Paying off medical school debt in 2021? 4 things to consider

There are several options for paying off your medical school loans. (iStock)

Paying off student loans can be tricky, especially as the halt to federal student loan payments is extended amid the pandemic and the Biden administration considers a plan for student loan forgiveness.

Having a plan to pay off medical school loans is important since the average student completes their training with more than $200,000 in debt, plus any debt from undergraduate classes, said Dr. Jaewon Ryu, CEO of Geisinger, a Danville, Pa.-based hospital and healthcare company.

There are several factors that people with medical student loans should explore, such as seeking debt forgiveness or refinancing private student loans. Student debt holders can use Credible to get prequalified student loan refinancing rates without affecting their credit score.


How long will federal student loan relief last?

People with federal student loans received an additional reprieve. President Joe Biden extended the payment pause through Sept. 30, 2021. During this relief period, student debt holders are not required to make monthly payments and the student loan debt is not accruing interest.

The Biden administration has not made a decision on whether student loan debt will be forgiven. One encouraging sign is that Biden and Congress have recently discussed forgiving $10,000 to $50,000 in student debt. Forgiving student debt would likely occur through an executive order and only apply to federal student loans only. 

If you took out private student loans, consider using an online tool like Credible to view a rates table that compares rates from multiple lenders at once


Can medical school debt be forgiven?

Borrowing money to pay for medical school is common. There are several traditional ways you can seek forgiveness, such as through Public Service Loan Forgiveness (PSLF) and other programs like enrolling in a service program operated by the military or government that will pay for medical school.

There are loan forgiveness options available for medical school graduates who are willing to work in the public health sector or are willing to take jobs in underserved areas such as rural communities or on tribal land, said Bruce McClary, spokesperson for the National Foundation for Credit Counseling, a Washington, D.C.-based non-profit organization. Other student loan forgiveness plans are also available from state governments and the military.  

Medical school debt can be forgiven under the PSLF program. To qualify for PSLF, borrowers are required to work full-time for a qualifying nonprofit organization or government agency, make 120 qualifying loan payments and agree to be on an income-driven repayment plan. Physicians that qualify for PSLF typically work for a government-run hospital or a non-profit community hospital, said Leslie Tayne, a Melville, N.Y. attorney specializing in debt relief. 

If you can't devote that much time after graduation to working for a government-run hospital or a non-profit community hospital, find employers who contribute monthly payments to employees’ student loans or work a part-time job as a teaching or research assistant.

Is student loan refinancing worth it? 

For those that do not qualify for the PSLF program, refinancing can be worth it for many borrowers seeking a lower interest rate on their student loans, Tayne said. 

"Keep in mind that refinancing a federal loan turns it into a private loan, so those choosing to refinance will no longer qualify for federal benefits, including the current forbearance programs and PSLF," she said. 

To qualify for the lowest interest rates, borrowers really need to have excellent credit when applying. 

"Otherwise, refinancing might not be worth it, especially if interest rates are higher than the current loans and costs and fees exceed current payment schedules," Tayne said.

Depending on the timing and the terms, refinancing a student loan can help borrowers save money, McClary said. 

"While savings may be the goal, it’s always a good idea to review the benefits and the drawbacks before moving ahead," he said. 

Student loan refinance rates have been declining. To see if loan refinancing would work in your favor, use an online student loan refinance calculator to determine your new monthly payments and interest savings.


For borrowers with credit scores of 720 or higher who used the Credible marketplace to select a lender, during the week of March 29:

  • Rates on 10-year fixed-rate loans averaged 3.82%, up from 3.76% the week before and down 5.07% a year ago. The record low for 10-year fixed rate loans was 3.71%, during the week of Feb. 15, 2021.
  • Rates on 5-year variable-rate loans averaged 3.45%, up from 3.33% the week before and 3.44% a year ago. Variable-rate loans recorded a record low of 2.63% during the week of June 29, 2020.

Use an online tool like Credible to compare student loan refinancing rates from multiple lenders at once without affecting their credit score.

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