12 Ways to Pay Off Medical Student Loans Fast

Let’s cut to the chase.  We all hate student loans.  Yes, they are often a necessary evil, but I have yet to meet a physician who was happy they were in debt.  If you are anything like me, then you are debt averse.  This means you want your student loans gone…like yesterday.  My wife and I finished medical school with a combined $670,000 of debt!  Insert terrified emoji.  The past few years have highlighted the debt crisis facing the United States.  I am not here to tell you I have a systemic solution, but for individuals who are motivated, I have found a number of ways I think will help you eliminate your student loans as fast as possible.  Whether you are considering medical school, are currently in training, or are a practicing physician still dealing with debt, there is something here for you.  Here are 12 ways to pay off medical student loans fast!

1. Minimize loans as much as possible in medical school

What is the best way to get rid of student debt?  The answer is to prevent it from happening in the first place!  There is your daily dose of preventative medicine!  I understand that a vast majority of readers are well beyond this point, however for the few of you currently in school (pharmacy, dental, medical school, etc.) then this section is for you.  When I was in medical school, I treated loans like ‘Monopoly money.’  It didn’t seem real to me.  ‘You mean to tell me I just sign on the dotted line and I get how much!?’  Couple this deluded mentality with the terrible advice of ‘you deserve to live comfortably while you are studying so hard in medical school’ and you end up like me… In your early 30s paying six figures in debt annually.  Don’t be like me.

Less (debt) is more (wealth)

For anyone starting out, it is imperative that you pursue all avenues for scholarship as well as debt minimization.  I know it may not sound super appealing, but living at home while in school, or sharing a residence with multiple roommates can help lower costs.  Further, live well below your means when you are taking out debt.  Calculate your living expenses and be as frugal as possible.  Don’t starve yourself, but limit unnecessary expenses as much as possible.  Remember you will likely be carrying this debt for a decade or more… That is plenty of time for interest to work against you.  The first of our 12 ways to pay off medical student loans fast is all about prevention.

2. Have the military pay for your education

The government offers plenty of avenues to help you avoid debt, or pay it off quickly.  When I was in medical school, I had a number of peers who pursued this route and thought highly of it.  As I understand it, most branches of the United States Military (i.e., Army, Navy, Marines, Air Force, etc.) offer a version of this incentive program.  Generally, this consists of providing 1 year of military service for each year of education covered. 

A really productive way to serve your country

If you sign up for these programs before starting higher education (or shortly after starting) often they will cover the costs of your education as well as proving a cost-of-living stipend.  In medical school, for example, this means that they will pay for all four years of education, however following graduation you owe the military four years of service as an active service military physician.  These programs offer military residencies, but you are also allowed to pursue civilian residences.  No matter the route you take, you are trading money for time.  If you are willing to travel for a few years (as they can station you at a location of their choosing) this can be a phenomenal way to avoid debt, or at least have it eliminated while still serving your country.  Number two on our list of the 12 ways to pay off medical student loans fast is all about having someone else pay it for you!

3. Live below your means

This is often synonymous with the popular phrase ‘live like a resident.’  The point is simple, but not so easy.  While in training, our salaries are commonly determined by the American College of General Medical Education (ACGME).  This means there is a predetermined pool of money that the teaching hospital is allotted for which they reimburse their medical and surgical trainees.  There is some geographic variability based on cost of living, but commonly interns, residents and fellows make a five-figure salary.  It is far from ‘doctor money’ and does not afford a lavish lifestyle. 

‘Live like a resident’

However, the income of a trainee is still enough to support an individual and allow for a comfortable life.  When trainees transition into their attending careers, often salaries increase three or four-fold (or more)!  If you are able, avoiding lifestyle creep as your income drastically increases can afford you substantially more debt elimination power.  If you were previously living off of $60,000 annually (before taxes), then suddenly your attending salary is $275,000, you don’t need to increase your lifestyle to fit your new income.  You were living on a quarter of that only months previously.  It is OK to expand your lifestyle a small percentage (10% or so) but use the rest of that ‘pay raise’ to destroy your debt! Number 3 on our list of the 12 ways to pay off medical student loans fast is living below your means.

4. Make payments while still in training

Another effective way to eliminate your debt is to start paying it off while in training.  This can prove difficult (as I alluded to above) as trainee salaries are not generous.  If you are able to, chipping away at your debt before it has time to accrue massive amounts of interest can help you avoid tens of thousands of dollars down the road (sometimes hundreds of thousands of dollars…I’m serious).  Whether it be a few hundred dollars here and there or moonlighting money while in training, every little bit helps. 

5. Pursue Public Service Loan Forgiveness (PSLF)

Now here is a topic that has been making waves.  For those who do not know, Public Student Loan Forgiveness (PSLF) is a government program that offers loan forgiveness to individuals with federal student loans.  There are a few caveats that must be highlighted here.  For one, you have to have federal student loans.  You are not eligible (as of the writing of this article) if you have refinanced your educational debt to a private lender.  Another caveat to be aware of is that you have to make 120 certified payments.  A certified payment is a (monthly) payment made in an accredited Income Driven Repayment (IDR) model (i.e., Pay As You Earn (PAYE), Revised-Pay As You Earn (RePAYE) that is recognized by the federal government lender.  Lastly, you have to be employed by an institution/hospital that is a designated center for the PSLF program. 

Is PSLF right for me?

As I mentioned earlier, you have to make 120 certified payments.  Since most repayment plans are monthly, in general you have to make monthly certified payments for 10 years.  For trainees entering lengthy residencies or fellowships (think neurosurgery, interventional cardiology, interventional radiology, electrophysiology, pediatric subspecialties, etc.), this can be a great option as often you make payments for the 6-8 years you are in training.  This is then followed by increased payments for a few years as an attending, then all is forgiven!  It is more complicated than that, but you get the gist.  You can learn more at studentaid.gov.  Number 5 on our list of the 12 ways to pay off medical student loans fast is about pursuing loan forgiveness.

6. Refinance your student loans for a lower interest rate

OK…disclaimer here.  If you refinance your student loans to a private lender, you are no longer eligible for PSLF.  Think long and hard about this decision before deciding to refinance.  If you are unsure, ask a professional.

With that out of the way let’s talk about why this can be a great option for certain individuals.  I previously wrote an article titled Choosing Refinancing Over PSLF.  There I lay out all my reasons for personally choosing to refinance my medical student loans.  When I graduated from medical school I had approximately $342,000 worth of federal educational debt.  Across all of my loans, my average interest rate was between 6%-7%.  This was staggering!  I was accumulating debt way faster than I could pay it down…plus I was a trainee.  With my wife (initially) pursuing a career that made her ineligible for PSLF, we refinanced (multiple times) to achieve an average rate of around 3%.  This will save us literally hundreds of thousands of dollars in the long run.  Once you refinance and are no longer a candidate for PSLF, you are now incentivized to refinance as often as you wish in pursuit of the lowest interest rate possible.  When the pandemic hit and there was a moratorium on federal student loan payments, interest rates plummeted.  That was a perfect time for us to capitalize (and we did) refinancing a second time. 

Risks and benefits

There are real risks and benefits when it comes to refinancing.  For me, I am incredibly debt averse and I feel an obligation to repay my debts.  My wife and I have refinanced and never looked back.  We now pay approximately $100,000 towards our debt a year and are on track to pay it off by 2024.  If you want to know more about my debt elimination journey, make sure to check out Graphing Student Loan Repayment Progress.  Number 6 on our list of the 12 ways to pay off medical student loans fast is about refinancing to the lowest rate possible.

7. Negotiate loan reimbursement

On to the negotiation process.  OK, so you are preparing to graduate or are in the process of changing jobs.  Now is the perfect opportunity to negotiate for monetary incentives.  Many physician contracts will utilize this incentive to draw applicants.  One incentive that has become commonplace is loan reimbursement.  Academic and private hospitals alike will sometimes offer loan reimbursement.  If they are not advertising this, you should definitely still ask about it.  Often it is available…you just have to ask the right questions.

Loan reimbursement is out there… you just have to ask!

A great example of this is the Education Debt Reduction Program (EDRP) offered by the Veterans Affairs Healthcare System.  For qualifying positions deemed ‘critical need,’ EDRP is offered.  With this particular federal program, medical appointments meeting criteria can receive up to $200,000 in loan reimbursement over 5 years.  That is $40,000 annually in after tax dollars!  There are plenty of other programs similar to this.  Make sure, no matter where you are interviewing, that you ask about loan reimbursement.  These types of incentives are common and can be game-changing when it comes to tackling your debt.

8. Negotiate a signing bonus

In a similar vein, signing bonuses are another common incentive utilized to drive employment.  These are often utilized at private and academic institutions alike.  I have personally seen signing bonuses offered as high as six-figures for ‘difficult-to-fill’ positions.  Similar to loan reimbursement, these types of payments can tear through debt.  Obviously, my recommendation would be to use the signing bonus in its entirety to put a massive dent in your debt… but there is a caveat here. 

Stipulations on signing bonuses

Often, signing bonuses can take a few months to hit your bank accounts.  Further, and more importantly, these signing bonuses often have stipulations.  I see contracts comment that ‘in the event of an untimely end in employment (generally within a predetermined time frame) that signing bonus must be returned in full (or pro-rated)’ to paraphrase the legalese.  Here is the abbreviated version… you cannot immediately turn around and put your signing bonus towards your debt.  Why not?  Because you may end up ‘on the hook’ for that money if your employment does not work out.  In this scenario, it may be smarter to place that money in a savings or investment account until such a time that contractually there are no longer stipulations on that money.  Then (and only then) is it safe to put it all towards your debt. 

Signing bonuses are great but can often have tricky provisions in the fine print.  Read your contract thoroughly, then… when it is safe… use it to destroy your student loans! Numbers 7 and 8 on our list of the 12 ways to pay off medical student loans fast are about negotiating incentives to help you pay off your debt faster!

9. Put all extra income towards loans

Here is an easy one.  No caveats.  Put any and all extra income (outside of your budgeted expenses) towards debt elimination.  Examples include bonuses, ‘at-risk’ pay, moonlighting money, etc.  The way my wife and I approach it; first we determine what our combined monthly (after tax) income is excluding all bonuses or excess income.  We then use this number to build our monthly budget.  Any extra money that comes into our hands goes directly towards our loans.  It may not seem like much, but if you do this monthly, that money can add up! 

10. Choose a low cost-of-living area

Where you choose to live can have substantial impacts on your ability to pay down debt.  This is difficult because sometimes we can feel pulled to settling in high cost-of-living areas for legitimate reasons (i.e. family, friends, schools, jobs, etc.)  However, cost of living should remain on your radar as you consider settling down.  Certain locations can apply pressure to your wallet in all facets. 

If you truly do not have ties to a certain location, then it can be wise to consider lower cost of living areas.  There are multiple benefits that arise from this as well.  Often rural areas have medical needs.  Statistically rural areas offer competitive reimbursement and qualify for PSLF as well.  Further, costs of home ownership is likely lower as well, thus affording you the ability to maybe live in a nicer home for a lower cost. 

Location, location, location

Look, location is important for so many reasons.  I personally live in a relatively high cost-of-living location because sometimes you cannot put a price on having family nearby.  Well… you definitely can put a price on it, but I am willing to pay that cost to be near family.  No matter what you choose, there are important considerations when determining locations.  When it comes to paying down debt, location can (and should) play a role. 

11. Use a debt repayment strategy that keeps you motivated

If you carry more than one loan, it can be difficult to determine how best to prioritize their repayment.  Creating a method for their repayment can be important to maintain motivation.  Some examples include the debt ‘snowball’ or the debt ‘avalanche.’  The debt snowball is a method of choosing the smallest (lowest amount) loan to pay first.  Gradually, as you pay off the lowest amount loan, you graduate to paying off the next lowest.  On and on until you are tackling the largest loans in your account.  This method motivates individuals as you are able to see your progress early and often, thus keeping you motivated. 

Snowball versus avalanche

The debt avalanche, on the other hand, is just the opposite.  With this method you pay off the largest loan first.  The idea is to eliminate the loan driving accumulation of the most interest.  This may take the longest, but then you have successfully started by eliminating the largest of your loans.  This approach can be daunting, especially if your loans are in the hundreds of thousands (like me).  But for those that cannot stand to look at their large loan amounts, this approach may be motivational too.

No matter the method for debt elimination, maintaining motivation is important.  Which leads me to my next point…

12. Celebrate your victories

Celebrate your victories as often as you can.  Debt often brings up visceral emotions.  Combat these feelings by choosing to celebrate your loan repayment victories.  Create your own milestones (both long and short) and bask in the moments when you achieve them. 

An example would be celebrating your first complete loan repayment if you are using the ‘debt snowball’ approach.  For my wife and I, we celebrate each December when we pay the last of our $100,000 annual goal towards our debt.  We also will pick milestones like ‘getting our loans below $400,000,’ or ‘getting our net worth more than -$100,000! (that’s negative $100,000).’ 

Each celebration marks not only a success, but revitalizes us to keep tackling our debt!  You have to find a way to instill some joy into the process or it will always pull you down.

Take home points

You made it!  These are the 12 ways to pay off student loans fast.  I have curated this list over years of experience and I feel proud of the result.  Debt elimination is a grind.  Plain and simple.  There are ways to expedite its payment while still maintaining the motivation needed to run this ‘marathon.’  I hope you have found this article helpful!  Now get out there and tackle your debt.  You got this!  As always…

Stay Motivated!

The Motivated M.D.

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