Medical school left you with a mountain of student debt. Statistics show that 81% of 2015 medical school graduates owe more than $180,000 in medical school loans. Now that it’s time to start paying those loans, declining reimbursements at the corporate level are reducing revenue, and that may reduce your starting salary. Seems like an untenable equation, doesn’t it? There is a way to manage student debt while building future wealth, but it requires a solid strategy:

  1. Identify all payback options
  2. Strategize debt management
  3. Work a logical, measurable plan

According to financial advisors and student loan experts, here is what you need to know:  

Payback/management options:

  1. Deferment
  2. Forbearance
  3. Consolidation
  4. Payback plans including income-based plans
  5. Forgiveness plans

Ignorance is not bliss- it’s costly. Know the difference between deferment and forbearance.

Deferment and forbearance delay loan payments. You must apply to each loan originator to request either plan. Most importantly, you must educate yourself on how interest will, or will not, accrue on the loan during the deferment or forbearance period. If not managed correctly, the accumulating interest could add hundreds of thousands of dollars to your loans.

  1. What is Deferment?

According to, a deferment is a temporary period of time during which you do not need to repay the principal and interest of a loan. Depending on the type of loan, the federal government may pay the interest during deferment. For those who qualify, loan payments can be deferred for up to 3 years (or longer in specific instances).

The government may pay the interest on;

  • Federal Perkins Loan
  • Direct Subsidized Loan
  • Subsidized Federal Stafford Loan

The government does not pay the interest on unsubsidized or PLUS loans; you must pay it. If you don’t pay the interest that accumulates during deferment it may be added to the loan’s principal balance.

  1. What is Forbearance?

According to, if you can’t make your scheduled loan payments, but don’t qualify for a deferment, a loan servicer may grant a forbearance. A forbearance allows you to stop making, or reduces, monthly payments for up to 12 months. Interest continues to accrue on subsidized and unsubsidized loans, including all PLUS loans.  

There are two types of forbearances:

  • Discretionary; requested for financial hardship and illness
  • Mandatory; requested if serving in medical or dental internships or a residency program, and meet specific requirements. You can also request if:  
  • The total amount owed each month for all student loans is 20% or more of total monthly gross income (and other conditions).
  • You are serving in a national service position for which you received a national service award.
  • Qualify for partial repayment of your loans under the U.S. Department of Defense Student Loan Repayment Program.
  • You are a member of the National Guard and have been activated by a governor, but you are not eligible for a military deferment.

You can pay the interest during forbearance or allow the interest to accumulate. If you don’t pay the interest on your loan during forbearance, it may be added to your principal balance.

  1. ConsolidationFederal loans can be consolidated, private loans cannot.

You can consolidate your loans through a Direct Consolidation Loan, or through a private student loan refinancing company.  Before beginning the consolidation process, organize loan documents by federal and private originator. The originator is also known as the lender (i.e. Sallie Mae), know the originator, the disbursement date and the amount of each loan before calling to consolidate your loans.  

  1. Income Driven Repayment Plans:  

In the short term these plans work well. You pay an amount decided upon by the loan originator, based on your debt- to-income ratio. It is the originator’s equation that ultimately decides how much you will pay each month. Under these plans, you pay as little as possible each month. If you pay consistently over a period of time your loans may be forgiven in the future (after 20+ years). However, you may pay more interest over time, and loan amounts that are forgiven may be considered taxable income. Check out this  detailed overview of income-driven repayment plans.

Types of income-driven plans are:

  • • Income-Based Repayment (IBR): Caps monthly payments based on percentage of income
    • Pay As You Earn (PAYE): Must demonstrate need, have no student loans before 10/1/07
    • Revised Pay As You Earn (REPAYE): New as of 12/15, removes time restriction of PAYE
    • Income-Contingent Repayment Plan (ICR): No income eligibility requirement

According to Medical Economics, “Many physicians are on a trajectory to have a significant amount—and potentially all— of their student loans forgiven” through the income-driven plans listed above.

Beware: Loan forgiveness is based on working a decade or more in a non-profit or underserved area, or 25 years at a for-profit institution. This may not support your career or income goals.

  1. Special Forgiveness Programs for Doctors by State
Special Forgiveness Programs for Doctors by State

Some states offer forgiveness programs specifically for doctors. Programs change regularly and can be impacted by state budgets. Always check with the state government to get current details on program offerings. Hyperlinks are connected to the name of each state below.

New York

  1. Regents Physician Loan Forgiveness Award Program: Helps physicians practicing in New York and awards up to $10,000 each year, for 2 years. Applicants must be licensed in New York State, completed residency in the past 5 years, program focus is primary care. Applicants must agree to work in a specific area or with an underserved population.
  2. Physician Loan Repayment – Qualified Educational Loan Repayment program; awards up to $150,000 to physicians that commit to a 5-year term of working in an underserved region.


Health Professional Loan Repayment Program for doctors, nurses, pharmacists, and dentists. Awards up to $35,000 per year, for 2 years. Must provide primary care in an underserved or rural area.


Primary care doctors and dentists can get up to $100,000 awarded, must work full-time for two years with medically underserved populations. Physicians must be licensed in Pennsylvania and meet certain requirements.

You have worked hard. You are ready to earn money. Strategy and planning won’t make a mountain of student debt disappear, but it might just stand it in the corner so you can get on with your life and your practice of medicine.