Key Takeaways
- The average medical school graduate carries $205,000+ in debt — federal Direct Unsubsidized and Grad PLUS loans cover most of it, but knowing the rate difference matters before you borrow.
- Grad PLUS loans currently carry a 9.08% fixed rate for 2025-26; strong-credit borrowers can beat that with private lenders like Earnest or Laurel Road, but only if they’re not pursuing PSLF.
- Laurel Road offers residency-specific repayment as low as $1/month during training — a meaningful structural difference from standard private loan terms.
- PSLF requires federal loans and an income-driven repayment plan. Refinancing to private before residency ends kills PSLF eligibility permanently.
What You’re Actually Borrowing Against
The average medical school graduate who took on debt finished in 2024 owing $205,000, according to AAMC data. At private medical schools, the median sits closer to $240,000. And that number doesn’t include undergraduate debt, which many medical students are still carrying when they walk into their first anatomy lecture.
This isn’t a number to absorb passively. At 9.08% interest compounded over a four-year program, $200,000 in Grad PLUS loans grows meaningfully before you make your first payment. A borrower who takes $50,000 per year in Grad PLUS loans over four years and doesn’t make any payments during school will owe roughly $226,000 by graduation, assuming current rates hold, simply because of interest capitalization. That’s the starting line for repayment, not $200,000.
The good news is that the repayment landscape for physicians is more flexible than for almost any other profession, specifically because lenders, federal programs, and forgiveness systems have all built structures around the reality of residency. You just have to know which tools do what.
Federal Loans First, Not as a Disclaimer, But as Strategy
Federal loans should be your first source of borrowing for medical school. Not because of some general principle, but because the specific features of federal loans align with the specific realities of medical training in ways private loans don’t replicate.
For the 2025-26 academic year, Direct Unsubsidized Loans for graduate students carry a 8.08% fixed rate. Grad PLUS loans carry 9.08%. The annual borrowing limit on Direct Unsubsidized Loans for graduate students is $20,500, which is far below what medical school costs. Most medical students hit that ceiling by October and need Grad PLUS loans to cover the remainder. Grad PLUS loans have no annual cap beyond your school’s certified cost of attendance, but they do require a credit check and come at that higher 9.08% rate.
Most medical students end up with a mix of both: $20,500 per year in Direct Unsubsidized Loans, with Grad PLUS loans covering the remaining $30,000 to $60,000 per year depending on the school. Over four years, that adds up to the $200,000-plus numbers AAMC is tracking.
The features you’re paying for with that higher Grad PLUS rate are real. Income-driven repayment plans, specifically SAVE (now under litigation but still available in some form), PAYE, and IBR, calculate your payment based on your income. During a residency at $65,000 per year, your IDR payment might be $350 to $500 per month rather than the $2,200 a standard 10-year repayment would require. You’re not just deferring the debt; you’re managing it against your actual cash flow.
Public Service Loan Forgiveness: The Residency Math That Changes Everything
If you plan to work at a nonprofit hospital or government employer after residency, federal loans aren’t just your best option. They’re the only option that keeps PSLF on the table.
PSLF forgives the remaining balance on federal loans after 120 qualifying monthly payments under an income-driven repayment plan while working full-time for a qualifying employer. Many academic medical centers, VA hospitals, and safety-net hospitals are 501(c)(3) nonprofits. Residency programs at those institutions count too, which means your three to seven years of residency can generate 36 to 84 qualifying PSLF payments before you ever earn an attending salary.
Here’s what that actually means numerically. A resident earning $65,000 on the IBR plan might pay $400 per month toward $220,000 in federal loans. Over a five-year residency, that’s $24,000 in payments. Meanwhile, the loan balance grows because $400 doesn’t cover the interest on $220,000 at 9.08%. At the end of residency, the balance might be $260,000. But the borrower has 60 qualifying PSLF payments banked. They need 60 more as an attending at a qualifying nonprofit, which at that point they can pay on IDR or even a higher voluntary payment. The forgiven amount at 120 payments could be $200,000 or more, tax-free under current federal rules.
Refinancing to a private loan before those 120 payments are complete ends PSLF eligibility. Permanently. There is no path back once federal loans are refinanced into private. This is the single most consequential decision in medical school loan management, and it should be made deliberately, not by default when a lender sends a refi offer in your intern year.
Private Medical School Loans: When They Make Sense
Private loans make sense in two situations. First, if you need more than the federal cost of attendance certification allows, which is rare but happens. Second, if you’ve done the math on your specific situation, concluded that PSLF is not your path, and can qualify for a materially lower rate than Grad PLUS.
For the second scenario, the comparison is against that 9.08% Grad PLUS rate. Several lenders have built products specifically for medical students, and for borrowers with strong credit histories (or a co-signer with a strong profile), the rate savings can be significant.
Sallie Mae’s graduate loan for health professions lists variable rates starting around 5.37% and fixed rates from 4.50% as of mid-2025. Read the footnote: that rate assumes a co-signer, a credit score well above 750, and includes a 0.25% auto-pay discount. Most applicants without a co-signer see rates 2 to 4 percentage points higher. College Ave offers similar terms with comparable footnote conditions.
Earnest is worth looking at for borrowers who can qualify independently. Their medical school loans are priced off a more granular credit model than most lenders use, which can benefit applicants with thin credit files but strong income trajectories. Their footnote on the lowest advertised rate requires a co-signer with excellent credit, same as the others.
Laurel Road stands apart for one specific structural reason: their medical school loan product includes residency-friendly repayment. Borrowers can pay as little as $1 per month during residency and a grace period, stepping up to interest-only payments before standard repayment begins. For a borrower who has decided against PSLF and wants to keep payments manageable during training without federal IDR, that structure is genuinely useful. Their rates for qualified borrowers start around 5.50% fixed, though again, the footnote ties that to credit profile and co-signer status.
For a concrete comparison: take $80,000 in Grad PLUS loans at 9.08% versus the same amount at Laurel Road at 6.50% over 10 years. The Grad PLUS payment runs $1,018 per month; at 6.50%, it’s $907. Over 10 years, that’s roughly $13,300 in interest savings. If the borrower’s path doesn’t involve PSLF, that’s real money. If PSLF is on the table, the calculation inverts entirely, because the forgiven balance on the Grad PLUS loan could dwarf $13,300.
A comparison of current private student loan rates across lenders can help you identify who’s quoting competitively for medical school borrowers right now. And if you want a broader view of lenders that serve graduate health professions programs, the best private student loans guide covers underwriting criteria and repayment terms in more detail.
Residency Repayment: Your Three Real Options
Residency changes the repayment equation because your income drops dramatically below your eventual earning power while your loan balance is at its largest. You have three functional paths.
First: IDR on federal loans. SAVE, PAYE, and IBR all calculate your payment as a percentage of discretionary income. On a $65,000 resident salary, a single borrower on SAVE might pay $350 to $450 per month. This preserves PSLF eligibility and keeps cash flow manageable. The balance will grow if your payment doesn’t cover interest, which is normal and expected during this phase.
Second: deferment. Federal loans can be deferred during residency through a graduate fellowship deferment or general forbearance. Interest still accrues. Deferment payments don’t count toward PSLF. This is the worst choice if PSLF is your goal, but it does provide breathing room if you’re in a financial emergency.
Third: private lender residency programs. If you borrowed privately through Laurel Road or a similar lender, their residency payment structures reduce your monthly obligation during training. These payments don’t count toward any forgiveness program. They’re simply a cash flow management tool.
The servicer detail that trips people up: if your federal loans are transferred to a new servicer during residency, which has happened routinely since Navient exited federal servicing and MOHELA took on millions of accounts, your IDR enrollment and auto-pay discount don’t automatically transfer correctly. You have to verify both after any servicer change. One missed IDR recertification can knock a payment out of PSLF eligibility.
Loan Repayment Programs: Plan Around These From Year One
Three categories of loan repayment programs exist for physicians, and they deserve serious attention before you decide how much to borrow and from whom.
The National Health Service Corps awards up to $50,000 in loan repayment (tax-advantaged) in exchange for two years of service at a NHSC-approved site in a health professional shortage area. Competitive applicants in high-need specialties have received awards above $50,000. Applications open annually. Works with both federal and private loans, which is an exception worth noting.
Military service programs, specifically the Health Professions Scholarship Program (HPSP), pay full tuition plus a monthly stipend during medical school in exchange for a service commitment. For students who know early that military medicine appeals to them, HPSP changes the entire debt calculation: you may graduate with no medical school debt at all. The tradeoff is a binding service commitment, but for a specialty like emergency medicine or surgery where military training is robust, the tradeoffs are more straightforward.
State loan repayment programs vary widely. Many states have their own NHSC-equivalent programs targeting primary care and psychiatry shortages. New York, California, and Texas all have active programs, though award amounts and specialty eligibility differ year to year. These are worth researching in your second year of medical school, not after you’ve matched.
The common thread: all of these programs work best when you’ve planned your borrowing around them from the start, not when you’re scrambling to find relief after graduation.
The Post-Residency Refinance Question
Once you finish residency and have an attending offer letter in hand, the refinancing calculus changes substantially. An internal medicine attending earning $280,000, or a surgeon earning $450,000, has the income to aggressively pay down debt and might genuinely save tens of thousands of dollars by refinancing federal loans into a private loan at a lower rate.
But that decision belongs after residency, not before. The physicians who refinance early because a lender marketed aggressively to them in intern year often discover the mistake when they’re within two years of PSLF completion. The post-residency refinance question has its own dedicated analysis, the variables (employment type, loan balance, rate spread, specialty income) are different enough from the in-school and in-residency decisions that collapsing them into a single article does borrowers a disservice.
What’s worth knowing now is this: physicians who work at qualifying nonprofit employers and complete residency at the same type of employer may reach 120 PSLF payments before finishing fellowship. Refinancing at any point before that 120th payment means walking away from forgiveness on whatever balance remains. The math on that decision should be run explicitly, with a real number, before any refi application is submitted.
The strategic arc for most medical school borrowers looks like this: federal loans first, private only if the PSLF calculation clearly doesn’t apply, IDR during residency to bank qualifying payments, and a deliberate refinancing decision post-match based on actual employer type and loan balance. Every deviation from that arc is a calculated choice, not a default.
