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5 Tips for Doctors and Nurses Facing a Pay Cut

The COVID-19 pandemic is creating unprecedented financial hardships for many Americans, including the very healthcare workers fighting the disease on the frontlines. For doctors, pay cuts can make a stressful time even more complicated. And it’s not just doctors who are feeling the impact of tightening health care budgets.

Nurse pay cuts in various parts of the country are also causing financial strain for many. If you’re working in healthcare and are struggling to adjust to a reduced personal budget after a pay cut, here are some tips to help you through this challenging time.

1. Know that frontline worker pay cuts are temporary

Student Loan Planner®’s survey results show about 22% of nurses, 29% of nurse practitioners and 22% of physicians have experienced a drop in income since May 2020. Doctors, nurses and other frontline workers experiencing pay cuts during the pandemic shouldn’t fear that their reduced pay will be permanent for the rest of their careers.

In the United States, hospitals determine their labor costs as a percentage of the revenue they bring in. As elective surgeries and other revenue-generating procedures resume, hospitals will again have to increase pay to remain competitive.

If you’re inclined to ride out a pay cut, do your best to reduce your expenses:

  • Take advantage of federal forbearance: If you currently have federal student loans, you can stop making payments on those loans from March 13, 2020, until Sept. 30, 2020, with no penalty.
  • Reduce your household expenses: Canceling unnecessary subscriptions, relying on one car instead of two, or asking for a rent or mortgage deferment are all ways to temporarily reduce your expenses. Remember that if you defer bills such as rent, however, you’ll eventually need to repay the amount you deferred. Although this strategy could help you weather the storm, once your pay increases again you’ll have to devote those extra funds toward repaying the debt.
  • Contact your creditors: If you have debt that you’re having trouble making payments on, such as credit card debt or personal loans, contact your creditors to negotiate a different payment plan. Most lenders will negotiate payments with you so that your plan better suits your current budget. While this could extend the lifetime of your debt, it will ensure you don’t fall behind on payments now so that you don’t damage your credit score long term.
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2. Consider moving

You might think a pandemic is an odd time to relocate, but a Pew Research Center study shows that 22% of U.S. adults have moved during COVID-19 or know someone who did. For those who are experiencing a pay reduction, moving could potentially reduce your household expenses or help you find a higher paying job.

Wondering how to decide where to move? We recently ranked the best small cities for nurses with student loan debt and the best states to practice medicine with student loan debt. Here’s what to consider when looking for a new location:

  • Is the location stable or growing?
  • Are there at least two nonprofit health care centers with more than a few hundred employees?
  • What is the area’s physician density?
  • What is the average cost-adjusted doctor salary or nurse salary?
  • What is the average cost of living?
  • What has the area’s response to the coronavirus looked like so far?

3. Reduce your income-driven repayment payments

If your income decreased, don’t forget that you can have your income-driven repayment (IDR) payments reduced after the federal forbearance program is over on Sept. 30, 2020. Although your tax returns are typically used to determine your IDR payments, you have the right to request a change in payments any time your income drops. You can easily recertify your IDR income.

When it comes to recertifying your income, make sure you are honest about your current situation. Don’t misrepresent your income to make it appear like you’re earning less than you actually are. You can request a change if your income has dropped for any reason, including a pay cut from an employer, if your spouse lost their job, or a decrease in earnings because of having to cut hours to stay home with children whose schools are closed.

4. Decide what your limit is

Doctors pay cuts, or pay cuts for frontline workers such as nurses, require those in healthcare professions to decide what their bottom line is going to be. If you decide that your job is important to keep right now, whether for financial reasons or because of a connection to your work, then you might have to accept temporary decreases in pay as hospitals work to optimize their revenue.

If you feel comfortable with the prospect of walking away from your job, you could try to negotiate for a better salary. Negotiating with a potential future employer might not be as easy to do in a bigger hospital network but could be possible in smaller settings. Physicians can ask for higher pay or other benefits that would make your role more attractive, like more flexible or desirable shifts or additional paid time off.

Even though it’s important to put any negotiated terms in writing, make sure you start your discussions in person, when social distancing allows, or through video chat, if necessary. Expressing yourself in conversation is often more effective during negotiations than making requests via email.

5. Take a sabbatical

If your pay decreased but your work increased or stayed the same, you could experience significant stress. If your finances allow it, you can consider taking some time to unplug and reassess your next steps. A sabbatical can be a time to study, create, rest or explore new opportunities. If you can manage your finances strategically, you can use this time to set yourself up for long-term success.

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