Medical school student loans, explained
The average medical student graduates with somewhere around $200,000–$250,000 in education debt, and dental graduates often more. That number is intimidating, but the loans behind it are more understandable than they look. Before you can choose a repayment strategy, it helps to know exactly what you're holding.
Federal vs private: the distinction that drives everything
Almost every decision you'll make hinges on whether a loan is federal or private. Federal loans — the kind most physicians carry from medical school — come with powerful protections: access to income-driven repayment, eligibility for Public Service Loan Forgiveness, deferment and forbearance options, and a fixed rate set by Congress. Private loans, from a bank or online lender, have none of those federal protections; they're a straight contract at whatever rate your credit earned.
This matters because refinancing converts federal loans into a private loan. The lower rate can be attractive, but you permanently surrender every federal benefit in the process. Knowing which bucket your loans fall into is step one.
The types you likely have
- Direct Unsubsidized Loans — the workhorse of medical school borrowing. Interest accrues the entire time, including while you're in school.
- Grad PLUS Loans — historically used to cover costs beyond the unsubsidized limit, typically at a higher rate. (Note: under the 2025 law, Grad PLUS is being eliminated for new borrowers — see our guide to what changed.)
- Private loans — if you borrowed from a bank or refinanced already.
Most physicians benefit from keeping federal loans as federal Direct Loans, because only Direct Loans are eligible for PSLF without extra steps.
Capitalization: how a big number gets bigger
Here's the trap that surprises new doctors. Your loans accrue interest from the day they're disbursed. While you're in school and during certain periods, that unpaid interest sits in a separate bucket. But at specific trigger events — leaving school, certain plan changes — the accrued interest capitalizes: it gets added to your principal, and from then on you pay interest on your interest. That's why a $200,000 balance at graduation can be $230,000 by the time you finish residency if you've been making little or no payments.
The residency squeeze. Your balance is largest exactly when your income is lowest. That's not a reason to panic — it's the reason income-driven plans exist, and the reason small, smart decisions during training matter so much.
What happens during residency
As a resident earning a modest salary, you generally have three broad options for federal loans: pay on a standard schedule (often unaffordable on a resident's income), enter an income-driven plan where your payment is based on your income (often just a few hundred dollars, sometimes less), or use forbearance to pause payments (which lets interest pile up). For most residents, an income-driven plan is the sweet spot — low payments that still count toward forgiveness if you're pursuing PSLF.
The three questions that decide your strategy
Everything downstream comes back to these:
- Will you work for a nonprofit or government employer? If yes, PSLF likely makes your loans far cheaper, and you should not refinance.
- How big is your balance relative to your future income? A manageable balance for a high earner points toward paying it off (possibly via refinance); a very large one can favor forgiveness.
- When did you first borrow? Borrowers from before July 1, 2026 keep access to legacy plans like capped IBR — which can be dramatically cheaper for high-earning attendings.
See your own answer. Our free engine takes these exact inputs and models PSLF, the new RAP plan, capped IBR, and refinancing across every term — then ranks them by what each truly costs you.
Educational only, not financial, tax, or legal advice. Verify program details at studentaid.gov.