For many, becoming a doctor and choosing a career helping others is an innate calling. For others, it may be a family tradition. Or for some, the lure of being at the forefront of medicine is irresistible. But whatever your motivation, becoming a skilled medical professional is expensive. To help you better navigate your finances during this exciting time, we’ve created a guide to help you plan and budget during residency.
|% with Ed. Debt||73%||68%||71%|
|Mean Debt||$194,280 (↓3%)||$222,899 (↓0.5%)||$205,037 (↓2%)|
|Median Debt||$193,000 (↓3%)||$224,000 (0%)||$200,000 (0%)|
|Tuition & fees, first-year median||$41,181||$67,443|
|Cost of Attendance||$67,641||$93,186|
|4-year COA for 2022 Class||$268,476||$363,836|
While the costs of applying to medical residency programs may appear almost insignificant in comparison to the total cost of your education over time, the overall cost of the process will vary widely. To help forecast associated costs and fees, keep in mind factors such as: potential specialty/specialties, number of applications submitted and programs ranked, and proximity to these programs, including travel to resident interviews and relocation.
To better understand how far you can stretch your dollar, there are several popular budgets you can use to help you organize your finances, or you can use the calculator below to gain more insight.
The 50/30/20 Plan: Allocate 50% of your income towards essentials such as housing, transportation, and groceries. Then, 30% can go towards discretionary items like entertainment and travel. Lastly, 20% should be set aside for financial goals such as saving for retirement or paying off debt.
The Debt Snowball Method: If you have multiple debts with different interest rates, start by paying off the debt with the highest interest rate first. Once that debt is paid off, you can focus on the next highest interest rate, and so on.
The Envelope System: This budgeting method involves setting aside cash for specific expenses like housing, transportation, and groceries. Once the cash for that category is gone, you cannot spend any more in that area. This can help you better stick to your budget.
The Zero-Sum Budget: To create a zero-sum budget, simply allocate every dollar of income towards a specific expense until your income is gone. This can help ensure that you do not overspend in any one area.
Our budget calculator will divide your after-tax income into three categories: 50% for needs, 30% for wants, and 20% for savings.
Essential required expenses – including housing, utilities, and minimum debt payments.
May include expenses you don’t always need, such as restaurants, travel, or entertainment.
Should include emergency funds, retirement, and extra debt payments.
Learn more about creating a budget as a physician here.
Your most predictable costs are the application fees associated with the residency selection process.
Separate from the application fees are interview expenses, which can be more varied and are driven by specialty choice and geography. In fact, they can add up to the biggest cost of the residency process. AAMC estimates a median cost of $3,000 but says the total cost of interviewing can range from $600 to $24,000. When budgeting for residency interviews, you want to plan for transportation—don’t forget shuttles/cabs/ride-shares if you’re not driving to the destination yourself—as well as accommodations, appropriate dress, and meals.
To keep total costs down, you could:
If you anticipate having to move for your residency match, start planning—and saving—early no matter whether you are headed across town or across the country. Moving costs can add up quickly, especially if you have to make several trips to secure housing, pick a roommate, and sign a lease. The summer is a busy time for movers, so get quotes from several companies and book in advance. To keep costs down, consider moving only what is essential as it can be cheaper to buy new items than pay to move them. If your mover charges by the hour, get yourself ready before they arrive. Box your possessions and break down the bigger items—like a dresser or bed—yourself. Also, don’t forget to ask what insurance requirements your building requires of your movers.
If you need help financing your move, or paying for other expenses, there may be personal loan options available for residents that can help you pay for relocation or interview expenses.
Now is the time to get your finances in order. With graduation in May, followed closely by move in and the start of residency, there will be less free time available for dealing with finances than you might think. So, what should you do?
Gather the records of all your debt—student loans, car payments, mortgage, personal loans, credit cards, etc.—and keep it in one safe place. Include the amount, terms, payments, interest rates, and any other key information.
Remember, cost of living varies based on location. When budgeting for expenses like transportation, groceries, and housing be sure to research what these costs are near your residency program.
See the full picture of your debt so you can make informed financial decisions. This should encompass how much you owe, monthly payment due dates, and your current payoff dates, even if they are 10, 15, or 20 years away.
House, kids, private practice, lifestyle—include it all. Even if plans and circumstances change, thinking about where you want to go now will help you be better prepared for the future.
As you enter residency it is important to consider how you will pay back your student loans. First, you’ll want to understand all your repayment options, depending on if you have federal or private student loans. Let’s look at some of the main options for repaying your student loans, including direct consolidation loans, income-driven repayment, refinancing, and public service loan forgiveness.
Consolidation can help simplify repayment by combining two or more federal loans into one loan with one fixed interest rate. Depending on the types of federal loans you have, you may need to consolidate your loans to begin an income-driven repayment plan.
Keep in mind:
While not a form of repayment, forbearance allows you to temporarily postpone loan payments or reduce the amount you pay for up to 12 months at a time. There are two types, and both are short-term solutions:
Keep in mind:
Income-driven repayment plans allow you to reduce monthly payment amounts for federal loans according to your income.
Keep in mind:
And if you’re going to pursue PSLF, you will need to enroll in an IDR plan.
Qualifying borrowers working in public or non-profit organizations can have their loans forgiven after 10 years of working in these sectors and making 120 payments on their direct loans.1 Qualifying employers can include 501(c)(3) nonprofits, government agencies, and other not-for-profit organizations, qualifying medical schools and teaching hospitals, military service, public health, and public safety.
Keep in mind:
If you’re considering pursuing student loan forgiveness through PLSF or IDR, our Gradfin specialists can help you understand all your repayment options with a free consultation.
To learn more about your federal loan repayment options, including PSLF, check out our Guide to Federal Loan Repayment.
Refinancing provides the opportunity to pay off your original student loans and obtain a new loan with different terms or a lower interest rate. For those in good financial standing, it can be an opportunity to save money over the life of the loan or simplify the repayment process.
Keep in mind:
Learn more about your refinancing options and other private student loan repayment options with Laurel Road’s Guide to Student Loan Repayment.
There are several strategies you can explore which we’ve detailed below, but key factors to keep in mind are:
Managing the cost of medical school debt can be challenging, especially during residency. Now that you understand the options, you can choose the best way to manage your debt and finances during training. If you’re looking to learn more about managing your finances as a resident, check out some of our financial resources for medical residents and fellows here.
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IMPORTANT INFORMATION: Please note that if you refinance qualifying federal student loans with Laurel Road, you may no longer be eligible for certain federal benefits or programs and waive your right to future benefits or programs offered on those loans. Please carefully consider your options when refinancing federal student loans and consult Federal Student Aid for the most current information.
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