nurses and doctors

by Michelle Richardson, former Assistant Vice President at Chase Student Loans

Obtaining a medical degree can pave the way for adults to follow their dream of becoming a medical doctor. However, that dream can be shattered once the newly graduated medical doctor realizes that they are buried in educational loan debt. According to the Association of American Medical Colleges (AAMC), the class of 2019 medical students’ median debt was $200,000, and about 18% of those graduates incurred $300,000 in premed and medical school educational loan debt combined.    

Those figures may not seem unbearable when one thinks of the salary of a doctor. However, obtaining the medical degree is not the end of a doctor’s journey. Once a student graduates from medical school, they go into residency for a number of years before they begin earning a higher salary. The average medical resident earns $63,400 annually, according to Medscape’s Residents Salary and Debt Report 2020.  This is an increase of 3% from the $61,200 they earned in 2019.

Due to the low salary of medical residents, many will put their educational loans into a forbearance, or suspension of payments, while in residency. While it is nice to not have to make payments, the kicker is that those student loans are accruing interest. The minimum number of years of residency is three years, so imagine not paying on those loans for four years of medical school and then at least another three years while in residency. This is where substantial interest can accrue and the cost of a medical degree can be exponentially higher than the original pre and post-medical school debt. After residency, all of that accrued interest is capitalized, or added to the original principal amount that you borrowed.

Here are some thoughts on how to keep the cost of your medical education within reason:

  • Start by selecting an affordable institution for your undergraduate degree. You don’t have to break the bank for your undergraduate degree in order to be accepted into a medical school program. By minimizing borrowing as an undergrad, you minimize financial stress and accruing interest while in medical school and in residency.
  • Ask the right questions as you select your medical school regarding the availability and renewability of institutional grants or scholarships. Inquire about the average student loan debt load and about residency placement after graduation.
  • Borrow only what you need, not the maximum amount that you can borrow. I worked with many students through the years that just unthinkingly borrowed the maximum amount year over year and were shocked at the total debt accrued.
  • Don’t count on loan forgiveness Yes, there are federal and state programs currently available, but you may not qualify. Read the stipulations for each forgiveness program and be mindful that these programs may not always exist.
  • Look for service-based programs where you exchange service for a portion or all of your medical education debt to be forgiven or repaid. Current programs include the National Health Service Corps, Indian Health Service Corps, the Armed Services and potential hospital programs.
  • Live like a student, not a doctor. When I worked at the Mayo Clinic College of Medicine, this was a common theme we used during our student orientations and debt management sessions. Make good financial decisions such as getting a roommate, cooking at home or meal prepping, and forgoing major purchases such as housing and vehicles.

If obtaining a medical degree is in your future, take the necessary financial steps to ensure that degree is a great return on your investment. Be certain your MD doesn’t turn into an unnecessary MD, major debt load.

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Written by Michelle Richardson
Michelle Richardson is a college finance expert at College Coach. Before joining College Coach, she was a Senior Manager of Student Success at Student Connections and the Assistant Vice President at Chase Student Loans. Visit our website to learn more about Michelle Richardson.