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Student loans can be a drag on your financial goals, if you do not have a clear plan in place. Though your earnings may vary significantly between residency and as an attending physician, a few strategies can help ease the burden of medical school debt. Here are the top 5 tried and tested strategies that successful physicians have recommended for early closure of student loans.
Live like a resident
Medical school debt can seriously pile up,leaving you with a big bill to pay off. However, medical school graduates are among the highest-paid professionals, which means that each dollar you pay will go much further than it would if you attended another type of degree program. It is also important that you consider which jobs are best suited to your medical degree. There are many jobs that are managed by the government, which offer medical benefits without additional payment - i.e., military personnel,public officers. If you take advantage of this, it may even help to defray some or all of your tuition costs!
If you're currently in training to become a doctor, one way to spend less and save more is to try and avoid indulging in your finer (and sometimes vainer) pleasures. You've probably already been doing this for years but if you can keep the habit up it will certainly allow you to sock away even more money; especially when you consider earning three times (or more) than what someone in your position would be earning otherwise.
Make extra student loan payments
Paying extra (or even the standard monthly amount) may be tough when you're in medical school or residency. You want to focus on being the best doctor possible so your patients get better care! But every little bit counts to help you get out of debt faster. So once you can afford to, start making additional payments towards your loan, as it can help bring an early end to paying off your debts.
Opt for private refinancing
Refinancing can help you get better rates and more favorable terms. Since physicians are generally well-paid, lenders tend to provide special deals for them. Opting for private refinancing when you get a salary hike can be a smart move, especially if you have a large debt. Lenders offer lower interest rates, if your salary and credit scores are high.
Seek loan forgiveness
Public Service Loan Forgiveness or PSLF is a program run by the federal government which forgives your federal loans in exchange for public service. The qualifying criteria include:
- Having direct loans.
- Working for the federal, state or local government or non-profit organization.
- Making 120 qualifying payments.
- Making repayments under an income-driven plan.
Physicians who have a large student loan or a below-average salary stand to gain from this program, if they meet the conditions mentioned above.
Because the program also considers payments made during residency, you can avail the benefits sooner by 36 months once you start practicing. Additionally, the US government suspended loan payments and slashed student loan interest rates to 0% due to the pandemic last year. Every month of suspended payments during this period was also counted as a qualified payment towards PSLF.
Choose a specialization based on salary
While deciding on your specialization, you can also give weightage to salary considerations in addition to other factors. After all, a higher salary will allow you to close your loan sooner. Once you choose your specialization, you could also research the states that offer the best pay for the role. We've already covered the states that offer the best salaries to pediatricians and family medicine physicians.
The duration of your med school loan depends on the strategy that you adopt. Remember,about 1 in 3 physicians clear their loans in less than 5 years, by making extra payments and going for refinancing options. So, it really isn't an incredible feat!
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