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10 Medical School Loan Forgiveness and Refinancing Programs

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Medical student loan debt continues to climb. The average debt owed by 2023 grads is a whopping $200,000 Trusted Source Association of American Medical Colleges Highly respected medical organization Go to source , including both medical school and undergrad loans, according to the Association of American Medical Colleges. This compares with an average medical school debt of $13,500 in 1978 (equal to about $54,000 in today's dollars). So what can you do to help repay and retire your medical school loans? Here are 10 loan forgiveness programs or refinancing strategies that may help.

1. Public Student Loan Forgiveness

Public Student Loan Forgiveness is a federal government program designed to forgive federal student loans for people who work full-time for qualifying employers. It requires you to first make 120 loan payments (representing 10 years) and to work for the government or a nonprofit. After you've made 120 payments, the rest of your loan is forgiven.

Or at least that's the theory. Unfortunately, only about 2% of applicants get their loans forgiven through this program, partly due to conflicting information and miscommunication between loan service companies and borrowers.

In 2024, the government plans to offer a one-time account adjustment to borrowers who consolidate their loans. If you want to take advantage of this program, research to what extent it remains available and what its terms are, so you can ensure you qualify.

2. COVID-19 Emergency Relief and Federal Student Aid

The US Department of Education offered loan forgiveness throughout the pandemic, but the program ended September 1, 2023. Payments are due to begin again in October, 2023.

Payments that were paused for COVID count towards public student loan forgiveness and income-driven repayment arrangements. Check with your loaning entity on status.

3. National Health Service Corps Programs

The National Health Service Corps offers several loan-repayment programs you might want to consider:

  • Basic loan repayment. This provides up to $50,000 in tax-free student loan repayment if you work at least two years in primary care and in a health professional shortage area. If you're a family practitioner, internist, pediatrician, obstetrician/gynecologist, geriatrician or psychiatrist, you may qualify. (Note that if your loan is a Parent Plus loan, you won't qualify.)
  • Students to Service Loan Repayment Program. This plan offers up to $120,000 (up to $30,000 each year for four years) for fourth-year medical students who commit to working full-time for at least three years in a health professional shortage area. Again, you're more likely to qualify if you specialize in family medicine, internal medicine, pediatrics, obstetrics or gynecology, geriatrics or psychiatry, and Parent PLUS loans are ineligible.
  • Substance Use Disorder Workforce Loan Repayment Program helps forgive up to $75,000 in student loans for doctors providing substance abuse treatment for at least three years.

4. National Institutes of Health Loan Repayment Programs

The U.S. National Institutes of Health offers eight programs for doctors who work in biomedical or biobehavioral research, and provides up to $35,000 in student loan repayment annually. The programs are available for doctors in different fields: clinical care, pediatrics, AIDS, contraception and fertility.

5. Military Loan Repayment Programs

If you're a doctor who serves in the military–or who wants to enroll–check with your branch of service. Programs exist in the Navy, Army and Air Force to defray medical student loan costs in exchange for service commitments of several years. For example, the Navy's financial assistance program offers medical students or residents grants of up to $45,000 per year for up to four years, along with a monthly stipend of about $2,000.

6. Indian Health Service Loan Repayment Program

If you work for at least two years in an American Indian or Alaska Native community, you may be eligible for up to $40,000 in student loan repayment. Extensions are possible if you want to continue serving. Note that this loan is taxable, but part of the tax is paid by the program.

7. Income-Driven Repayment

One strategy you can employ to help manage the costs of your federal loan payments is income-driven repayment, which adjusts your payment to fit your income and living costs. For example, one income-driven repayment plan, called Pay As You Earn (PAYE), might work like this. Suppose you have borrowed $200,000 at 7% interest, payable over 10 years. Your payment would be $2,300 monthly–tough to meet if you are just out of med school. With PAYE, you could cut your payment as low as $350 per month.

The disadvantage of such a plan is that paying less extends your debt, meaning it will take you longer to pay it off.  Also, interest will accrue, causing you to owe more than you planned initially. It's a good idea to work with a financial adviser to see if this approach is best for you, and if so, to evaluate the types of income-driven repayment medical loan programs available.

8. State Loans

Many states have medical school loan repayment assistance programs, often offered through the National Health Service Corps' State Loan Repayment Program. You can find some state programs in the Association of American Medical College's online database of state loan forgiveness and repayment programs. Such plans may require you to commit to practice with medically underserved populations for a period of time.

For example, California's new "CalHealthCares" program pays up to $300,000 of medical loan costs for doctors and dentists. In exchange, you must agree to a five-year service commitment, during which time at least 30% of your caseload must be beneficiaries of the state's Medicaid health care plan, called Medi-Cal. 

9. Private Loans and Refinancing

Sometimes your federal loans don't cover the full balance of your student debt. You may want to consider financing the additional amount privately. Private loans from banks, such as Wells Fargo or Citizens Bank, offer discounts if you are a regular customer. Some have student loans targeted specifically for healthcare professionals. These include:

  • Sallie Mae Medical School Loan, which pays up to 100% of your funding needs, with a 20-year repayment term and no prepayment penalties. The program advertises lower rates than federal Direct Grad PLUS Loans. Sallie Mae also offers payment deferral while you are in residency, plus medical residency and relocation loans.
  • Discover Health Professions Loan, which covers 100% of your educational costs, with no fees. You can earn cash back of up to 1% of your loan if you earn a GPA of at least 3.0.

You may also look to private lenders to refinance medical school debt. Keep in mind, though, that some federal loan advantages may disappear if you refinance with private lenders. This includes income-based repayment and eligibility for some public service loan forgiveness programs.

10. Signing Bonuses

Many institutions pay signing bonuses for physicians. The average signing bonus for physicians in 2023 was $37,473, though at least one doctor received more than $500,000, according to a a report from AMN Healthcare. If you want to make a military commitment, the U.S. Navy's physician sign-on bonuses can range from $220,000 to $400,000, depending on your specialty and experience.

You can use a signing bonus to pay off or pay down your loans. Be careful before signing a bonus agreement that you understand its terms. Some may lock you into a longer-term time with an employer than you may wish. Also, you need to make sure it's not a loan or advance disguised as a bonus, but really is extra money you can afford to spend on your medical loan debt.

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