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Written by: Braden Balocan

Growing up in an Asian household, I am sure my parents had lofty aspirations for me to pursue a career in medicine or maybe even become an attorney.  My mother was adamant that I was always eager for a good argumentative discussion.  To my parent’s dismay, though, that was not to be the case.  I instead find myself in the hot seat as a financial advisor.  Working with various medical professionals across the United States assisting them with figuring out their own financial world.  So, in a way, I guess I am technically in the “medical field”.  All jokes aside, after the many years of working with clients, I cannot say I am very envious of the situation that most of you find yourselves in; primarily due to the astronomical amounts of debt that you needed to take on to get to where you want to be professionally.


On average, most of you are probably carrying around $250,000 – $350,000 of student loans upon your transition into residency training.  At that same time, you are faced with the daunting task of determining which repayment strategy makes that most sense for you and your long-term goals.  Truth be told, most of you probably will not be able to fully pay off your student loan debt during this phase of your career.  However, there are several ways that you can set yourself up for long-term success in the future dependent on your projected career path.


If you want to learn more about other ways to better position your financial plan before finishing training, you might enjoy this other blog post: Last year of Residency Finance Checklist.  If you prefer podcasts we have an episode on this very topic: Transitioning from Residency into Practice.  You can also find it on Apple Podcasts or wherever you get your podcasts.

The various situations we will explore:


  1. You are planning on working in an academic or non-profit setting as an attending
  2. You are planning on working in a private practice setting after training
  3. You are unsure of how/where you want to practice medicine in the future


Academic or Non-Profit Employment:


For those of you who are looking to pursue a career in academia or in the non-profit space, the repayment strategy that should jump out to you is PSLF – Public Service Loan Forgiveness.  For those with substantial loan balances, this can often be the most efficient way to eliminate your loans.  The goal with this strategy will be to make minimal payments towards your student debt and have the government forgive the remaining balance tax-free, saving you as much as hundreds of thousands of dollars.


Related article: Is PSLF Worth It?


How to qualify for Public Service Loan Forgiveness?


  1. Make 120 qualifying payments while working full-time for a qualifying employer.
    • These payments do not need be consecutive.
    • Most of your residency programs qualify, but make sure to double check with your HR department to be sure that your employer is a 501©3 organization (non-profit).


  1. You will need to make qualifying payments under an approved income-driven repayment plan.
    • IBR – Income Based Repayment
    • PAYE – Pay-As-You-Earn
    • REPAYE – Revised Pay-As-You-Earn
    • Standard Repayment – 10-year standard


  1. You also need to make sure that your student loans qualify for the PSLF program.
    • Basically, any “direct” student loan will qualify.
    • Look for the title of your student loan on your statements and they should say “Direct Stafford” or “Direct Grad Plus”.


  1. Every recertification period (once a year), you will need to supply your loan servicer with a PSLF employer certification form.
    • This is used to verify that your employer qualifies under the terms of the PSLF program, and that you will accrue 12 more qualifying payments while continuing your employment over the next year.
    • You can also complete the PSLF form with the PSLF Help Tool.


These criteria are also detailed on studentaid.gov.


The Public Service Loan Forgiveness FAQ (studentaid.gov) may be able to answer some of your general questions.

The key to this repayment strategy is to accrue as many qualifying payments as possible while you are still in training (residency and fellowship).  The reason is that most of your student loan payments during this time of your life will be somewhere in the range of $200 – $300 a month (for a single individual).  The more of these smaller payments that you can accrue during this phase of your career, the less payments you will need to make as an attending in the future, when your loan payments will be in the thousands of dollars per a month.  The idea is to complete more of your 120 qualifying payments at a lower cost, pay as little out of your own pocket as possible, and have the government forgive most of that debt in the future.  This is especially important and even more rewarding for those of you with longer training programs for your desired specialty (surgery, orthopedics, neurosurgery, etc.).


The PSLF program also went through some changes in late 2021.  To learn more about those and how they could affect you, check out our recent podcast about the PSLF Overhaul.  You can also find it on Apple Podcasts or wherever you get your podcasts.


Private Practice Aspirations:


For those of you who intend to pursue a career in private practice or for a non-qualifying employer under the terms of the PSLF program, you may want to seek out alternative forms of repayment.  The primary strategy most of you will end us using is private student loan refinancing.  The goal with this is to move your loans away from the federal government and to a private lender who will be able to, hopefully, reduce your interest rate and make you pay less overall as a result.


Generally, most of you have student loans that carry interest rates that range from 6.00% – 8.00%.  So, being able to reduce those rates down to 3.00% – 5.00% (based on current interest rates in 2022) with a private refinancing lender, means that you will possibly be able to save tens of thousands of dollars over your repayment terms.


Now, forewarning, private refinancing is typically not advisable when you are in still in training (residency or fellowship) given several factors.


Related article: Should I Refinance My Student Loans?


  1. You will not be able to qualify for the “best” rates as a resident or fellow.
    • These private lenders have separate rate tables for those in training and those practicing as attendings.


  1. Your “full” repayment starts instantly.
    • Most private refinancing lenders will force you to start making your full required monthly payments immediately upon refinancing.
    • For most of you, this will mean paying thousands of dollars each month towards your student loans on a resident salary, which typically doesn’t fit within your current budget.
    • There are some lenders that have special “resident/fellow” programs with reduced monthly payments in training, but that’s a separate discussion for another article.


  1. You sacrifice flexibility.
    • Once you move your loans to a private lender, there is no going back to having federal loans.
    • Basically, you are locked into your agreement with your new bank and you either make your required monthly payment or go into collections.
    • With the federal government, there are many ways to pay them back (IBR, PAYE, Graduated Repayment, etc.) or even deferment or forbearance if things get rough for you financially over time.


  1. The future is unknown.
    • Today you may be thinking private practice, tomorrow you might have inclinations towards pursuing a different path in academia or for a non-profit organization.
    • There is a lot of time between where you are today and where you will be at the end of training, so keep your options open and flexible given that anything can happen in the future.


Overall, even if you do have intentions to transition into the private practice space in the future, we will generally advise that our get enrolled in an income-driven repayment plan during their training years.  Even continuing to keep your loans in the same repayment plan for the first 6-12 months into your new practicing position isn’t a bad idea.  In turn, this will allow you to have a lower “required” monthly payment, which will help you better manage your budget during the lean times of residency and fellowship.  You will also create more flexibility for yourself in the early part of your career as an attending instead of worrying about huge student loan payments in between finishing training and starting your next job.  Most people take 2-3 months off before starting their new job and we want you to enjoy that time as much as possible!


Undetermined – Private or Academic:


Finally, for those of you who are undecided and are unsure of which direction you want to take with your practicing career, just know that you are not alone.  It is not uncommon to be in a position where you have not exactly nailed down what the future holds for you, whether you are just starting practice or even at the tail-end of training.  However, as I mentioned above, your job through your training years should be to keep your options open since you could proceed in either direction when it comes to your future employment.


It is typically recommended that you also keep your loans in an income-driven repayment plan while in training to accrue as many qualifying payments as you can towards PSLF just in case you do end up working for a qualifying employer.  As mentioned earlier, PSLF can save some people hundreds of thousands of dollars on their loans depending on their loan balances and attending income.  You can always refinance your student loans later should you find private employment down the road, but you can’t go back to the federal government once you transition your loans away from them.


To summarize, the name of the game when it comes to your student loan debt in relation towards where you are in training is all about keeping your options open. The future is bright and holds so many possibilities for all of you and this bright future all starts with making the proper decisions with your financial plan early on in your career.


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