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Did you know that $215,900 is the average balance of medical school debt? That sounds like a lot of money to pay back, but you can do it with the right repayment strategies for medical school loans.
Some strategies are easier than others, and you might not be able to do everything. However, you should try at least a few options to lower your loan balance and pay it off quickly.
Here’s what you should try.
Start Paying as Soon as You Can
One of the best things you can do to help pay off your medical school loans quickly is to start paying now. Even if you’re still in residency or medical school, try not to delay payment more than necessary.
In some cases, you may have subsidized loans, meaning the government will pay the interest while you’re in school. However, you might have unsubsidized loans, and the cost of those can easily add up for medical students.
The earlier you can start paying, the less time the loan will have to accrue a lot of money in interest. You can’t avoid interest entirely, but paying a bit now can help.
Review Your Debt
You should look at your medical school loans. Specifically, consider how much debt you have and if the loans are from the federal government or private lenders.
Also, review any debt you still have from your undergraduate years, and decide if you want to pay all of that back quickly. Then, you’ll have a good idea of how much money you owe.
You can run the numbers through a medical school loan calculator. Test out a few different monthly payment amounts to see how fast you can pay off the balance.
A good loan calculator will let you enter the balance, interest rate, and other details. That way, you can customize the results to your situation.
Keep Living Costs Low
If you’re still in medical school, consider where you want to apply for residency. Consider applying to programs in your hometown or in other cities where you have family members you can live with to save money.
Alternatively, you can apply to programs in places with a low cost of living. You can also apply to work in a city where you have a friend who’d be willing to have you as a roommate.
Keeping your living costs low during residency means you’ll have more money to put toward your medical school student loans. Find other ways to lower your living costs, such as cooking for yourself or walking to work. Cut costs on things like car insurance by shopping around. Apps like Truebill and BillTrim can help you track expenses and reduce monthly recurring bills. Simplifi is a handy budgeting app that lets you track your spending and income in one place.
Sell Old Items
Another excellent way to speed up paying off your medical school loans is to sell stuff you no longer use. Maybe you bought some furniture for your medical school apartment, but you won’t have space for some of it during your residency.
You can host a garage sale or list your items for sale on Facebook or eBay. Throughout your residency, keep a stack of items you don’t use and sell them when you can.
When you receive money after selling something, put that cash toward your debt. Each sale may not earn you a ton of money, but it can eventually add up the more you get rid of your old things.
Make Extra Money
As you start paying off your loans for medical school, consider starting a side hustle. When you’re in medical school or residency, you probably won’t have time for a traditional job. This article tells you about ways to get paid to take online surveys at home.
However, most side hustles are flexible enough for you to do during your free time. If you know you’ll have a day off, you can use that day to deliver for Doordash or Instacart. A great way to find one time gigs or ongoing gigs doing pet sitting, child care, senior care, or house cleaning is Care.com.
You can also offer tutoring to pre-med students, and you can charge a good amount for that. Be sure to save some of your earnings for taxes, especially if you think they’ll be significant. Lili is a banking app that lets you invoice customers, tracks payments, and calculates taxes. It has a lot of other great features as well, so it’s perfect for a medical student starting a tutoring business.
Put the rest of the money towards your medical school loans in addition to your regular monthly payments.
Save Your Raise
Like many jobs, you might earn a raise each year you’re in your residency. It can be tempting to spend that raise on a bigger apartment or a new car.
You may need some of it to account for inflation or necessary expenses. To avoid needing a lot of the raise, look for deals at the grocery store and try to carpool as much as you can.
Save as much of the raise as possible so that you can pay off your loans quickly. If you think you won’t be able to save much, look for a roommate or a cheaper apartment so that you can save money. Betterment is a great way to set aside a few extra dollars each month and automatically invest it. You can start with as little as $10.
Refinance Your Loan
If you have good credit, you may be able to refinance your medical school loans. This allows you to get a new loan from a private lender, so you can use the money to pay off your current loan balance.
The new loan may have a significantly lower interest rate, especially if you have fantastic credit. Refinancing your loans might not be for you if it wouldn’t save you that much. Look at the pros and cons and check your rates to determine if this is the right path for you.
So before you lock yourself into a new loan, use a loan calculator. Then, you can see how much you may save in interest and how early you could pay off the debt.
Ask for a Signing Bonus
As you approach the end of your residency, look for some good jobs. Of course, you’ll want a job with a good starting salary to pay for your living costs and cover your debt.
However, you may want to ask about a signing bonus from the hospital or office. Some places will be willing to pay a bonus to get you to work for them.
Some signing bonuses can be thousands of dollars on top of the salary. If you can get a bonus, put it towards paying off your loans for medical school.
How Will You Pay Off Your Medical School Loans?
When you have a lot of debt, it makes sense to want to get rid of it as quickly as possible. Medical school loans can easily add up, and the accruing interest doesn’t help.
Be sure to consider a few strategies to help pay back those loans in less time. Then, you can enjoy your life and salary as a doctor, and you won’t have to worry about defaulting on your debt.
Medical school and residency can be stressful. Read more about how to treat your mental health.