Psychiatrist Student Loan Repayment and Forgiveness: What to Know

It’s a stressful time out there and psychiatrists are needed more than ever. It’s also been stressful for psychiatrists, too.

With the rapid jump to telemedicine, trying to treat patients over video, losing touch with those who don’t have access to technology — combined with six-figure med school debt, psychiatrists can feel like there’s a big hill to climb.

The good news is that psychiatrist salary and loan forgiveness options can make the student debt much more manageable.

Let’s take a look at the details.

Psychiatrist student loan debt and salary

When you’re a medical student, you’re probably looking forward to getting out and helping people. But once you graduate and start residency, student loan repayment begins and the full amount of med school debt becomes apparent.

According to an AAMC survey, the average medical school debt is right around $200,000. Here at Student Loan Planner®, we’ve seen average loan balances of $334,000 for the 800+ individual physician consultations we’ve done.

The difference between the AAMC and our numbers could be that by the time we do a physician student loan consult, they’ve already been out of school for a few years and have accrued interest, or those with higher debt are the ones seeking the most help. Either way, six-figure student debt isn’t easy to face.

Fortunately, the cost of medical school comes with the opportunity to earn a great income. The average psychiatrist salary is $260,000 according to a 2019 Medscape survey. That income makes it much more manageable to pay back student loans and it also is a good return on the cost of medical school.

Given the six-figure student loans and a six-figure salary, there are a few ways to repay psychiatrist student loan debt.

Related: Disability insurance for psychiatrists: Costs and what to know

Student loan repayment for psychiatrists

With all of the individual consults we’ve done along with researching the best repayment options, there are two optimal ways to pay back psychiatrist debt.

1. Aggressive repayment

Psychiatrists who owe 1.25x their income, and aren’t working for a qualifying employer to get Public Service Loan Forgiveness (PSLF) or another loan forgiveness option, can choose to throw as much money as possible at the loans to pay them off quickly. Often this includes refinancing psychiatrist student loans to get a lower interest rate.

2. Pay as little as you can and maximize loan forgiveness

This loan repayment strategy works best for psychiatrists who are going for PSLF (or other loan forgiveness programs). It’s also an option for those who owe more than 1.25x their income in federal student loans.

The idea is to get on an income-driven repayment plan that’ll keep monthly payments as low as possible, then save as much as possible in pre-tax retirement accounts to build a nest egg and also lower your adjusted gross income (AGI). Lowering your AGI will lower student loan payments even more.

Psychiatrist student loan forgiveness

Psychiatrists (and other health professionals) have access to many great student loan forgiveness options including PSLF, and student loan repayment programs offered through National Health Service Corp, National Institutes of Health, Veteran’s Affairs (VA), and even state-specific forgiveness programs.

Public Service Loan Forgiveness

PSLF is one of the most common and most powerful loan forgiveness programs we see health professionals using. To get PSLF, a psychiatrist has to check off three boxes by:

1. Having federal Direct Loans
2. Enrolling an income-driven repayment plan (PAYE, REPAYE, IBR)
3. Working at a qualifying employer, like a non-profit or government entity.

Each monthly payment where these three boxes are checked count toward PSLF. Once there are 120 cumulative qualifying payments, any remaining loan balance gets forgiven, tax-free.

Qualifying payments during residency also count, so psychiatrists can start getting credit right after graduating from medical school.

Check out our Top PSLF Tips if you want to learn more.

National Health Service Corp Loan Repayment Program

The NHSC offers up to $50,000 in loan repayment for a two-year commitment. Then you can reapply after the term is up. It also offers three-year loan repayment programs with loan repayment of $75,000 or $100,000 to help with substance use disorders and also a rural community program.

Here’s the comparison for all three programs from the NHSC website.

Psychiatrists might qualify since they’re both physicians and help in the mental health area. Often, this can work in conjunction with PSLF where you can use the funds from the loan repayment program to subsidize the payments on an IDR.

Here are more details on the National Health Service Corps Loan Repayment Program with PSLF.

National Institutes of Health Loan Repayment Program (NIH LRP)

For psychiatrists who are interested in research, the NIH offers up to $50,000 to work in a qualifying job. One of the more interesting aspects is that you can either work for the NIH (intramural) or at another organization (extramural).

For the extramural programs, the position has to be clinical research, pediatric research, health disparities research, contraception or infertility research, or clinical research for individuals from disadvantaged backgrounds.

Here’s more information on the NIH program.

Veterans’ Affairs Education Debt Reduction Program (EDRP)

The VA-EDRP pays up to $200,000 over a five-year period. Plus, employment at the VA qualifies for PSLF since it’s a government organization. Here are more details about VA-EDRP.

State loan repayment and forgiveness programs

Many states have their own programs to attract and retain physicians (and psychiatrists). The list is way too long to cover here, but the American Association of Medical Colleges (AAMC) has a listing of 74 programs across various states.

Refinance med school debt for psychiatrists

If a psychiatrist owes less than 1.25x their income and has exhausted their loan forgiveness and repayment options to no avail, then refinancing and paying off the loans as quickly as possible could be the best way to pay back their student debt.

Explore multiple student loan refinancing lenders to see some of the best offers you might qualify for. Many of Student Loan Planner®’s refinancing partners also offer cash-back bonuses for those who qualify.

Best student loan repayment strategy for psychiatrists

There are many other variables that will impact the best way to pay back your student loans specific to your situation.

Spousal income and student situation can be major factors. Also, your overall financial situation and career aspirations will play a big role, too.

Maybe you have a mix of federal and private student loans that you’re not sure how to approach. Or perhaps you have other financial goals and you’re not sure where your student loans fit within the plan.

The good news is that there’s an optimal student loan plan that will not only save you the most money but will also fit around your career goals and aspirations.

We can help you get to the bottom of it with a student loan consult in an hour. Book a consultation session to learn more.