What physicians should know as student-loan payments resume

Timothy M. Smith , Contributing News Writer

Since the U.S. Supreme Court struck down the Biden administration's student-loan cancellation plan earlier this year, physicians with student-loan debt may have been wondering how the decision will affect their financial futures.

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An episode of “AMA Update” featured a discussion with Alyssa Schaefer, general manager and chief experience officer at Laurel Road, about what physician borrowers need to know with payments resuming this month.

Laurel Road has been selected by the AMA to help you navigate your financial future and to help AMA members save on their student loan debt. Learn more.

Despite the Supreme Court’s decision knocking down the plan to provide student-loan forgiveness up to $20,000 per borrower, physicians repaying their student loans might still be in a better situation than they were even a few years ago.

“The administration did put forward some changes in income-driven repayment plans that we believe are actually more advantageous to physicians in general and a larger population of people, potentially,” Schaefer said. “So there is some really good news on the horizon and people are taking advantage of that every day.”

The Saving on a Valuable Education (SAVE) Plan is a case in point. The White House estimates it could benefit more than 20 million borrowers.

“It takes into account your current earnings and, therefore, how much of your current earnings can go towards your monthly payment. So it will adjust, essentially, your monthly payment based on your current earnings and certainly takes into account you being a resident or a fellow,” Schaefer said.

While payments resumed Oct. 1, outstanding student loans started accruing interest again Sept. 1.

“You want to make sure that you have a plan in place and you really start to take the necessary steps,” Schaefer said.

“One of the first pieces of advice that we give people is to have a free consultation with a company called Gradfin,” Schaefer said. Gradfin is one of the leading student-loan counseling servicers in the U.S. and affiliated with Laurel Road.

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Illustration of resident looking at a diagnostic image

“They have a great team of deep, deep experts that really know the ins and outs of all the forgiveness plans and all your options, and they can talk you through what might may be best for you. It's a free 30-minute consultation, so it doesn't take a lot of time,” Schaefer said.

Also, keep in mind the 50-30-20 rule, favored by financial planners, “which basically says 50% of your income should go towards things that you need—your food, your rent, your car payment, etc.,” Schaefer said, adding that the 30% is “that discretionary income that you would have, maybe, to go out to a nicer dinner or take a vacation.”

Your student-loan payment should be included in the 50% category. The remaining 20% should be set aside for savings.

But continue to keep an eye out for opportunities for relief, Schaefer said.

“Maybe you're eligible for a public service loan forgiveness plan,” she said. “Maybe your best option is to refinance, or perhaps you just stay the course and keep paying on your loan. Those are all things that you want to look into.”

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