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Conquering Student Loans - What You Need to Know

If you've got student debt - and if you're a young physician, chances are you do - you're probably wondering about the best and fastest ways to get rid of it. Here's a quick overview of your options. By Christopher Malgieri, MD

You know the numbers.  A vast majority of medical students use student loans to finance education (up to 89%, according, and newly-minted physicians are graduating with average debt surpassing $250,000 (  If you’re reading this blog, I can only assume that you have student debt and are interested in getting rid of it. 

There are three ways to handle student debt.  You can ignore it, you can pay it, or you can have it forgiven.  Allowing your loans to go into default is far-and-away the worst plan.  As of now, your student loans cannot be discharged with bankruptcy, and your destroyed credit will make for a dubious financial future.  Also; you’re a mature professional.  You didn’t become a doctor by ignoring your responsibilities.  All government-held loans (Direct Loans are the most common) can be paid in an income-driven format (with “payments” as low as $0), so there is absolutely no excuse to ever (EVER) ignore student debt. 

Aggressively paying your loans is sensible for those with lower-than-average student loan balances (or with a wealthy spouse/partner).  It allows for career flexibility and peace of mind.  There is a plethora of refinancing options at lower interest rates if you’re committed to expiring your debt the old-fashioned way.  But if you decide to transfer your government-backed student loans to a private lender, beware the consequences.  Private loans are much more difficult to discharge in the event of disability, and come with more rigid payment options in the event you fall into financial crisis.

I want to take some time to talk to you about forgiveness.  There are a few avenues towards forgiveness that I won’t recommend or take time to explore (Death, permanent disability to name a couple).  But if you hold student debt, you need to familiarize yourself with Public Service Loan Forgiveness (PSLF).  Immediately.  To say this program benefits physicians (anesthesiologists, specifically) is an understatement.  The qualifications are a bit nuanced, but the benefits are life changing.  This is not an exaggeration.  Life changing. 

Established into law in 2007 by the most recent Higher Education Reauthorization Act, PSLF promises total, tax-free forgiveness of a borrower’s student loan balance if they meet the following requirements:

  1. Have the correct type of loan (Direct Loans. The most common type of medical student loan)
  2. Make 120 on-time monthly payments in a “qualified” plan. Income-driven plans qualify (even if your calculated monthly payment based on income is 0 dollars).
  3. Work in “Public Service” defined as the government or most non-religious, non-political 501c3 nonprofits (Most hospitals and universities fit this description)


That’s it.  That’s the requirements.  Consolidate your government loans at med school graduation into a single Direct Loan.  Sign up for an income-driven plan and work for a 501c3 hospital or university.  Celebrate the 10th anniversary of your medical school graduation by erasing hundreds of thousands of dollars in student debt.

There are three different “income driven” plans to choose from.  The first one is the original “Income-Based Repayment (IBR)”.  Under this plan, you pay 15% of your income above the poverty line.  The second plan (not available to those with any loans originating before October 2007) is “Pay As You Earn (PAYE).”  This plan only requires payment of 10% of salary above poverty line.  But here is how these plans benefit anesthesiologists the most.  Both PAYE and IBR payments are “capped”.  For these two plans, your monthly payment can never exceed what your standard 10-year payment would have been the day you graduated from medical school.  Even after hilarious accrual of interest on your journey through residency and multiple fellowships, your payment can never increase beyond that number. Even if you reach a point where 15% of your attending salary is SIGNIFICANTLY above this capped number, your payment will not go up. 

The third income-driven option, which is being heavily advertised to new graduates is “Revised Pay As You Earn (REPAYE).”  This plan comes with a benefit of delayed interest accrual as well as a 10% payment rate above the poverty line, but does NOT come with a payment cap.  You will continue to pay 10% of your salary even if that calculated number exceeds your standard payment number.  If you are a new-graduate with above average debt, this is probably not the best choice for you.

All income driven plans are calculated for twelve months, and are always based on LAST year’s income.  For new interns, it’s based on your income as a 4th year medical student.  For new attending physicians, it’s based on your last year in training.  Thus, for an average anesthesiologist completing a residency and a single year of fellowship, they might expect only to pay the “capped” amount for four out of ten years.  The other six years will have payments ranging from zero dollars to a few hundred dollars. 

There are many negative consequences for anesthesiologists becoming “employees” at hospital systems or universities.  But if there is one significant benefit, it’s the potential qualification for PSLF.  Approval is completely based upon the EIN number found on your W-2.  If you work full-time, and the number correlates to an entity with 501c3 status on the IRS database, then you qualify.  Employment Certification Forms (ECFs) were introduced in 2012 to confirm eligibility and can be submitted to FedLoans, the official servicer of the PSLF program.  The department of education recommends that borrowers fill out and submit this form annually to keep track of progress.

PSLF has generated some negative press for its low-approval rate, and there are plenty of financial gurus that would (rightly) caution you against putting too much faith in our government to continue this overly-generous program.  These are valid concerns, but there a couple of things that should give medical students some degree of confidence.  First, the PSLF program is carefully outlined in a borrower’s Master Promissory Note (MPN).  Alterations or elimination of PSLF would likely only affect new borrowers.  Secondly, the approval rate which was once at a laughable 1% continues to increase as borrowers become more educated, and applications are for forgiveness are submitted by informed borrowers rather than the over-zealous. 

The key to realizing the benefits of PSLF for anesthesiologists is early action.  To get the most in forgiveness, you need to start immediately.  After you graduate medical school you should enter repayment the moment you are permitted.  Even if you ultimately accept a private practice job, your years of payments in an IBR format will delay capitalization of your balance and could also help you take advantage of government subsidies with interest payments.  But as more of us are completing fellowships and ultimately working for large non-profits, the potential rewards for anesthesiologists are enormous. 

There are entire online communities dedicated to your successful navigation through PSLF, a couple of my favorites are on Reddit or the physician-specific group on Facebook.  This brief post is by no means a comprehensive review of the program.  I would urge you to look at your finances and career goals before deciding whether PSLF is a good fit for you.

Christopher J. Malgieri, MD, is an anesthesiologist with Lifespan Physician Group in Providence, RI, specializing in pediatric anesthesiology. Dr. Malgieri completed his medical residency as chief resident at Emory University in Atlanta. He is a member of the Society of Pediatric Anesthesiologists, the American Society of Anesthesiologists, and is secretary of the Rhode Island Society of Anesthesiologists.

The ASA Committee on Young Physicians is pleased to present this monthly article series on personal finance. These articles are not written by hedge fund managers or real estate tycoons but by practicing physicians. Some have business degrees and some do not – but every contributor is an anesthesiologist who has some guidance to offer the rising generation of attending physicians. It is not the intention of the committee to offer definitive financial advice, but rather some pearls of wisdom to consider while developing a personal fiscal plan.


ASA Community Blog is published as a benefit for ASA members. The views expressed on this blog are those of the individual contributing writers only and do not necessarily represent the opinions of ASA.