- The average medical school debt for the class of 2021 was $203,062, but this number varies widely according to factors like whether you attended a public or private school.
- Tuition, student loan interest rates and postgraduate residencies are three primary factors driving up the average medical school debt.
- There are many ways to get help with burdensome education debt payments, whether you have federal or private loans.
- Student loan refinancing could help medical school graduates lower their interest rates, but it’s not the right move for all borrowers.
Nearly two in three medical residents said their education debt was somewhat or very concerning as they embarked on their first professional practice, according to a 2021 survey from Merritt Hawkins, a physician recruiting firm.
It’s no wonder. The average medical school debt for the class of 2021 was $203,062. Let’s examine why this number is so staggering, plus how to manage six figures in student loans if that’s your unfortunate reality.
Why the average medical school debt is sky-high
Paying off student loans is a tall task for any borrower, but it’s a different challenge for medical school graduates. Yes, you’ll likely earn a far higher-than-average wage, but you’re also a good bet to graduate with significant student loan debt.
In fact, just about 7 in 10 medical school grads leave campus indebted, and staring at six figures in the red is the norm, according to October 2021 data from the Association of American Medical Colleges (AAMC).
|Average medical school debt for the class of 2021||Overall||Public school||Private school|
There are a few primary factors behind why the average medical school debt is so high.
Medical school tuition
After paying tuition for your bachelor’s degree, you might have scoffed at the sticker price of medical school. For the class of 2022, the median four-year cost of attendance was $263,488 for a public school, and $357,868 for private school, according to the 2021 AAMC data.
“Many factors contribute to cost and changes in tuition and fees at medical schools,” says Julie Fresne, a senior director at the AAMC. “These include but are not limited to public support from the state, trends in endowment revenue and institutional priorities.”
Student loan interest rates
As with other forms of borrowing, student loans aren’t free. You agree to repay the original balance, plus the amount of interest it accrues over time.
And both types of federal student loans that can be used for medical school are unsubsidized, meaning the government doesn’t subsidize the accrued interest when you’re enrolled, in residency or otherwise not actively repaying your balance. (This means you, as the borrower, have to foot the bill for interest charges—the Department of Education only covers interest on Direct Subsidized Loans.)
Student loan interest rates for medical school students for the 2021-2022 school year
|Federal Direct Unsubsidized Loans||Federal Direct Grad PLUS Loans|
If you borrowed student loans less recently, you may have a different interest rate. Here are federal loan rates since 2006:
|Academic period||Rate for Direct Unsubsidized Loans for graduate, professional students||Rate for Direct PLUS Loans for graduate, professional students|
Most medical school graduates also carry significant private student loan debt for a couple of reasons:
There are annual and aggregate borrowing limits for federal Direct Unsubsidized Loans
Banks, credit unions and other financial institutions sometimes offer better rates and terms than those of federal Direct PLUS Loans
Unfortunately, many private student loans are tagged with double-digit APRs. On top of that, student loan APRs in general were due to tick up because the Federal Reserve was raising rates in early 2022 to combat post-pandemic inflation.
Residencies—and repayment plans—allow interest to grow
Undergraduate borrowers typically enter repayment on student loans six months after leaving school, but medical school graduates often defer repayment during their postgraduate residency. Given that a residency could span three to seven years, that’s more time for unpaid education debt to accrue and capitalize interest onto the original balance.
Yes, you might receive a stipend for each year you’re in residency, but wages vary, and they’re certainly not in the same ballpark as a doctor’s salary. The median stipend for a first-year resident in 2021 was $58,650, according to an AAMC survey.
Then consider the fact that student loan repayment can be extended from 10 to 30 years (in the case of federal loans), and anywhere from 5 to 20 years (private loans). The longer you put off making at least the minimum monthly payment, the more interest keeps getting tacked onto your balance. That could explain why you’re staring at a significantly higher “amount owed” than you originally borrowed.
How to handle medical school debt
You can budget until you’re blue in the face, but if you’re staring at six-figure debt, you might need either assistance or strategy to whittle that debt down.
How to get help paying off medical school loans
The type of student loan repayment relief you may be able to get depends on several factors. These include:
Your loan type: federal or private
Your employer: government and nonprofit or private
Your home state: whether its government sponsors repayment assistance
Your professional specialty: some assistance and forgiveness programs are for niche disciplines
In general, however, federal student loans have the most repayment flexibility.
“Federal repayment plans are favorable for all borrowers, basing payments on income level, not debt amount,” says the AAMC’s Fresne of income-driven repayment (IDR) options that cap borrower dues at a percentage of their income. IDR allows “medical graduates to begin loan payments during residency and [allows] all borrowers, regardless of specialty, manageable payments after residency.”
Given the high cost of medical school tuition, it’s very possible that you’re burdened by both loan types. Let’s review common options for each:
|Goal||Federal loans||Private loans|
|Pause monthly payments||A deferment or forbearance allows you to postpone dues if you’re in residency, unemployed or experiencing hardship, among other scenarios.||Some financial institutions offer in-residency deferment and economic hardship forbearance, but this varies by lender.|
|Lower monthly payments||Consider the IDR plans that Fresne alluded to above. They limit your dues to a percentage of your earnings.||Talk to your lender about options, or consider refinancing to a longer repayment term (more on that below).|
|Loan forgiveness||Public Service Loan Forgiveness wipes away your debt after 10 years of minimum payments and work for a government or nonprofit employer. There are other student loan forgiveness options, too.||While there are repayment assistance programs that don’t distinguish between federal and private loans (see below), private loan forgiveness is generally nonexistent.|
If you’re fuzzy on student loan terms, check out the following guides:
More options for forgiveness, assistance with medical school debt
About 56% of medical school graduates have “no plans to enter a program” for forgiveness or relief on their education debt, according to an AAMC report that Fresne co-authored in 2020. If you’re open to the idea, though, consider the following options:
State-based repayment assistance programs: The AAMC has a handy directory of 70-plus federal and state-offered opportunities, including from the National Institutes of Health and National Health Service Corps. Typically, programs require you to work in a certain geographical area or professional field for a set period in exchange for partial or full relief on your education debt.
Employer-based repayment relief: Congress passed legislation in 2021 that allows employers to match your student loan payment, up to $5,250 per year through 2025, without increasing your taxable income. You could also negotiate a signing bonus (or loan repayment bonus) if you work in the private sector, or qualify for relief programs if you work in the armed services.
How to refinance medical school debt
Student loan refinancing for medical school debt could make sense if …
Your finances are in good shape, and don’t require you to postpone or reduce monthly payments. On the contrary, you might even consider making extra (large) payments on your debt to end it ahead of schedule.
You work for a private employer or in a specific field of medicine that isn’t eligible for governmental relief programs.
Your loan interest rates—or APRs, which account for the rate and fees—are double digits, and you have the credit (or cosigner) to qualify for better terms with a new lender.
Through refinancing, you could group your original student loans into one new loan for the same balance, but ideally at a lower APR and more attractive repayment terms. Reputable lenders seek applicants with a credit score of at least 650, but scores approaching 800 are needed to score a bargain-basement APR.
The risk of refinancing is specific to federal loans. If you include them in your refinancing application, the accounts would lose their government-exclusive protections, such as access to IDR and relief options like PSLF. It’s wise to think twice before refinancing federal loans, particularly as the prospect for federal loan forgiveness brightens.
If you don’t have federal loans—or your finances can stomach the risk of refinancing them—it’s worth at least shopping around to see what APRs you could qualify for. The best student loan refinancing banks, credit unions and online companies offer prequalification, or the ability to confirm your eligibility and check rates without harming your credit score. It never hurts to browse.