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Student debt is one of the heaviest financial anchors most individuals can find themselves carrying.
Unlike other forms of debt, such as a home mortgage, you just can’t sell the collateral to reduce or pay that debt off because that collateral just happens to be you!
Also the vast majority of student loan debt can not be discharged by filing bankruptcy.
One of my favorite financial milestones was finally paying off that last dollar to Sallie Mae and wiping my medical student loan debt clean.
Ali Roach contacted me about a guest post so that she could share her particular insight on student loan debt and the growing problem we face.
Why Are So Many of Us in Debt These Days?
A recent report by the Association of American Medical Colleges indicates that medical students are carrying, on average, $197,000 in debt upon graduation.
Undergraduate debts can increase this amount by $28,000 on average, an indicator that physicians are usually experiencing a substantial financial burden by the time they graduate.
Therefore, it’s important for physicians to be aware of their debts and learn about debt repayment options that have been successfully adopted by other physicians.
Physician Debt Influencing Professional Choices.
Medical school debt can influence one’s choice of specialty.
Throughout the country, more doctors are shying away from specialties with lower pay, such as psychiatry and pediatrics, and even jobs located in rural and less wealthy areas.
This trend might lead to a lower diversity of the available doctors.
The University of California reports that this issue poses a significant concern, as the need for primary care physicians can be particularly acute in some regions, such as areas with aging populations.
Even for practitioners who receive high salaries, the weight of debt can be hefty.
This is part of the reason why New York University’s School of Medicine recently opted to waive tuition for all future and current medical students.
Doing so, the admissions team hopes, will allow more lower-income and minority students to enroll, and it will also encourage students to choose lower-paying but in-demand specialties, like primary care.
This type of strategy may alleviate the current anxieties of many medical students undertaking the profession, which could end up improving the total population of physicians over the long term.
The Major Causes of Debt.
With almost 50% of active physicians who graduated in 2015 and earlier still carrying over $100,000 in debt, it is safe to say that the most significant factor of physicians’ debt is going through medical school.
The obvious reasons for this are rent, tuition, and food.
Students may incur other costs by surprises, such as board exam registrations and preparations.
Students may incur additional costs due to interview travel in the final year.
This is why it is common for new physicians to majorly struggle with their student debt, as it can take anywhere from six to ten years to clear these massive amounts.
One of the surefire ways physicians can attempt to contain their debt is to address it head-on and conduct proper financial planning from the get-go.
By starting medical school with a plan to tackle the debt in increments later on, or working with a solid budget while attending classes, students can prepare themselves for repaying their loans.
It is crucial to understand one’s financial situation before beginning classes, especially so students can avoid running up their credit card bills, which will ultimately worsen the debt situation.
Another way to contain debt during medical school is to seek financial aid.
Most schools will have a program set up that can reduce tuition costs drastically; it is wise to enroll in the school or program that therefore offers the best and most cost-effective tuition as a student.
There are also external scholarships and financial aid programs beyond most medical schools, which can ultimately detract from the overall costs students will be burdened with upon graduation.
For example, the American Medical Association and the American Medical Women’s Association are two professional groups that offer scholarship opportunities to students, as well as worthwhile and robust information related to affording medical school in general.
Debt Repayment Options
The good news is, almost 50% of the physicians who have settled their student debts have done it within the first two years after completing school.
Loan forgiveness and debt relief programs are two examples of loan solutions that physicians may be able to secure.
Through these programs, doctors needed to treat a certain subset of patients for a set number of years, and in turn, their debt amount will be wiped clean.
As such programs can be limited, learning more about options such as debt consolidation, refinancing, and U.S military scholarships are sustainable routes.
Other viable options include making extra payments, living within a budget, and pursuing extra shifts.
Each of us is going through a situation unique to ourselves, so it’s critical to settle on a repayment strategy that is tailored to a physician’s future.
It is helpful to carry out in-depth research, like other colleagues, and even consult loan repayment experts.
The earlier you make the right choices, the more significant your long-term savings can be.
If you are in search of financial help, please consider enlisting the service of any of the sponsors of this blog who I feel are part of the “good guys and gals of finance.”
Even a steadfast DIY’er can sometimes gain benefit from the occasional professional input.
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