How to Get Out of Medical School Debt and Be Debt-Free
With an already troubling job market and rising college costs, more young people today are finding it increasingly difficult to pay off their school debt. Eight out of ten medical school graduates borrowed heavily to earn their degrees and most now carry heavy debt with more than half-a-million dollars in debt. A round up of the most recent statistics reveal that the average medical school debt has now exceed $200,000, with graduates racking up more debt as they go through the academic process. One out of every three college graduates is in debt right now.
There are several ways of reducing your medical school debt and just as many options available to graduates with a high amount. You might be one of the lucky students who qualify for federal or state loans, which offer great rates and flexible repayment terms. Or you might have other means of paying such as scholarships, military training grants, or work-study opportunities at a medical center. If you qualify for federal loans, you probably want to consider consolidating those loans into one low monthly payment, so you only have to deal with one bill instead of a series of them.
You may also want to try working on your school debt while you’re still in residency. Many hospitals and medical schools offer jobs that allow students to work in their facilities after they finish their residencies, or they can continue to pay off their student loans. These “after residency” loans usually have interest rates much lower than the standard loans offered. For some, it may even be possible to take advantage of federal student loans, or federal work-study opportunities, to pay off these student loans once you graduate. But if this doesn’t work out, there are other ways to reduce your debt while in residency.
Consolidation of student loan debts is only part of what you’ll need to do to reduce the overall amount of debt you have. You also need to get rid of all of your excess or secondary school debts. These are any loans that were not directly provided by the school, like a personal loan from a family member or a co-signer’s loan. Many people try to consolidate their student loan debts without getting rid of these other debts first, but this is a mistake. There is no better way to reduce your student loan payments when you are already attending school.
Some student lenders will actually forgive some of your student debt if you go back to school and complete an additional four years of education. This doesn’t apply to all federal programs, however. For federal programs like Stafford Loans and Perkins Loans, going back to college and completing a four year degree or higher will almost always require repayment. Loans for students going to medical school will be different, since they are given on a case-by-case basis. You will need to talk to your loan’s about repayment plans and options.
The most important thing to do if you’re having difficulty repaying your student loan is to find a solution as soon as possible. Since repayment usually begins on the day after graduation, you should start thinking about how to deal with your debt as soon as you graduate. Your best option may be to go back to school so you can begin repayment immediately, while you still have time to work. By finding a way to do this, you’ll likely save money over the long term on interest.
If you are thinking about using loan forgiveness programs, your best bet is to find a lender who specializes in giving out loans to graduates who want to go back to school. Be prepared to pay a higher interest rate and, depending on the type of loan forgiveness program you choose, possibly have a lower monthly payment as well. However, if you can do nothing else and your school debt is unmanageable, at least find a financial institution that is willing to help. In some cases, it might even be a good idea to contact your loan company directly and ask them for advice. While they don’t offer loan forgiveness programs, they do know lots about the best way to proceed in your situation.
Another good thing to do if you’re struggling with school debt is to start researching consolidation options. Federal loans are often the first step to debt-free living after graduation. You can easily obtain government consolidation loans to pay off the various loans you have taken out, including credit card debt. Talk to an expert at a local debt counseling office and see what sort of loans might be available to you, including federal student loans. These programs are designed to help you consolidate your debt without a compromise on your school. In addition to the government loans, you may also be eligible for federal subsidized or unsubsidized student loans to consolidate your loans.