How Long Does It Take to Pay Off Student Loans as a Doctor?


The total debt for graduating medical school students continues to increase, according to the Association of American Medical Colleges, primarily because of rising tuition and fees at both public and private universities. In fact, the AAMC's predicts that by 2033, medical school students may have to take on a staggering $750,000 in education-related debt. Paying off medical school loans can be burdensome even with a high physician's salary, and you may be paying on them well into your 50s.

Medical School Debt

According to the AAMC's 2010 Graduate Questionnaire, medical school graduates carry approximately $147,000 in educational debt. Most graduates defer repayment until after their three-year residencies, according to the AAMC. While in deferment, interest accrues on unsubsidized student loans. Interest on Federal Stafford unsubsidized loans for graduate students is 6.8 percent, as of 2011. Private student loans may be much higher. The interest capitalizes on the loans annually, which increases a student's total indebtedness when she begins repayment on the loans after residency.

Physician Salaries

The Medical Group Management Association conducts an annual physician compensation survey. Results from the 2010 survey, which reflects 2009 data, indicate that primary care physicians in both hospital-owned and non-hospital-owned practices report median annual salaries of around $191,500. Specialty care physicians in non-hospital-owned practices reported median annual salaries of around $350,000, whereas those in hospital-owned practices make around 25 percent less. Overall, primary care physicians reported a 2.8 percent increase in median salaries from the previous MGMA survey, whereas certain specialty areas reported a greater increase. The specialty area you choose will affect your income, which also affects the length of time you spend repaying your student loans.

Debt Payments

The standard repayment plan for federal direct loans offers a default 10-year plan. The October 2007 AAMC "Medical School Tuition and Young Physician Indebtedness" report indicates that monthly payments for a following residency -- on this standard plan -- would be approximately $1,700 if repaying on $151,000. However, an extended repayment plan of 25 years would lower the monthly payments by about $700. Loans with private student loan companies usually have stricter repayment terms than federal student loans.

Loan Programs

Medical school graduates have a couple options if seeking more favorable loan terms. For example, AAMC's MedLoans program offers more favorable repayment terms and interest rates than the federal direct loan program. It offers a lower initial interest rate during student loan disbursement and periods of deferment. Also, the AAMC loan program has no origination fee and offers interest-rate-reduction during repayment. On the other hand, young doctors may also be able to consolidate federal student loans under either the income-contingent or income-based repayment plans with a Direct Consolidation Loan from the Department of Education. These plans offer extended repayment plans of 25 years, lower payments than the standard repayment plan and automatic student loan forgiveness for any balance left at the end of the 25-year repayment period.

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