What is the average debt of a medical school grad?
If you're thinking about becoming a doctor, you might be worried about the amount of debt you'll have to take on to pay for medical school. One suggestion from the Consumer Financial Protection Bureau for determining how much debt is reasonable is to: Make sure you don't borrow more than your expected starting salary. This is great news for pre-med students because doctors graduate with debt that is comparable to an entry-level physician's salary.
However, debt levels can differ significantly from the national average. We'll look at average student debt loads after graduation and how they differ by an institution to see how much you can expect to spend on medical school. We'll also look at how specialization affects debt, average doctor salaries, and debt repayment strategies after graduation.
Important Takeaways
- The average debt load for medical school graduates, including pre-med, was $207,003.
- Medical school debt is about 10% higher than student debt at public universities.
- The amount of student debt owed varies greatly depending on the school attended.
- The length of the residency requirement in your field of study may have an impact on when you can start repaying.
- Primary care physicians will earn an average of $242,000 in 2021, while specialists will earn over $100,000 more.
- If you begin early in your residency, income-driven repayment plans may be an option.
Debt from Medical School on Average
According to the Association of American Medical Colleges, about 73 percent of medical school graduates had medical education debt (including pre-med debt) in 2019. (AAMC).
Debt was higher among private school graduates than among public school graduates, which is unsurprising. What's interesting is that the debt difference was much smaller than the cost difference. The average debt for private school graduates was around $20,000 higher, and the median cost of attending a private medical school for four years was around $80,000 higher.
Average Medical Education Debt in 2019
Median Four-Year Cost of Attendance in 2019
Public School
$199,391
$250,222
Private School
$219,829
$330,180
Because private schools typically offer more scholarships and grants to offset costs, the difference in debt is likely to be much smaller than the cost difference. It's also something to consider when deciding whether to attend a public or private university.
Having said that, if you attend a private medical school, you'll be far more likely to graduate with significant debt. While only 15% of graduates from public universities have debts of $300,000 or more, nearly twice as many (27%) of graduates from private universities have such debts.
Debt by School Average
Where you go to school greatly impacts how much debt you have when you graduate. Not only do tuition costs vary widely, but housing is also an important factor to consider when it comes to student debt. Someone who can live at home instead of paying for on-campus or other accommodations, for example, could save tens of thousands of dollars.
The average debt loads of graduates earning a first professional degree in medicine at various schools are shown in the table below (debt often includes tuition, housing, food, books, and supplies). Each school's one-year tuition rates are also provided for comparison with debt loads.
However, keep in mind that the cost of attendance is only one piece of the puzzle; the financial aid package you're offered (and the amount of aid that isn't repaid) is critical.
One-Year Tuition Average Professional Debt Accumulated at the School Medical School Type (2021-2022)
Medical Schools
Type
The Average Professional Debt Amassed During School
Single Year Tuition (2021-2022)
University of California-Davis
Public
$113,413
$42,648 (in-state)
The University of Texas Medical Branch at Galveston
Public
$127,240
$20,271 (in-state)
Indiana University-Purdue University-Indianapolis
Public
$201,882
$18,018 (in-state)
Tufts University
Private, nonprofit
$216,726
$66,354
Tulane University of Louisiana
Private, nonprofit
$250,026
$69,308
As you can see, the average amount of debt is not always a reliable indicator of tuition costs. UC Davis, for example, has the third-highest tuition on the list but the lowest average debt load. This emphasizes the importance of comparing not only the cost of attending one school versus another but also the amount of financial aid you can expect in the form of grants and scholarships.
What Impacts Debt Payoff Depending on Your Medical Specialty
Students enter a postgraduate training or residency program after medical school, which can last anywhere from three to nine years, depending on their field or specialty. Even though you are paid an annual stipend as a resident, the length of your residency program may affect when you can start paying off debt. This is due to the fact that stipends are much lower than the average physician's salary of $242,000, delaying your ability to pay off debt.
According to an AAMC survey, stipends for the first year of residency in 2020 averaged $58,921 and rose to $77,543 for residents in their eighth year (for programs that require that many years).
An orthopedic surgeon, for example, may owe the same amount in medical school as a lower-paying specialty. They'll likely need to spend four years in orthopedic surgery residency and another year in another, more general practice area for five years. A pediatrician's residency is typically only three years, so he or she could begin making larger student loan payments sooner.
Note that spending more time as a resident on a tight budget may affect your ability to pay back your loan. If you don't pay your interest while you're in residency, your student loan will capitalize, which means the amount you owe will grow due to the unpaid interest.
According to the AAMC study, education debt levels are relatively consistent regardless of specialty. As a result, if you're like the majority of students, you won't choose (or avoid) specialties because of debt concerns.
Will I Be Able to Pay Off My Medical School Student Loans?
Regardless of which specialization is chosen, a physician's starting salary will often be close to the amount of debt he or she graduated with. In other words, if you become a full-fledged doctor, you'll most likely be able to pay off your medical school debt. According to Salary.com, entry-level physicians with less than a year of experience earned an average of $192,078 in 2021.
On the other hand, choosing to specialize may allow you to repay your debts more quickly.
According to a survey of 17,903 doctors conducted by the physician-targeted website Medscape in 2021, primary-care physicians earned an average of $242,000 in 2020, while specialists earned an average of $344,000.
Note that in 2020, plastic surgery was the highest-paying specialty, with an average annual compensation of $526,000, while pediatrics was the lowest-paying, with an average annual compensation of $221,000.
Medical School Debt vs. Debt from Other Healthcare Professions
In comparison to other students who graduate with advanced degrees, medical school graduates have higher debt loads on average.
14 However, debt is common among healthcare graduates. Compare the debt loads for various healthcare professions to get a sense of graduate medical school debt versus different types of healthcare education debt:
Average Debt for Different Types of Schools
- $207,003 (medical) (2020)
- $292,169 for dental (2019)
- $180,000 in optometry (2018)
- $142,875.00 Pharmacy (average between 2009-2019)
- $111,091 is the average salary for a physician assistant (2019)
- $258,112 for Osteopathy (2020)
In comparison to other fields such as dentistry and Osteopathy, medical school debt appears to be reasonable. If you want to avoid debt, consider a pharmacist or physician assistant career, both of which require less debt.
What Is The Best Way To Pay Off Medical School Debt?
According to the American Association of Medical Colleges, about 45 percent of all medical school graduates intend to participate in a loan forgiveness or repayment program. Here are some options for debt repayment.
Choose your loan repayment plan based on your income
Income-driven repayment plans, such as Income-Contingent Repayment (ICR), Pay As You Earn (PAYE), and Revised Pay As You Earn (RPAE), may be available for your federal loans (REPAYE). These plans may be centred on your revenue, family size, and discretionary income, and you may be required to meet financial hardship requirements in some cases. Depending on the plan, payments could be completed in 10 to 25 years, with the remainder forgiven (any amount forgiven may be taxable). These plans reduce your monthly payments, but interest may cause your total debt to grow over time.
Select a Budget-Friendly Location
Living in a high-cost city while practicing a lower-paid medical profession may necessitate a long-term repayment plan or other compromises. Choose a location with a lower cost of living if possible, and consider a physician loan as an alternative to a traditional mortgage.
Attempt to Get Your Student Loans Forgiven
Students with Direct Loans (and a few other types) can apply for Public Service Loan Forgiveness (PSLF) after working in government or a qualifying nonprofit for about ten years. Some requirements include being on an income-driven repayment plan, making 120 qualifying payments, and jumping through a few online hoops each year to verify your employment. The forgiven amount is not taxable. Look into state-sponsored forgiveness programmes as well as forgiveness and scholarship programmes for members of the armed forces.
Consider refinancing or consolidating your debts
Consolidation refers to the process of combining multiple loans into a single payment. Consolidating your current debts may result in a lower monthly payment and a longer repayment period. You may, however, be charged a higher interest rate, forfeit your grace period and other federal loan benefits, and be required to repay your loan over a longer period of time (and potentially pay more interest).
You can lower your interest rate and, as a result, your payment by refinancing your student loans. You can, however, opt out of the grace period and other federal loan benefits in exchange for a longer repayment period.
Make sure the benefits of either option outweigh the potential loss of federal protections.
Discharge is a goal that should be pursued
In certain—and fairly extreme—circumstances, your payments on federally guaranteed loans may be canceled or forgiven, such as if:
- You pass away
- In your name, someone committed loan fraud.
- You've been diagnosed with a permanent disability.
- Your medical school is closed down before you finish your studies.
- You file for bankruptcy and can show that you have suffered "undue hardship."
- To put it another way, discharge isn't a good way to pay off medical school debt.
Residency and Pay During School
Even if you're on a tight budget, you can reduce your long-term debt by making partial or full contributions to your unsubsidized loan interest, which accrues daily. Otherwise, at the end of your grace period following graduation, any unpaid, accumulating interest will be added to the loan's original amount.
Your total debt will rise, and your lender will begin charging interest on that debt. Furthermore, you can only fully benefit from the tax deduction for paid student loan interest while earning less than $85,000, which you'll almost certainly exceed by the time you're a practicing physician.
Organize Your Debt in a Strategic Way
Prioritize repayment of your highest-rate debt, even if it means reducing payments on lower-rate debt to the bare minimum to free up cash flow for higher-rate debt. Inquire with your loan servicer about a 0.25 percent interest rate reduction for making automatic payments. If you can, make voluntary payments to reduce the loan's principal. Keep in mind that a shorter repayment schedule will increase your monthly payments while lowering the total amount owed.
The Association of American Medical Colleges (AAMC) offers enrolled medical students and recently graduated medical school students and graduates a free online "MedLoans Organizer and Calculator." You can upload your federal loans to the web-based tool, use it to test out different repayment plans, save loan notes, and figure out payments based on how long you've lived where you are.
