Average Medical School Student Loan DebtAugust 18, 2021
For some, becoming a doctor is a lifelong dream. And it’s true that the profession can lead to a six-figure salary. For others, however, the average medical school debt may negate that feeling of success.
If you’re concerned about how much student debt you may have to accrue to afford medical school, here is a breakdown of the average medical school debt in 2021 and some options to help you manage it.
The Average Medical School Debt
Student loan debt is not unusual for medical school graduates. According to EducationData.org, 76-89% of medical school graduates have some level of student loan debt. A little less than half of graduates, 43% to be exact, reported taking out student loans prior to medical school.
For 2021, the average education debt for a medical school graduate is $241,600. Medical school debt has increased compared to 2020 when the average totaled only $200,000. With totals this high, it comes as no surprise that the total debt for medical school graduates far exceeds the average student loan debt in 2021 of $39,351.
Average Medical School Debt After Residency
Unfortunately residency can have a major effect on student loans and can cause the total of student loan debt to rise.
The average medical school debt after residency generally increases, especially because many students may not make payments – or only make small payments that do not cover their full interest costs – during residency.
With the average salary of $58,921 in 2020 for the first year of residency, it may seem impossible to tackle these student loan debt totals. Federal student loans during residency can be deferred or put in forbearance, but if loan payments are not made during residency or are paid on an income-based repayment plan, interest may continue to accrue in some cases.
The length of residency is generally between three and seven years depending on the student’s specialty. If no payments are made during that time, students may inadvertently add thousands of dollars onto their balances in interest.
For example, if residency is the minimum 3 years and loans are in forbearance during that time in addition to the six month grace period after graduation, there will be no payments for 42 months. If you have the average medical school debt of $215,900 and a 6% interest rate, this can add a total of $45,339 in interest costs during that time.
To avoid increasing your medical school debt after residency, try to make payments during residency, and explore the below options to tackle your debt faster.
How to Pay Down Loans Faster
If you are concerned your debt is holding you back from reaching other financial goals, know it is possible to pay student loans while investing and working towards retirement. There are many options to help manage your loans, whether you’re hoping to reduce your monthly payment or pay less in total interest.
Student Loan Refinancing
Student loan refinancing can help achieve your goal of debt freedom, and it may even save you money over the course of your repayment. Refinancing allows you to repay previous student loans with a new loan from a private lender like ELFI.*
You may be able to qualify for a lower interest rate based on your credit score, potentially saving thousands in interest costs over the life of the loan. Refinancing can also allow you to shorten the term of your loan to pay it off more quickly or lengthen the term to reduce your monthly payment.
To get an idea of how much you could save, use ELFI’s Student Loan Refinancing Calculator.* You can also pre-qualify in minutes to see what you could save with ELFI.
Student Loan Forgiveness Programs
Depending on where you practice, you may be eligible for medical student loan forgiveness programs that will discharge some or all of your loan balance.
The most notable is the Public Service Loan Forgiveness (PSLF) program through the U.S. Department of Education. For 10 years of work in a government or nonprofit sector, qualifying federal student loans can be discharged.
If you intend to pursue this path, be sure to keep up with the PSLF program’s requirements, such as reapplying every time you change employers.
Income-Driven Repayment (IDR) Plan
If you have federal student loans and are unable to make your payment on the standard repayment plan, you can pursue income-driven repayment (IDR).
Keep in mind, however, that while this can be helpful with a lower salary during residency, your payment will increase when your income increases. Another factor to remember is that your calculated monthly payment may be lower than the interest accruing, so the balance may continue to grow even though you’re making payments.
Although the average medical school debt total may seem daunting, student loan refinancing is an excellent option to pay off debt faster and save money over time. If becoming a doctor is a lifelong dream, the fear of student loan debt shouldn’t stand in the way of your long-term goals.