For many medical school graduates, a heaping pile of debt is the norm, not the exception. The average borrower with medical school debt owes $216,659 as of 2025, according to the Education Data Initiative. And not surprisingly, among students entering medical school in 2024, 77.3% said their ability to pay off debt was a major concern.
Although medical professionals can make good money eventually, the path to those six-figure salaries can be slow. A 2024 Medscape report found that first- and second-year residents earn an average of $65,000, while those in their fifth to eight years of residency only earn an average of $78,000.
The Education Data Initiative says, at the federal direct PLUS loans interest rate of 8.94%, a borrower could pay off $200,000 in 10 years with monthly payments of $2,526.20. But given the average resident salary, a monthly payment that large may be next to impossible.
Still, that doesn’t mean you’re doomed to carry medical school debt forever. Here’s how to tackle a $200,000 medical school loan balance.
[Read: Best Private Student Loans.]
Get Onto a Budget Right Away
Getting a handle on your finances is crucial when you’re on the hook for a large loan.
Steven Rogé, certified financial planner and chief investment officer and CEO of R.W. Rogé & Company Inc., serves as an adjunct clinical instructor at the New York Institute of Technology College of Osteopathic Medicine, where he teaches medical students financial wellness strategies. He says the first step in tackling a large student loan balance is setting a budget.
“Start with a simple monthly budget that separates needs, wants and savings,” he says, taking care to “keep fixed costs low during training and in your first attending year.”
While you’ll need to make sure you’re covering your required loan payments, Rogé says it’s also crucial to build “at least a small emergency fund,” even when your earnings aren’t much to write home about. That could spare you from having to add to your debt to cover unexpected bills.
Sign Up for an Income-Driven Repayment Plan Early On
The good thing about taking out federal student loans to cover medical school is that you may be eligible for an income-driven repayment plan. Given that you may be earning a comparatively low salary as a resident, one of these plans could make your loans more affordable.
Here’s an overview of what federal income-driven repayment plans are available:
— With the PAYE plan, payments are capped at 10% of discretionary income, with potential forgiveness after 20 years.
— With the IBR plan, payments are capped at 10% of discretionary income for loans taken after July 1, 2014, and forgiveness is possible after 20 years.
— With the ICR plan, payments are capped at 20% of discretionary income, and forgiveness is possible after 25 years.
Another federal income-driven repayment plan, called SAVE, is blocked for new applicants.
Take note, though: The passing of the One Big Beautiful Bill Act means that borrowers who are enrolled in ICR, SAVE or PAYE will need to move to a different repayment plan by July 1, 2028.
Beginning on July 1, 2026, borrowers will have access to a new income-driven repayment plan option called the Repayment Assistance Plan. Monthly payments under RAP will generally range from 1% to 10% of earnings, depending on income. Loans are eligible for forgiveness after 30 years.
[Read: Best Student Loans for Graduate School]
Make Lump-Sum Payments When Possible
An income-driven repayment plan might make your medical school loan payments manageable when you’re earning lower wages as a resident. But Dan Kennedy, chief marketing officer at College Ave student loans, warns, “This strategy will typically lengthen your repayment period and increase the amount of interest you pay over the life of your loan.”
Kennedy suggests making lump-sum payments into your loan as your circumstances allow for it. That could mean using windfalls like tax refunds or making larger payments once you’re past the residency stage and your income increases.
Another smart strategy along these lines is to consider sticking to your resident salary budget once you’re earning a much higher income. Or, as Rogé puts it, “Live like a resident for the first one to two attending years.” You can put the extra money toward your student loans during that time to really get ahead of them.
“This approach can drastically reduce your loan term, which, in turn, reduces the total amount of interest you’ll pay by hundreds or even thousands of dollars over the life of the loan,” Kennedy says.
Speed Up the Process With Small Steps
You don’t necessarily have to limit your extra loan payments to windfalls. Rogé says that small steps along the way could get your debt paid off sooner.
“Set automatic extra payments each month, even if small, and bump them up with every raise or bonus,” he suggests. You can also consider a modest side gig for extra money if it is feasible.
[Read: Best Student Loan Refinance Lenders.]
Consider Refinancing — But Know the Risks
Once you complete your medical training and your income increases substantially, you may want to consider refinancing your student loans through a private lender. Depending on your financial situation, you may qualify for a lower interest rate than what your federal loans allow for.
“If you have a good credit history and stable income, you may be able to take advantage of a lower interest rate, which will also save you money over the lifetime of your loan,” says Kennedy.
“However,” he cautions, “it’s important to remember that federal loans come with unique benefits, such as public service forgiveness and income-driven repayment options, that you may lose when refinancing. So be sure to weigh all of your options first.”
Rogé agrees that refinancing into a more aggressive payoff timeline makes sense once you have a stable contract and emergency fund. But, he cautions, “Avoid private refinancing if forgiveness is even a possibility, because you cannot go back to federal protections after you leave.”
The Bottom Line on Paying Off Medical School Loans
Graduating from medical school with a mountain of debt can be daunting. The key, therefore, is to get a good handle on your finances from the start and change your payment plan as your income increases to speed up the timeline. With the right approach, you can set yourself up to enjoy a rewarding career without leaving your medical school debt to hang over your head longer than necessary.
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What’s the Easiest Way to Repay $200,000 in Medical School Loans? originally appeared on usnews.com
