Medical Residency Personal Finance

Say goodbye to physician residency—and medical student-loan debt?

Brendan Murphy , Senior News Writer

Medical student-loan debt, a figure that on average reaches about $200,000, looms large in many life decisions that physicians make as they exit training and enter practice. For some doctors, that figure can play a factor in evaluating their first position out of residency.

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Salary, naturally, will be a factor in determining one’s ability to repay a loan in the most efficient way possible as too may be a signing bonus. In a competitive job market, employers are also offering another carrot to attract candidates: medical student-loan repayment.

For new and soon-to-be entrants to the physician job market, here’s a rundown of some key aspects of employer-sponsored loan repayment.

One common recruiting incentive offered by employers seeking to attract physicians—according to a 2023 report released by the AMN Healthcare’s Physicians Solutions division, formerly known as Merritt Hawkins—was a signing or commencement bonus. The report indicates that those types of bonuses were offered in 63% of searches the firm conducted in 2022–2023. That’s down from 92% in 2021–2022.

By contrast, 18% of AMN Healthcare Physicians Solutions division searches tracked in the report featured loan repayment. Educational loan repayment entails payment by the recruiting hospital or other facility of the physician’s medical student loans in exchange for a commitment to stay in the community for a given period of time.

The average amount of loan repayment offered in Merritt Hawkins job searches was $98,665 in 2022–2023. In return, most applicants (84%) were required to stay in their position for three years or more. 

Educational loan forgiveness can be a big recruiting incentive, said experts at AMN Healthcare’s Physician Solutions division. Larger health systems are generally able to offer $100,000 or more in student-loan repayment, compared with smaller such incentives at medium-sized health systems or physician private practices. There was a wide range of loan repayment incentives offered to physician recruits, from a low of $10,000 to a high of $400,000, the report says.  

Though the volume of recruiting opportunities offering loan repayment was relatively low, he number is likely higher for young physicians and residents transitioning to practice because more established physicians have, in most instances, paid off their loans.

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Illustration of resident looking at a diagnostic image

When family physician Samantha Benz, MD, was looking for a post-residency job, she had a few key factors that guided her search such as work autonomy, practice culture and location. When she was down to a few final offers, the one that offered medical student-loan repayment stood out.

For a two-year commitment to stay in her position, Dr. Benz—with Aurora Health Care in Milwaukee—was given $100,000 that goes toward paying her loans. That incentive came on top of a signing bonus. Both the signing bonus and the payments her employer made toward her student-loan debt count as taxable income, which is different than loans that are forgiven through the Public Service Loan Forgiveness program. 

“It was really appealing,” Dr. Benz said. “The way that it works out after the loan repayment ... basically all of my loans will be paid.”

“When I was comparing the two positions, one offered the medical student-loan repayment incentive and the other didn’t.”

Dr. Benz’s loan repayment stipend was paid as a lump sum. Because she had been making payments toward her loans during residency, while student loan interest was on pause for government loans, the sum she received as part of her recruiting incentive was enough to put her close to having her loans entirely repaid, she said.

“It made the one job more appealing,” said Dr. Benz who began her position with Advocate in mid-October. “Knowing that it would be close to complete was good to know.”

Read more about AMA policy on medical education costs and student debt, last updated in 2023, and check out this to-do list for young physicians to get their finances on track.

The AMA selected Laurel Road as a preferred provider to support you in navigating your financial future. AMA members who refinance their student loans with Laurel Road receive an additional 0.25% rate discount through AMA Member Benefits PLUS.

The 0.25% AMA member interest rate discount is offered on new student loan refinance applications from active AMA members. The AMA discount is applied to your monthly payment and will be reflected in your billing statement. The discount will end if the AMA notifies Laurel Road that the borrower is no longer a member. This offer cannot be combined with other member or employee discounts.