The odds are that upon beginning residency training, most physicians are going to have some debt related to their education—and that might not be the only debt one accrues during medical school.
In a survey of graduating 2024 medical students, conducted by the Association of American Medical Colleges, 67% of respondents reported having medical school debt, with most of the group reporting their medical school related debt load to be more than $150,000. That same survey reported that about 20% of respondents had other types of debt, stemming from credit cards and car payments, among other categories.
How can residents manage their education and consumer debt? Experts from Laurel Road, selected by the AMA as a preferred provider to help you navigate your financial future, offered a few tips.
Pay down high-interest debt first
As a resident, you’ll want to look carefully at your expenses and debts and how to balance them on a resident’s salary. Many resident physicians will take on some additional debt before or during training, perhaps to cover moving expenses. If you took on credit card debt, consider paying down or consolidating that high interest debt first. This will help you save on interest and avoid going further into debt.
“Ideally, as soon as you get your first paychecks, you should prioritize paying down your credit card debt and then focus on creating a plan to manage your student loans,” said Chirag Shah, MD, an anesthesiologist who works with Laurel Road in an advisory capacity.
“You may have some other forms of debt too, but especially on a resident’s salary, the most important thing is to pay off your high interest debt and then move on to your lower interest debt after that,” Dr. Shah added.
Dive deeper:
- 3 tips to avoid lifestyle creep as a young physician
- You made it—will your wallet? How to budget in physician residency
Subscribe and thrive in residency
Get tips and insider advice from the AMA on navigating and making the most of medical residency—delivered to your inbox.
Have a student-loan repayment plan
Many residents can qualify for Public Service Loan Forgiveness (PSLF), and that program—through which physicians working at eligible nonprofit or government organizations can have the remaining federal student-loan debt forgiven after 10 years of repayment (120 qualifying payments)—has several different repayment options. Income-driven repayment plans usually offer the most affordable options for new residents.
“When you have federal student loans, make sure you talk to a student-loan expert so you understand if you can qualify for federal repayment or forgiveness programs, such as PSLF or income-driven repayment programs,” said Diana Welch, head of Laurel Road for Hospitals. “These options can significantly reduce your monthly payments during training since they will be calculated based on your current salary as a resident.”
If you have private student loans, or a combination of federal and private loans, refinancing may be an option to help you save, especially if you can qualify for a lower interest rate. To get an expert opinion on your student loan repayment path, schedule a free student-loan consultation with a Laurel Road specialist.
Dive deeper:
- Repaying student loans with SAVE: What resident physicians should know
- What to do when federal student-loan forgiveness goes wrong
- AMA member exclusive: Medical student loan repayment options and forgiveness consultation
Manage your credit
As a medical resident, you are going to be building good credit to allow you maximum financial flexibility going forward. There are three key steps to follow to build and maintain your credit score:
Check your credit report for errors. Checking your credit report regularly lets you stay on top of your finances and ensure everything is accurate, and if anything is incorrect, you’ll be able to dispute it.
Reduce your overall debt. Revolving debt, or the balance you carry on any revolving lines of credit, like credit cards, can significantly impact your credit utilization ratio, which is the amount of debt you owe compared to your overall credit limit.
Apply for new credit sparingly. Opening a new line of credit can have a small impact on your credit score. That said, a minor credit score dip shouldn’t keep you from applying for a mortgage or refinancing your student loans, but it’s something to keep in mind when considering opening a new line of credit.
Dive deeper: