Student Debt: Only Borrow What You Need


Embarking on a career in medicine is both exciting and rewarding. It can also leave you with a high level of debt after graduation if you’re not careful with managing your expenses and borrowing costs. Let’s look at three hypothetical scenarios to see how much of a difference it can make when you take a prudent approach to debt minimization as you progress through medical school.

Scenario #1: The excessive borrower. Dr. Anwar made a budget each year, but borrowed more than what she needed in each of the first two years. When she graduated from medical school, she had borrowed $110,000.

Scenario #2: The overspending borrower. Dr. Jones didn’t make a budget at all. His bank gave him a line of credit with a $150,000 limit in the first year of medical school. As a result, he rented a more expensive apartment than he had originally planned and bought a car in the first year of medical school. He had used all of the $150,000 line of credit by the time he graduated.

Scenario #3: The needs-based borrower. Dr. Cheung worked with his advisor to create a sensible budget, which he followed carefully. Based on his budget, each year he applied for and borrowed only what he needed. Upon graduation, he was $100,000 in debt, including accumulated interest.

Now let’s see how the different borrowing styles affected the three doctors once it came time to begin repaying their debt. The figures assume a compounded annual interest rate of 4.75%.





Debt accumulated by graduation from medical school




First monthly payment—covers interest charges only1




Time needed to pay off the loan if $1,000 monthly payments are made to cover principal and interest

12 years and 1 month

19 years and 1 month

10 years and 8 months

In the example above, Dr. Cheung followed his advisor’s advice, which means he will pay less interest and eliminate his student debt sooner.

Don't pay more interest than necessary

One of the most important factors in minimizing your debt is the amount of interest you pay. If you’ve been putting your expenses on your credit card, you can end up with a sizable amount owing, especially if you’ve only been paying the minimum amount required monthly. Transfer balances to a line of credit or personal loan to ensure you’re paying less interest and can pay down the balance faster.

The chart below shows the differences in interest charges between a line of credit and a credit card.

Examples of interest payments for loans 

Medical Student and Resident Line of Credit

Average balance



Interest rate



Monthly interest payment




Credit card

Average balance



Interest rate



Monthly interest payment



Rates are examples only and are subject to change.

By making wise decisions about how to manage your debt and pay it off sooner, you can be on your way to building the wealth you’ll need to achieve your long-term financial goals.

Read about five more useful tips on debt management.

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