Medicine was a pivot for Chirag Shah, MD.
After starting his professional life in investment banking, Dr. Shah found that a career in medicine was more appealing. Still, there was one problem: How was he going to pay for it?
As many medical students do, Dr. Shah turned to student loans to finance his training. He graduated from Case Western Reserve University School of Medicine with more than $250,000 in medical school debt.
“If you want to be a doctor and you don’t have a way to fund your training, you are going to take out loans,” said Dr. Shah, now an anesthesiologist in the Department of Veterans Affairs (VA). “When I graduated with $250,000 in debt, my first thought was: How am I going to repay this? But you see as you go through training that the number is not insurmountable.”
With the benefit of hindsight and having his loans close to being paid off, Dr. Shah offered insight about what he wishes he knew in medical school about student-loan repayment.
Know what you owe
“Before I graduated, I did sit down for an hour, try and figure out what I owed and got an overall holistic picture of my loans,” said Dr. Shah who is an adviser for Laurel Road, a financial services company that specializes in medical school loans. “You want to look at your debt load and ask yourself, ‘How long is this going to take me to repay it? What kind of structure of repayment am I in?’"
“Medical schools have experts to help. It's worthwhile to sit down with a loan adviser or a colleague or someone with at least a little bit of financial knowledge or educate yourself even better and understand what exactly you're signing up for in terms of repayment and what plan is best for you in terms of repayment,” he said. “That's something that everyone should really think about in their M4 year. Hopefully you've thought about it before then.”
Dive deeper:
- 3 mistakes to avoid on medical student-loan repayment
- AMA member exclusive: Medical student loan repayment options and forgiveness consultation
Avoid other types of debt
“At Case, we got an estimated budget at the beginning of the year,” Dr. Shah said. “I would recommend trying to follow that budget. If I was going to go over that budget, I'd try and figure out a way to cut back.
“The biggest piece of advice I have is do not take on credit card debt to make ends meet because with credit card debt, you're paying an APR of somewhere around 20 or 25%. Meanwhile, student loans are typically around 7%. Obviously, there's a huge differential there and it just builds up and you don't want to get in that debt trap.
“If you look at that estimated budget at the beginning of the year and think, ‘Hey, I probably spend a little bit more than the average person,’ take out a little bit more in student loans. Especially in your third and fourth years of medical school, you're going to have a lot of expenses. You're going to have all the applications fees, you're going to have your Step exams, you might have to travel for interviews.
“It's much better that it is rolled into your student debt, than your credit card debt. And at the end of the year, you can always return it and just repay it and you haven't lost that much.”
Dive deeper:
- Budgeting 101: Money management tips for medical students
Subscribe and succeed in medical school
Get tips and insider advice from the AMA on succeeding in medical school—delivered to your inbox.
Pay something
“After medical school, loans go into forbearance [for six months],” Dr. Shah said. “That means that you’re not required to pay anything but the interest on those loans is still building. You want to start making payments as soon as you can.”
“Luckily with federal loans, when you get out of medical school and you're in residency, they tie it to your income. You don't really have to repay it based on what it would be if it was straight amortized. You're paying a hundred dollars a month or something minimal like that.”
Dive deeper:
Plans change
“When I graduated, I always thought that I would be in the academic sector or in a not-for-profit setting and that would put me on the Public Service Loan Forgiveness (PSLF) road,” Dr. Shah said. “Of course, as luck turns out, I did do a not-for-profit residency and fellowship and then I went into private practice, which made the PSLF not possible. At that point, I was able to refinance and get a favorable interest rate through Laurel Road.
“The biggest point is don’t get stuck in one mindset. My first real job was at a for-profit. Then of course two years later I actually switched to VA, which is another not-for-profit, and that would've qualified. Even in hindsight, it's very hard to say what exactly the right move is in terms of refinancing, but it's best to know your options.”
Dive deeper:
- 5 key student-loan terms that medical students should know
- Repaying student loans with SAVE: What resident physicians should know
- What to do when federal student-loan forgiveness goes wrong
It works out
“With your income potential as a physician, you will be fine monetarily no matter what your loan burden is,” Dr. Shah said. “You’re going to be able to repay your loans, and that stressor of repayment is temporary.”
To fully understand your repayment options, you can schedule a free student loan consultation with a Laurel Road specialist. During that conversation, you can evaluate your options for forgiveness and understand the best road for your unique financial situation.
