Physician Mom

4 Highly-Effective Strategies Moms Can Use to Tackle Medical School Debt

4 Highly-Effective Strategies Moms Can Use to Tackle Medical School Debt

Being a parent is downright expensive, but working moms have it especially tough. And with challenges such as increasing costs, declines in physician reimbursements, and a heap of student debt, it’s more expensive than ever to manage a budding medical career and family.

According to the Association of American Medical Colleges, the average amount of medical school debt among class of 2014 graduates was over $176,000. Over time, that equates to tens of thousands of dollars in interest payments that could otherwise be spent on a college tuition fund or vacations with your children.

So if you’re in need of a smart student loan repayment plan, here are a few ideas from our student loan guide for doctors to help you pay off your debt quickly and focus on what matters most: your family.

How Moms Can Pay Off Medical School Debt

1. Negotiate Your Signing Bonus

Many employers – including private practices and hospitals – offer signing bonuses as an incentive to attract new physicians. As Modern Medicine Network explains, these signing bonuses can range anywhere from $24,000 to $150,000. Negotiating a substantial signing bonus could allow you to pay back your loan in one lump sum, putting an end to monthly payments and high interest immediately.

Just remember: a signing bonus should be a true bonus, not something merely added to your weekly paycheck. Make sure you check your contract for how the bonus would be structured before signing the dotted line.

2. Consider Refinancing

If you have decent credit but are paying high interest rates (between 6% and 9%), refinancing your student loans might be your best option. This method allows a new loan company to pay off and assume your existing debt. You then make payments to the new company, ideally at a substantially lower interest rate. In the long run, refinancing can save you thousands of dollars, especially in interest payments.

However, keep in mind that refinancing isn’t for everyone. Federal loans often allow flexible repayment options like loan deferment and income-based repayments. When you work with a refinancing company, however, you lose access to these federal programs. Though some offer unemployment protection, many do not; if your job situation is not 100 percent secure (particularly if you are an independent consultant), make sure you fully understand the terms before refinancing.

3. Work for the Military

The military offers many perks in exchange for service from physicians. For example, the Navy Financial Assistance Program (FAP) provides residents an annual grant of $45,000 for up to four years, on top of a salary of approximately $50,000 and a monthly stipend of $2,179 to help with living expenses. That can add up to $121,000 annually – easily enough to put a big dent in your student loan debt.

Of course, this option requires a major lifestyle shift. Joining the military generally entails three to five years of active duty, plus several more years in the reserves, which means you’ll have to spend substantial time away from your home and family. There are plenty of moms who do make this work, but make sure you consider all angles of these programs before undergoing such a drastic lifestyle change.

4. Restructure Your Payment Plan

Programs like income-based repayment (IBR) allow you to reduce the amount of your monthly payments based on your income, rather than accruing interest while not paying down the principal at all. Another great thing about income-based repayment is that it postpones interest capitalization and gives you a partial interest subsidy for the first three years of making payments, allowing you to forego your loans after 20-25 years, depending on the program.

In addition, if you work for the government or nonprofit sector, some programs will forgive your student loans after 10 years of service. There is no cap on how much student debt can be forgiven, which means moms working for nonprofit hospitals or clinics can get out of debt simply by doing their jobs.

Make Paying Down Medical School Debt a Priority

Working and being a mom can sap your time, your energy, and your bank account. But medical school loans can make it even harder to get ahead. By shedding your medical school debt as quickly as possible, you can enjoy your income, save for the future, and look forward to a debt-free life with your family.

Image Credit: Helge V. Keitel