Carrying a high student loan debt is typical among physicians who’ve spent years on education and training. It can get really overwhelming to live with such big loans. Luckily, there are ways to make repayment management much easier for you. One of the most effective ones is loan consolidation.

Understand Physician Student Debt

Typically physicians graduate with a student loan debt of over $200,000, which has a huge impact on their financial stability and possibilities for saving money. Of course, high earnings are a big advantage of becoming a medical professional, however the loan debt can make the first years of medical career really hard.

Top Strategies for Managing Student Debt as a Physician

1. Repayment plans based on your income

Income-driven repayments (IDR) are designed to help you adjust the monthly payments depending on your income and family size, which is beneficial especially during the first residency years when earnings are relatively low. Many physicians start paying off their loan debt with IDR and change their repayment strategy once their income is higher.

2. Public Service Loan Forgiveness (PSLF)

PSLF is a federal program offering forgiveness on qualifying loans after making 120 payments for medical professionals working full-time for eligible nonprofit or government employers. That means that you can qualify working for example in public hospitals, health clinics, or academic institutions.

3. Refinancing and Consolidation

Not many know that loan refinancing and consolidation are two different but complementary strategies. Refinancing involves replacing one or more loans with a new loan from a private lender, ideally with a lower interest rate. However, while refinancing federal loans with private lenders, you can lose federal protections like IDR plans and PSLF eligibility, so this is a good option for medical professionals after residency who earn a higher income. Consolidation can help you simplify your payments by combining multiple loans into a single loan with a fixed interest rate. It can also make loans eligible for PSLF and other repayment plans that weren’t accessible before. What are other benefits it brings?

Benefits of Loan Consolidation for Physicians

Consolidation has many advantages that can make a physician’s life easier. One of them is, as said above, a simplified repayment process. For busy doctors, this can reduce the mental load and make tracking payments easier. What’s more, consolidation allows you to extend the repayment term which reduces monthly payments. It is useful especially for new physicians whose income is initially lower. Another benefit is that with consolidation you will have a better interest rate based on the weighted average of the loans you consolidate. This stability is very profitable in a rising-rate environment and definitely can help you reduce stress connected to your debts.

How To Consolidate Your Student Loans?

First step to consolidate your loans is to review them. Collect details about each one to understand the interest rates and overdue balances. Then, choose the most accurate repayment plan for you. While selecting, you should take into consideration your earnings level and future income potential. Then apply through the Federal Student Aid website, where you can select a servicer and finalize the contract.

Is Loan Consolidation a Good Choice for You?

Loan consolidation is often an important step towards financial stability. It can help you start managing your payments well, as well as open the door to loan forgiveness. However, it’s crucial to assess your personal loan portfolio, possible career growth, and also financial goals.

If you want to be sure you have your finances under control, check if you know about these common financial red flags!