Executive Summary
Student debt is a persistent problem that can hinder financial success for years. According to a new study by Weatherby Healthcare, the high cost of medical school student loans weighs heavily on new doctors for many years following graduation.
The Medical School Debt Report 2019 surveyed more than 500 actively practicing physicians across the country to better understand how student debt has impacted their lives over time. Respondents graduated from medical school in 2015 or earlier and were asked about student loans, debt repayment and factors that impact their financial decisions.
Nearly two-thirds of respondents (65%) are still carrying debt from medical school. Of that group, 80% had more than $100,000 in remaining debt, with 32% carrying more than $250,000 of debt.
Struggling under the weight of debt
With so many doctors carrying such heavy medical school debt, it should not be surprising that one-third of indebted respondents (34%) expected to take at least ten years to pay off student loans. An additional quarter (25%) expected to take six to 10 years to pay off their debt. Only 10% of respondents believed it was realistic to pay off their debt in the next two years.
Accumulating more debt further impacts repaying student loans, but these new factors were typically not luxuries and extravagances. Nearly 60% indicated that buying a home had added to the overall debt and slowed repayment, and 49% said raising a family increased debt. When prompted to elaborate on additional financial complications, the most common responses were starting private practices, high cost-of-living, divorce, and caring for aging family members.
When considering ways to reduce debt, two-thirds of indebted respondents (66%) are interested in loan forgiveness programs. Doctors also expressed a desire to learn more about loan consolidation and refinancing (45%), how to live within a budget (39%), and working locum tenens (29%).
Success in paying off student loans
The study also highlights strategies for quickly eliminating debt from the 35% of respondents who had shed their student loans. A significant majority of this group had paid off their debt relatively quickly, with 47% clearing their loans within two years of graduating and 27% paying theirs off within three-to-five years.
These doctors emphasized a blend of strategies, including managing finances, pursuing additional work, and consolidating debt. Nearly half (49%) reported making extra payments on a regular basis and 34% worked locum tenens or pursued extra shifts. Loan consolidation was another strategy used by over a quarter of respondents, with 18% leveraging federal programs and 10% pursuing private refinancing.
When prompted for other strategies, many doctors had taken advantage of U.S. military scholarships and active duty loan forgiveness programs. Others had parents and family members who helped pay for schooling. Smaller groups had academic scholarships or connections that allowed them to attend medical school in other countries like France and Argentina, where their schooling had been subsidized by governments.
Offering open-ended advice for eliminating debt
The study included a broad, open-ended question asking doctors how they would advise physicians and medical students hoping to pay off debt more quickly. The answers were varied and insightful.
The stress of schooling combined with the weight of debt had clearly overwhelmed several respondents, who expressed frustration and only offered discouraging advice. This was perhaps best summed up by one response: “Don’t go to medical school in the first place.”
However, by far the largest grouping of advice was simply to live as frugally as possible until the debt was paid off. This included living below means, putting any extra income toward debt, and pursuing additional work through locum tenens or picking up more shifts. Many suggested considering military scholarships and debt forgiveness plans, while others urged students to avoid the military and look for other options. Making smarter decisions up front like not borrowing more than absolutely necessary and selecting less expensive state schools were other compelling responses.
Medical school student loans are extensive, long-lasting and compounded when physicians strive to find a work-life balance. Although many doctors have paid off their debt through up-front planning, strict budgeting and utilizing military incentives, the majority continue to struggle with debt that they do not expect to repay for a decade or more.
Survey Report
A broad majority of medical doctors surveyed still carry debt from their schooling. Respondents to this study were all medical doctors in established practices who had graduated prior to 2015.
Medical school student loans are extensive, long-lasting and compounded by life decisions. The weight of debt from medical school is significant, even for a professions with high salaries. The single largest group of respondents had over a quarter of a million dollars in debt remaining, while fewer than 10% had $50,000 or less to pay off.
With such heavy debt, most doctors’ outlook for paying it off is equally long. One-third of respondents expect to take more than a decade to pay off their loans, a number that closely corresponds with the highest levels of debts. More doctors expect to pay off their debt in three-to-five years than six-to-ten years, however, which could be a sign of optimism about repayment among respondents.
Along with medical school loans, doctors incur overall debt in the same way many other people do: buying homes and raising families. Even respondents who outlined other reasons for incurring debt pointed to family costs, medical expenses, taking care of extended family, high cost of living, opening private practices, debt from a spouse’s schooling, divorce, credit card debt, medical traveling, and investments as driving additional debt and delaying repayment of medical school student loans.
Doctors who pay off medical debt tend to do so quickly, using strategies like strict budgeting and taking advantage of outside opportunities.
As expected, the longer a physician has been in practice, the higher the likelihood they have paid off student loans. However, more than a third (36%) of physicians who graduated in or before 2005 still carry debt. Of respondents who graduated in 2014 or later, only 9% have paid off their student loans.
Quickly paying off medical school loans is the most common way to go, with nearly half repaying their debt in two years or less and over one-quarter in three-to-five years. Any plan that required nine years or more was decidedly uncommon, only accounting for 13% or respondents.
Nearly every respondent who had paid off medical debt used several strategies in the process, the most common being careful management of finances and finding additional work through locum tenens and extra shifts. Many shared other strategies including U.S. military scholarships, active duty loan forgiveness programs, accepting loans or gifts from family members and considering lower-cost medical schools both in the U.S. and abroad.
Methodology
Weatherby Healthcare surveyed more than 500 actively practicing physicians across the country to better understand how student debt impacts medical doctors’ lives over time. Respondents were asked specifically about the amount of debt they carry, their plans for paying it back, and about other factors that impact their financial decisions. In cases where loan debt had been repaid, respondents were asked about their strategies and tips for coming out from under the cloud of debt. Weatherby Healthcare is one of the nation’s largest providers of locum tenens services.
To learn more about strategies for eliminating medical school debt more quickly, see Weatherby’s comprehensive guide to paying off medical school debt.
