Managing your money--Real stories from real doctors Part 1: Paying off your student loans

By Mindy Ligos
Published September 14, 2017

Key Takeaways

Dr. Max Spektor is living the life of the proverbial starving medical resident. He pays $850 per month for a cramped studio apartment with only a desk, a chair, and a bed as furnishings. He drives a cheap used car. He rarely goes out in the evenings. And he gets most of his meals for free at the hospital where he works.

The only difference? Dr. Spector completed his residency more than a year ago and earns more than $320,000 annually as a general surgeon. “I live very, very, very leanly,” says the young physician, who works for a group of surgeons at a hospital in a small town located about 45 minutes north of Sacramento. He whittles his expenses down to the bare minimum (the hospital even provides the electricity for his old electric vehicle), and “I allow myself very few indulgences,” he says, other than the occasional weekend jaunt to Mexico.

So what is Dr. Spektor spending all of discretionary income on? The $380,000 in student loan debt he accumulated in medical school and on his undergraduate education. By living within his self-imposed spending plan, Dr. Spektor estimates that he can completely wipe out the debt within three years.

That’s quite a feat for a new physician these days, according to financial experts. With student loan debt for graduates from health professions rising at an alarming rate—the average student debt for a new physician is $183,000, according to the Association of American Medical Colleges. While average salaries in some specialties are declining or not keeping pace with inflation, many new doctors fresh out of their residencies are going to dramatic lengths to pay down their loans as quickly as possible.

Indeed, Kyle Winkfield, managing partner at O’Dell, Winkfield, Roseman & Shipp, a financial planning firm in the Washington DC area, said that more and more of his clients who are new physicians are leading remarkably thrifty lifestyles in attempt to get a handle on student loan debt. “It used to be that once people finished their residencies, they were so relieved at not having to live like paupers anymore that the first thing they wanted to do was reward themselves with a nice car or a nice home, or both,” he says.

But now, carrying a debt that matches or exceeds many new doctors’ annual salaries (the median starting salary for a family physician is $180,000, according to the latest Medical Group Management Association (MGMA) report). Winkfield observes that many are delaying major purchases and maintaining their frugal spending habits in order to pay off loans more quickly. Winkfield advises his clients that the lifestyle they establish the first five years following their residencies will likely help set the stage for the lifestyles they maintain for their entire careers. “So setting yourself up to live leanly is a smart idea,” he says.

But financial experts recognize that not all new physicians are able—or willing—to be quite as thrifty as Dr. Spektor is. Most advocate a mix of strategies to pay down debt while also achieving other financial goals, like putting money into an emergency fund, contributing to an employee-sponsored retirement plan, and investing in the stock market.

In addition to adhering to a strict budget, there are other smart strategies new physicians can use to help tackle student debt. Kyle Ryan, head of advisory services for Personal Capital, a wealth management firm based in San Francisco, advises new physicians to attempt to refinance their loans through a private lender if they are paying interest rates above 6%. By refinancing, it’s possible to knock up to five points off a student loan’s interest rate, which can result in a significant savings, he says. Indeed, Dr. Spektor shopped around to refinance his loans and was able to cut four percentage points off his interest rate. (One caveat: Switching from federal loans to private loans requires you forego access to federal repayment plans.)

Other new physicians are seeking employment with firms that offer signing bonuses or partial student loan forgiveness as an incentive. According to the The Medicus Firm, a national search firm for physicians, the average signing bonus in 2016 for a physician was nearly $25,000, with family practices being the most likely type of firm to offer a bonus. Physicians who work for employers who meet certain non-profit criteria or are public institutions might be eligible for the Public Student Loan Forgiveness program, which requires borrowers to make monthly payments consistently for 10 years, at which time their debt is forgiven. Some private firms are emulating those types of programs as well.

Dr. Seth Kaufer, a gastroenterologist who recently completed his residency and a three-year fellowship for a small private practice group in Philadelphia, is contemplating taking a job with a group practice in his hometown in a rural area near Scranton, PA, which offers a debt repayment program that will help him reduce his $280,000 in medical school loans.

Another selling point: By moving from Philadelphia to a more remote area, Dr. Kaufer will also be able to trim his cost-of-living expenses. If he takes the position, which requires him to sign a 10-year contract, he’ll lease his one-bedroom condo in the heart of the city and find a small, affordable unit near his new employer. But he recognizes that such a move isn’t for everyone. “It’s in my hometown, so I’m used to the rural kind of lifestyle,” he says. Dr. Kaufer has colleagues who are not as easily able to uproot themselves to navigate their debt. They may have spouses who have jobs in the area where they currently live or other ties that aren’t so easily broken. While he acknowledges that moving away from his current home might not be easy, Dr. Kaufer says it’s the best option if he wants to relieve his debt burden.

“For me, the most important thing is getting this monkey off my back,” he says.

Debt Relief: Creative Options

While loan consolidation, refinancing and federally-sponsored income-based repayment plans can all be important tools to manage medical school debt, some physicians are considering national and state-sponsored debt forgiveness programs to get them out of debt even faster. Here’s are sampling of what’s available:
National Institutes of Health Loan Repayment Programs
This program offers up to $35,000 in debt repayment to physicians and other health professionals pursuing carers in biomedical or bio-behavioral research. To be eligible, physicians must commit to two years of research at a qualifying nonprofit. For more information, visit:
Students to Service Loan Repayment Program
Through this program, students in their last year of medical school who commit to working as a primary health care provider at an approved site for three years can get up to $120,000 of their medical school loans repaid.. The approved sites include both urban and rural areas throughout the United States that have been federally designated as Health Professional Shortage Areas. For information, visit:
Military Student Loan Forgiveness Program
The military offers several student loan forgiveness and repayment assistance programs to physicians. One example: The Navy Student Loan Repayment program pays out up to $65,000 in total loan forgiveness. Those who qualify for the program must serve in active duty for at least four years. For details, contact the branch of the military you’re interested in.
State Loan Repayment Assistance Programs
There are a variety of state programs that offer assistance as well. For instance, a program offered through the state of Massachusetts offers up to $50,000 to physicians who work in high-need areas. For a sampling of such programs, visit
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