The average medical school debt is simply the reflection of the medical school cost. A typical medical school graduate owes six times more than an average college graduate, according to EducationData.org. Moreover, medical school graduates owe $4.3 billion in total every year.
Now, we all know that a medical career is profoundly noble.
But what is the actual cost of pursuing it? What does the residency aftermath look like? Can doctors repay their student debt and make a living?
Let’s find out.
What Is the Average Medical School Debt?
Student loans are more than necessary for over half of medical school students. They need to pay for the school and cover living expenses. In addition, the AAFP claims that medical students often take out a mix of loans to ensure sufficient funding.
These loans have different provisions; the interest rates vary greatly. Logically, students end up with piles of debt.
Statistics show that medical graduates owe on average $241,600.
Of course, students without premedical debt have to return less than that — $215,900. Either way, medical graduates are among the most heavily indebted graduates.
The Average Medical School Debt Over Time
Medical school in the US has always been difficult and expensive. But, medical student debt became a problem of national importance in the 1960s, according to UCSF. By 1984, over 86% of medical school students graduated with significant amounts of debt.
Still, the AAMC reports that the education debt has been increasing more slowly than the cost of medical school.
The median medical school debt rises by 2.3% every year. In 2009, an average medical school graduate owed $190,000, while the average debt reached nearly $200,000 in 2015.
Furthermore, 73% of medical school graduates had educational debt in 2019. In 2012, that number was 86%.
Why Is the Average Debt for Medical School So High?
It’s hard to put a price on a life-saving profession. Yet, medical schools in the US rank high on the most expensive schools list. Additionally, the AAMC emphasizes the debt level driven by the school type.
Many medical students take out loans to afford the tuition. Private medical schools charge more than public medical schools, so it’s not surprising that their graduates have higher levels of educational debt. Yet, they are less likely to have it.
Conversely, the average debt in a public medical school is slightly lower, but the number of loans is higher than that of private medical schools.
The Cost of Medical School
Apart from tuition, other charges add to the debt — application and admission fees, accommodation, personal expenses, etc. On average, the cost of a medical degree is $218,792, based on EducationData.org.
However, even the tuition alone is high for some medical students.
Tuition
The average college tuition in America at private colleges is $38,070. At public colleges, it’s $10,740 for in-state and $27,560 for out-of-state students.
The average doctor student loan debt depends considerably on medical school tuition. Spending over $200,000 on four years of medical school puts students in a tough position.
The average tuition for medical school per year is much higher than for other degrees — $54,698.
Furthermore, the average tuition differs for private ($59,555) and public medical schools ($49,842). The same applies to in-state and out-of-state students, who have to pay $51,464 and $57,933, respectively.
Overall, the average cost of any medical school increases by $1,500 every year.
Who Has the Highest Average Debt After Medical School?
Medical students of various backgrounds and ethnicities experience financial struggles. It seems that this is due to socioeconomic reasons.
Extensive research reveals that black medical students owe more than their peers of some other race. Curiously, black students at private medical schools report having the second-highest amount of debt ($230,000).
In addition, the student debt is different for graduates of medicine-related fields. For example, students interested in oral surgery need to enter MD-integrated programs after dental school.
Since these programs last for six years, students often need to borrow money to complete them.
The Average Dental School Debt
According to ADEA, the average educational debt for dental student graduates is $301,583. Naturally, the average debt at private dental schools is slightly higher ($354,901). At public ones, students owe $261,226 on average.
The fact that 17% of dental school graduates in 2021 didn’t have student debt is astonishing.
The percentage is pretty high, knowing how much money dental students have to allocate for tuition only. ADA explains that the first-year tuitions in dental schools across the states are approximately $40,000 for public and $75,000 for private dental schools.
What Happens to the Average Medical School Debt After Residency?
Upon graduating, medical students have two options: start repaying the school debt right away or postpone it.
Postponing the medical school debt repayment sounds appealing to medical students, especially during residency when they are not making too much money.
It’s essential to know how financial aid works before applying for it. Depending on the type of student loan, different interest rates apply.
What’s more, interest rates don’t stop accruing even if students decide to postpone the payment. As a result, the average student loan debt for doctors piles up. On top of that, a forbearance request is mandatory; all medical and dental students wishing to postpone the paying-off period can find it at studentaid.gov.
No matter how tempting it might be, it’s better not to defer the payment during residency.
According to Debt.org, a ten-year loan term is added to the time spent in residency. So the total debt increases, affecting the monthly payments in the long run.
Post-residency monthly payments range between $1,100 and $2,900, depending on the repayment plan.
During residency, they range between zero and $360.
How Long Does It Take to Pay Off the Average Medical Student Loan Debt?
Medical students can pay off the student debt in 10 to over 20 years. So when it comes to federal education loans, medical students can be debt-free in 10 years. The good thing about these student loans is that you can switch to a different repayment plan if your financial situation changes.
Medical student debt for private loans can stretch over 20 years and more.
Education statistics reveal that it takes top-earning doctors at least seven years to pay off their student debt. But the average time differs for students refinancing, applying for loan forgiveness, or opting for income-driven repayment.
Can the Average Medical School Debt Be Forgiven?
Medical students taking advantage of federal student loans are eligible for the public service loan forgiveness program (PSLF).
The College Cost Reduction and Access Act established this program in 2007. It forgives the remaining balance of direct loans after making 120 separate monthly payments.
There are some loans that can be made eligible:
- Direct subsidized and unsubsidized loans
- Direct PLUS loans
- Direct consolidation loans
- Federal family education loans (FFEL) Stafford, PLUS, and consolidation loans
- Federal Perkins loan
- Certain health professions and nursing loans
Additionally, the borrowers paying off the average student debt after medical school have to be enrolled in one of the available repayment plans:
- Standard
- Income-based repayment (IBR)
- Income-contingent repayment (ICR)
- Revised Pay As You Earn (REPAYE)
- Pay As You Earn (PAYE)
Qualifying employment is another deciding factor.
More information is available at studentaid.gov. In short, to be eligible, you have to be employed full-time in a qualifying public service position during the period in which you made 120 monthly payments.
The applicants also have to be employed at the time of application for the loan forgiveness program and until the remaining principal and interest are forgiven.
The Best Ways to Reduce the Average Debt from Medical School
Start Paying Off in Residency
Student loan debt statistics show that many medical students decide to pause debt repayment during residency. Deferring school debt while in residency reduces stress, but only temporarily. The actual cost increases significantly because of the interest accruing over the entire deferment time.
Some medical residents need to do it, though. An average medical resident makes $59,279 per year, according to AAMC. In that case, it’s better to pay at least the accrued interest. That way, the final medical debt will not skyrocket after residency.
Enter a Forgiveness Program
The average student loan debt that medical school students have can be forgiven. The public service loan forgiveness program is a terrific alternative, even though it has special conditions. It provides a huge financial relief to borrowers who have been paying off the debt for ten years.
By that time, your debt will be much lower. However, it can definitely come in handy to have the rest of your debt forgiven. It’s essential to meet all the requirements year after year to be eligible for the forgiveness program.
Make Extra Payments
Paying extra to lower the average debt out of medical school can be inconvenient right upon graduation or residency. However, additional money deposited during the grace period has long-lasting positive effects on the final sum.
In the end, the debt will cost you less. So whenever possible, make extra payments to reduce the medical school debt, and pay it off faster.
Think About Loan Consolidation
Loan consolidation is ideal for medical graduates with multiple student loans. If you are one of them, you can combine them into one loan with a fixed interest rate at no cost. The average debt of a medical student with more than one student loan is a sum of interest rates for all those loans.
You can have only one payment based on the average of the interest rates on the consolidated loans. It’s great that this process doesn’t require fees; loan consolidation is completely free of charge, and it takes 30 minutes to complete at studentaid.gov.
Make a Student Loan Interest Deduction
You have to pay student loan interest during the year on a qualified student loan. Later on, you can lower the average medical student debt you owe by deducting it. According to the IRS, you are allowed to deduct up to $2,500 or the amount of interest you paid during the year.
Student loan interest deduction represents one of the tax breaks intended to help students pay for higher education. You claim this deduction as an adjustment to income, so you don’t need to itemize your deductions.
Get on a Budget
As an indebted medical graduate, you need to set financial priorities. Unfortunately, it’s almost impossible to pay off the average student loan debt for medical school and live luxuriously, at least until you find a high-paying job.
Always make sure to set aside enough money for the monthly payment. One of the ways to save money is to find a roommate, cook all your meals, and make coffee at home.
Closing Thoughts
It’s clear that medical school is worth the investment. But it is also evident that paying for it is a big deal. Researching student loan conditions is a must for people who use this kind of financial student aid. Otherwise, medical debt can turn into an endless nightmare that costs a fortune.