Student Loans 101: How to Minimize Your Student Debt


I have good news and bad news. The bad news is the cost of higher-level education, including college and medical school, is becoming more expensive. The good news is this guide will cover everything you need to know to better manage those pain-in-the-butt student loans.

I’ll show you the strategies I used to save hundreds of thousands of dollars myself.


Understanding Student Loans

Student loans are unique from other loans in three key areas:

  1. They must be used for education and associated living expenses
  2. Rates are pretty bad, usually 5-10% interest
  3. They are discharged only in the event of death or total disability, but not bankruptcy

There are two main categories of student loans: Federal Loans (also called Direct Loans) and Private Loans.

Federal Loans are almost always better, as they have lower interest rates and come with special income-based payment and forgiveness plans, which we’ll get to shortly. For that reason, always max out your federal loans prior to turning to private loans. Generally speaking, Caribbean medical schools do not qualify for federal loans, except for those with higher match rates, such as AUC, Saba, and St. Georges.


Student Loans in College/Undergrad

The compounding effect works wonders for you in investing, but it also works against you when it comes to student loans. Therefore, minimizing loan burden as soon as possible as a college student is advised.

*Note that I’m not a tax or financial professional, so seek out professional advice prior to acting on any of the information presented here.

1 | Go to an Affordable School

Many students feel pressured to go to expensive private institutions when a highly ranked public university would provide nearly all the same benefits at a far lower cost. I personally went to UCLA, and by doing well there, I was able to get into a top medical school with a full-tuition scholarship, which saved me hundreds of thousands of dollars.

Learn more about the importance of college prestige and how to make the decision in our article: Does Your College Matter for Med School? Ivy League vs. Public University.

Be sure to check for scholarship and grant opportunities at the colleges you’re accepted to. This shouldn’t be the only factor but should play an important part of your decision when deciding between multiple undergraduate institutions.

2 | Work-Study or Part-Time Job

I also recommend doing work-study to help pay for tuition. I personally found a job in a research lab, so not only was I making money to help pay for school, but I also was strengthening my medical school application by generating publications on colon cancer in mice models of inflammatory bowel disease. Talk about killing two birds with one stone.

Those publications didn’t just help me get into medical school but also helped pad my publication list when applying to competitive residency programs.

3 | Minimize Living Expenses

College is a time to be frugal, but not painfully so. Have roommates—you can treat yourself to your own place later on after graduating. If you’re really hardcore, live at home, but I personally feel a big part of development in college is learning to be independent.

Learn to cook, so you aren’t always eating out, which is not only more expensive, but also less healthy. Buy used books rather than new, and sell them when you’re done. Don’t feel the need to upgrade to the latest tech every single year at this time in your life.

4 | Be Intelligent With Loan Options

Be smart with how you borrow money. Only borrow what you need since you’re paying interest on the money you take out. Opt for subsidized loans when possible, as they reduce or eliminate the amount of interest that accrues while you’re still in school, which is a pretty big deal.


Student Loans in Medical School

Medical school is far more expensive than college. Getting through it without a significant loan burden usually means you either have parents helping you out, you were a super impressive premed who earned merit-based scholarships, or you’re able to secure scholarships based on other criteria, like where you grew up or your family background.

1 | Consider Maxing Out Loans in Senior Year of College

Student loans in college tend to come with better terms than student loans in medical school, usually in terms of being subsidized with lower interest rates. For this reason, it may benefit you to max out your loans during your senior year in college and put that money towards your medical school tuition expenses.

2 | Consider Cost of Living of the City

If you go to medical school in San Francisco or New York City, it’s going to be much harder to live frugally since the cost of living in these major metropolitan areas is so high. That is… unless you go to tuition-free medical schools.

3 | Apply to Free Tuition Medical Schools

New York University and Columbia medical schools are offer free tuition programs to medical students. Hopefully, more schools follow suit in the future. You should always apply to free tuition medical schools given the asymmetric risk profile—very high upside and quite limited downside.

4 | Continue to Live Frugally

I know you were living frugally in college, but medical school isn’t the time to #treatyoself. Still live with roommates, purchase used textbooks and medical equipment, ride a bike to save money but also to keep you healthy, and avoid going out every night.

5 | Seek University Loans

Medical school loans are generally not subsidized. This is unless you are able to obtain student loans directly from your university. These are called University Loans and they often have better terms.

6 | Consider Contract Scholarships

Certain organizations will pay for your medical school expenses with the contractual agreement that you’ll work for them for a certain period of time. Examples would be the Health Professions Scholarship Program, the National Health Service Corps, Indian Health Services, or state primary care programs.

My recommendation is you only pursue these options if they align with your interests. For example, don’t do HPSP if you aren’t happy to work as a doctor in the military.

7 | Consider Debt When Choosing a Specialty

Your student loan burden and the compensation of a specific specialty should not be primary considerations when you’re deciding what type of doctor you want to be. However, if you’re graduating with $500,000 in student loans, it’s going to be much more difficult to pay off as a family medicine doctor.


Managing Loans as a Resident Physician

As a resident, you’ll no longer be taking out new student loans, and you’ll be earning a salary as a doctor for the first time. Congratulations! Unfortunately, that salary is going to be around $50,000 per year, which means you probably won’t even be able to pay off the interest that’s accruing on your loans month to month.

When paying off your loans, it’s important to first knock out the loans with the highest interest rates. For private student loans, you can refinance your loans, thus allowing you to pay a lower interest rate and also have lower monthly payments.

It’s standard to be going from a 6-10% interest rate before refinancing to a 4-6% rate after refinancing, although I have friends and colleagues who have gone substantially lower than that by having a parent cosign on the loan.

Federal student loans aren’t so straightforward because there are a variety of programs you can use to your advantage.

Income-driven repayment programs, or IDR for short, tie your monthly payments to your income and family size rather than your loan amount or interest rate. There are a few loan forgiveness programs too, the most notorious of which is the Public Service Loan Forgiveness Program, or PSLF for short. It offers tax-free forgiveness of all your loans after 10 years of payments.

The catch is you must be a full-time employee of a non-profit 501(c)3 during these 10 years. It sounds great, but note that it currently has up to a 99% rejection rate. Things are looking up in the future, but as it’s a complex topic, it’s best explored in a future post.


Managing Loans as an Attending Physician

Once you make it through residency, you’re an attending physician living in the promised land. You should be able to refinance your loans to get even lower interest rates, meaning more of your payments go to the principal rather than paying off interest, which means you can pay off your loans even faster.

Depending on your specialty, you should have a sizable six-figure income and be able to pay off your loans in just a few years, assuming you live like a resident and don’t let lifestyle inflation get the better of you.


Final Thoughts

Paying for college and medical school is daunting, but I want to congratulate you on taking the first steps to tackle it head-on responsibly. I’ve made a few other posts regarding the cost of medical school and how to best address it if you’re interested.

Remember that a big part of earning merit-based scholarships, which saved me hundreds of thousands of dollars, is being as competitive a medical school applicant as possible. Once you get multiple top 10 medical school acceptances, you can shop around and see which program is able to provide you with the most appealing financial package.

Our team at Med School Insiders specializes in helping students become as competitive as they can be. And we don’t rely on wishful thinking. We’ve worked tirelessly to perfect our proprietary and systematic processes that ensure the highest quality service for each and every student. Unlike other companies, you’ll never worry about being “unlucky” and not getting a phenomenal advisor.

Let me know in the comments below what other financial topics you’d like us to cover in an article or YouTube video.


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