grip on your student loans:

Don’t Defer Payment During Residency

Most medical school graduates put off paying their student loans during residency, citing low income. 

Without regular payments bringing your debt figures down and interest increasing it every year, deferring loans may result in doctors leaving training with more debt than they actually owed. 

Therefore, it might make sense to prioritize paying down your debt during your residency, so you might be able to save time and money and possibly leave with a little less debt repayment stress. 

There are many ways you can go about paying debt while working as a resident, and we will discuss a couple of them below. 

But an important piece of advice would be to try and make sure your monthly or annual debt payment is higher than the interest amount. This way, you will be able to make a mark on the figure and reduce the amount you owe. 

Continue Living Like a Resident

Doctors often experience a steep pay raise as residency transcends into professional medical practice. Some fellows report receiving a 20% pay raise as they go from residency to fellowship [5], while a physician’s salary goes from around $64K to $160K as they shift from being residents to certified physicians [6] [7]

This sharp increase in income often compels physicians to start living the extravagant lifestyle they deserve. 

However, this can be a key moment in your career. 

You can either use the extra money to build a luxurious lifestyle. Or put that lifestyle on hold for a couple of years, live like a resident for a little longer, and use the income hike to pay off your debt. 

Many financially smart physicians go this route. In fact, 35% of physicians claim to have paid their debt within five years of graduating from med school [8]

And you can do it too. 

Keep your discretionary expenses as low as you can. Eat in whenever possible, even if coming home and cooking a meal may be the last thing you want to do after a long day at the hospital. 

Consider moving closer to work, so you might be able to save on travel expenses. 

Look into some tax-write offs that you might be eligible for and capitalize on them. 

Finally, consider working with a financial professional to build a budget that focuses on debt repayment and building an emergency fund by optimizing your cashflows. 

Go for Moonlighting

Moonlighting is when a person takes a secondary job, outside of normal work hours, mostly to support their primary income. 

A report by Medscape found that 37% of physicians have a side job, while 45% of the physicians cite financial stress as the reason for moonlighting [9]

As a medical professional, you have many options if you decide to moonlight. 

More than 40,000+ medical practitioners across the US work as locum tenens [10]

This might be a good moonlighting option if you don’t want to step out of your field for extra income. 

Working locum tenens may pay well and might support your debt repayment efforts. According to a report, around half the moonlighting physicians make around $30,000 extra income every year, while a quarter of them bring in between $30-$70K as secondary earnings [11]

Of course, the amount you make may vary, but this gives you an idea of how much you might be able to earn by working locum tenens. 

You can use all the extra income you generate with moonlighting to make higher debt payments and potentially walk away from debt sooner. 

However, there are some caveats to moonlighting.  

The income you make with moonlighting would be taxable. That would mean a higher tax bill. 

Secondly, you may not have enough time to focus on your personal nourishment, professional development, or your family with your busy routine. 

So weigh the pros and cons thoroughly before deciding to moonlight. 

Negotiate a Physician Signing Bonus

Apart from paying your debt off in monthly payments, you also have the option of paying it down in one lump sum amount. And you may capitalize on this option by negotiating a physician signing bonus. 

Physicians are in high demand, and therefore, many employers – hospitals or healthcare services – offer a signing bonus when physicians sign new contracts with them. 

But certain employers might not offer a signing bonus themselves. And in that case, you may have to negotiate with them a little to get them to loosen their purse strings. 

For successful negotiation, consider doing some research to find out what your peers are receiving. Additionally, figure out and be explicit about the value you are bringing to the health care organization. Make sure they know you are in demand so they can capitalize on the opportunity that is your service. 

The amount of the bonus may also vary. Rural and low population areas tend to pay more due to the high demand for qualified medical professionals [12]

Finally, once you have your signing bonus on hand (or in account), talk to your loan servicer to see what lump sump payment options you have to potentially pay down a big portion of your debt. 

Look into Loan Forgiveness Programs

A public service loan forgiveness program rewards professionals for their services in the non-profit/government sector. 

PSLF is often touted as one of the best ways to get rid of your medical school debt if you work full-time at a public or non-profit organization. 

Many hospitals are public sector or work as a non-profit organization. Therefore, being employed in these hospitals may help you qualify for a PSLF. 

In the PSLF, you are required to make monthly debt payments over 10 years, and any amount left after that can be forgiven. The forgiveness, in this case, is tax-free. However, the PSLF may only apply to federal loans [13]

Additionally, qualifying for a PSLF may not be an easy task. Where you work is just one of the many eligibility requirements, there are several other criteria that have to be met which is why many applicants often fail to qualify for PSLF. 

According to February 2022 data, only 1.34% of the total PSLF applications have been approved [14]

Income-driven Loan Repayment Programs

Income-driven repayment programs are similar to PSLF. However, one big difference is that your monthly payments, in this case, are calculated based on your earnings and family size and are usually capped at 10-15% of your discretionary income [15]

This tends to make the regular debt repayments potentially more affordable. 

Additionally, IDRs stretch out these payments over 20 to 25 years, after which any amount that is due might be forgiven [16]

Previously, the forgiven amount was treated as income and taxed accordingly. However, the US department of education has revoked the tax requirements for debt amounts forgiven through 2025 [17]

Many programs come under IDR,  and each of these payment programs has its own eligibility criteria and benefits. Therefore, you may want to choose very carefully. 

These programs are usually great for residents and other physicians who are struggling with low income but want to avoid loan deferment or forbearance. 

Consider Talking to a Financial Professional

Medical education is expensive and many students take loans to pay for it. 

After graduating, these medical graduates are left with six-figure debts, that they often struggle to repay, despite their high-income profession. 

It might be best for you to prioritize paying off your debt as soon as possible, potentially prevent your debt figures from multiplying due to interest, and get rid of debt to start focusing on the better and more important things in life.  

There are many debt repayment strategies. And choosing one that is well-aligned with your current financial situation and goals is critical for accelerating your journey towards a debt-free life. 

Therefore, consider talking to a financial professional if you can’t figure out how to approach your surmounting debt.  

At Dayton and Sydney, we build tailored debt repayment strategies for physicians like you. Our financial professionals work with you to understand your unique financial situation, offer advice on cashflow optimization, budgeting, and how you can channel your income to high priority expenses, like debt repayment and retirement planning. Get your free consultation today. 


This article is provided for informational purposes only and is based on our general understanding of the subject matter.  Equitable Advisors, its affiliates and financial professionals do not provide legal or tax advice or loan services.  You should consult with your personal legal and/or tax advisors regarding your specific situation. 




[1] “Average Medical School Debt”, Melanie Hanson, Education Data Initiative, Dec 9, 2021. 

[2] “Debt and financial stress contribute to physician burnout”, Joanne Finnegan, Fierce Healthcare, March 15, 2017. 

[3] “Average Medical School Debt”, Melanie Hanson, Education Data Initiative, Dec 9, 2021. 

[4] “Average Medical School Debt”, Melanie Hanson, Education Data Initiative, Dec 9, 2021. 

[5] “What Is A Medical Fellowship? Purpose, Length, Salary”, Inspire Advantage, Nov 8, 2021. 

[6] “What residents are getting paid in 2021”, The DO, July 28, 2021.

[7] “Average Physician / Doctor, General Practice Salary”, Payscale. 

[8] “Paying Off Medical School Debt: 5 Strategies for Doctors”, Teddy Nykiel, Ryan Lane, Nerdwallet, Jan 4, 2022. 

[9] “Nearly 4 in 10 US physicians have side gigs: 6 Medscape survey findings”, Kelly Gooch, Becker’s Hospital Review, July 4th, 2021. 

[10] “The Scoop on Locum Tenens: Definitions, Stats, Perks & More”, Staff Care, Oct 24, 2021. 

[11] “ Moonlighting Benefits: Primary Care & Urgent Care”, MicroMD, Jan 19, 2018. 

[12] “How to Ask For a Signing Bonus: A Full Guide for Physicians”, Betsy Rubendall, Physicians Thrive, March 23, 2021. 

[13] “Public Service Loan Forgiveness: What It Is, How It Works”, Anna Helhoski, Colin Beresford, Nerdwallet, March 31, 2022. 

[14] “Public Service Loan Forgiveness: What It Is, How It Works”, Anna Helhoski, Colin Beresford, Nerdwallet, March 31, 2022. 

[15] “Income-Driven Repayment: Is It Right for You?”, Ryan Lane, Anna Helhoski, Nerdwallet, Dec 22, 2021. 

[16] “Income-Driven Repayment: Is It Right for You?”, Ryan Lane, Anna Helhoski, Nerdwallet, Dec 22, 2021. 

[17] “What is income-driven repayment?”, Holly D. Johnson, Bankrate, Feb 23, 2022. 

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