Paying Off Debt: Strategies for Physicians with Student Loans, Credit Card Debt, and Other Obligations

By: Tanya Frias, CFP®, ChSNC®

Published: May 2, 2023

📂 Financial Education

Written for:

✅ Residents and Fellows

✅ Early Career Physicians

✅ Mid Career Physicians

✅ Established Professionals

As physicians, we understand the burden of debt that comes with pursuing a career in medicine. Whether it's student loans, credit card debt, or other obligations, it can be challenging to know where to start when it comes to paying off debt. However, there are several strategies that can help us manage our debts and achieve financial freedom. 

Here are some general strategies for paying off debt: 

  1. Prioritize high-interest debt: Start by tackling debts with the highest interest rates, such as credit card debt. This can help save money in the long run by reducing the amount of interest paid.

  2. Consider refinancing: Refinancing student loans with high interest rates can help save money on interest and potentially lower monthly payments.

  3. Set up automatic payments: Automating debt payments can help stay on track and avoid late fees. Many lenders offer discounts for setting up automatic payments.

  4. Make extra payments: Consider putting extra money each month towards debt, as even small extra payments can help pay off debt faster. 

  5. Create a budget: Living within one's means is important when paying off debt. Create a budget to track expenses and find areas to cut back.

  6. Be cautious with debt consolidation: Consolidating debts into one loan may seem like a good idea, but it's important to do research and ensure it's the right move. Some consolidation loans may have higher interest rates or longer repayment terms, costing more in the long run. 

  7. Seek professional advice: Consider seeking advice from a financial professional to create a personalized plan for paying off debt and achieving financial goals.

  8. Explore PSLF. For physicians with student loans, there are specific considerations such as the Public Service Loan Forgiveness program (PSLF). PSLF forgives the remaining balance on eligible federal student loans after 120 qualifying monthly payments while working full-time for a qualifying public service employer.

PSLF Deep Dive

Public Service Loan Forgiveness (PSLF) is a program that forgives the remaining balance on eligible federal student loans after 120 qualifying monthly payments have been made while working full-time for a qualifying public service employer. This can be a huge relief for physicians who have significant student loan debt.

To be eligible for PSLF, you must:

  • Have a qualifying federal student loan

  • Work full-time for a qualifying public service employer

  • Make 120 qualifying monthly payments

  • Make your payments under an income-driven repayment plan

Qualifying federal student loans include Direct Loans, FFEL Loans, and Perkins Loans that have been consolidated into Direct Loans.

Qualifying public service employers include:

  • The federal government

  • State governments

  • Local governments

  • Public schools

  • Nonprofit organizations that are 501(c)(3) organizations

To make a qualifying payment, you must make your payment on time and in full. You must also make your payment under an income-driven repayment plan.

If you meet all of the requirements, the remaining balance on your eligible federal student loans will be forgiven after you have made 120 qualifying monthly payments.

PSLF can be a great way to save money on your student loans if you work in a public service job. However, it is important to note that the program has been criticized for being difficult to qualify for and for having a number of confusing rules. Make sure to do your research and consult with a financial professional before pursuing PSLF.

Remember, paying off debt takes time and dedication. By implementing these strategies and seeking professional advice, you can take control of your finances and achieve financial freedom.

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