According to the American Association of Medical Colleges, the average medical student graduates with nearly $200,000 of student loan debt. This is the median figure, meaning half graduate with even more. For many residents, typically earning less than $60k per year, this figure weighs on them. They may struggle to meet minimum payments as they dream of a day when they can pay off their loans with one big signing bonus… but how often does this dream come true? And what do residents need to know right now to increase their chances of paying off medical school debt quickly?
Every year, the recruitment team at Jackson Physician Search talks to thousands of residents in every specialty, and for 95% of them, paying off medical school loans is a concern. As a physician recruitment firm focused on finding the best fit between employers and physicians, we encourage our employers to offer competitive signing bonuses that may be used for loan repayment and, when possible, participate in programs that qualify their physicians to receive federal or state loan support. We know this will help our clients attract physicians and help physicians achieve their goals of paying off debt quickly.
While a good physician recruiter can certainly help you prioritize loan repayment in your job search, there are several things to consider well before you begin an active physician job search (and the earlier, the better!):
1. The Complete Compensation Package
While you may be scanning physician job boards for ads with “loan repayment support” or “signing bonus” in the headline, it’s important to remember that the complete physician compensation package is what will ultimately allow you to repay your loans. Signing incentives are helpful, but assuming you maintain reasonable living expenses, part of your base salary and production-based bonuses can also be put toward your loans. Don’t let an impressive signing bonus distract you from a less than competitive salary or limited earning potential.
2. Signing Bonuses
Many organizations offer recruitment bonuses to attract candidates. Most of the time, these bonuses, funded by the hospital or practice, can be used as the candidate sees fit–for housing assistance, loan repayment, investment, or simply to squirrel away under the mattress. The money may be paid upfront and then forgiven incrementally over a period of three to five years of employment, or paid in installments over the first several years of work.
3. Loan Repayment Incentives
Like signing bonuses, loan repayment incentives are funded by the hospital or practice. In this scenario, the bonus is designated for loan repayment only. The organization may request your loan documents and make payments for you or reimburse you for payments made. This does not prevent you from making additional payments toward the total.
4. Public Service Loan Forgiveness (PSLF)
The options mentioned above are all funded by the employer, but there are also government programs to consider. The Public Service Loan Forgiveness program requires applicants to maintain employment with a government or other non-profit organization for ten years while making 120 income-driven monthly payments toward paying down the loan. After ten years of service, the rest of the loan will be forgiven.
Since most healthcare organizations are classified as not-for-profit, this can be an attractive option for new residents who will spend three to seven years in training, earning a relatively low income on which their loan payments will be based. Once training is complete, they must find employment with a non-profit until the 10-year obligation is fulfilled.
5. National Health Service Corps (NHSC)
The National Health Service Corps provides another government-funded loan forgiveness option for physicians working in primary care, dental, and mental or behavioral health. This program, which has three different options, requires the applicant to work at an NHSC-active site for two or three years, depending on the specific program, and offers $50,000-$100,000 in loan forgiveness.
NHSC-active employers may be located in urban, rural, or tribal communities with limited access to care. These facilities may include Federally Qualified Health Centers (FQHC), Rural Health Clinics (RHC), Indian Health Services Clinics and Hospitals, as well as private clinics and other community health centers. Not all employers that meet these requirements have submitted the paperwork to gain NHSC-active status, so if considering an offer and planning to utilize this program, make sure you know if the employer has or is willing to apply for the status.
6. State Loan Forgiveness Programs
Most states also offer loan forgiveness programs to incentivize physicians to work in areas of high need, whether rural or urban. Investigate available programs in the regions you are considering to identify programs that meet your needs. The state program may not be available in tandem with the federal one, but you may be able to move from one to the other once your original service commitment is complete.
Medical school debt is often heavy on the minds of residents and early-career physicians. However, multiple government-funded programs and employer-paid incentives are available to help pay off loans quickly. If loan repayment is a high priority for you, make sure to start your search early and identify the programs that best meet your needs. Applications have strict deadlines, and once accepted, you may be required to document your employment and income status regularly. So start your physician job search early, stay organized, and let your physician recruiter know that loan repayment is a priority. You will soon have your medical school debt behind you and a lucrative physician career ahead.
If you are starting a physician job search, the recruitment team at Jackson Physician Search is ready to answer any questions you have about the process, including potential loan repayment incentives. Contact a recruiter today or download the Physician Job Search Playbook to get started.