More than 70% of physicians under the age of 40 deal with student loan debt, and nearly half of these physicians are carrying debts between $150,000 and $200,000, according to the AMA Insurance Agency, Inc.’s, 2014 Work/Life Profiles of Today’s U.S. Physician. It’s important to understand how to manage student loans and know what options exist for repayment.
Tips to Managing Your Education Loans
- Know when the grace period ends. Loan repayment begins 6 months after leaving medical school.
- Lock-in a lower interest rate during the grace period. Consolidate medical education loans at least 30 days before the grace period ends to receive a lower grace interest rate. Remember that the grace period ends as soon as loans are consolidated.
- Investigate loan-repayment assistance options. If future employers offer loan reimbursement assistance as a recruitment tactic, read all the terms carefully before accepting. Agreements may include a required length of time to stay with that employer to receive the benefit.
- Refinance student loans. The average physician can save around $50,000 in interest by consolidating loans. By buying out a student’s loans from existing providers, loan lenders can consolidate those loans into one monthly payment and potentially offer a lower interest rate.
- Consider deferment. Deferment is a period of time when payments on loans are not required although interest still accrues. Only certain federal loan types are eligible for deferments, including: subsidized and unsubsidized Stafford, SLS, PLUS or Direct Consolidation. Application for deferment must occur before student loan payments are more than 180 days overdue. Consider loan deferment when:
- Going back to school (at least half-time in some cases)
- Taking a graduate fellowship
- Receiving rehabilitation training
- Experiencing unemployment
- Undergoing economic hardship