From NALTO: Managing student loan debt

According to the Association of American Medical Colleges, the average debt for a 2008 medical school graduate is $139,517, and more than 75% of graduates have debt in excess of $100,000. These figures are comparable to a home mortgage in some parts of the country. This enormous debt can be daunting, especially considering that a physician does not begin earning (residency salary aside) until his or her late 20s or even early-to-mid 30s.

Doctors often want to pay off student loans as quickly as possible, but investment executive Joe Potosky of MV Financial Group in Bethesda, Maryland, ( says they should approach debt management strategically. "People get psychologically attached to accomplishing an objective that may not be the most sound," says Potosky. "Don't let your emotions get in the way of a good business decision."

Educational loans, notes Potosky, should be considered long-term debt because the interest rates are relatively low when compared with consumer debt and because there is no asset more valuable or that has a better rate of return than a physician's training. Paying off high interest consumer loans should be a young doctor's first step toward a healthy financial future. "It comes down to prioritizing debt obligation," explains Potosky. "Never carry revolving credit card debt. Use cash to conduct your transactions."


Next, physicians should set aside 6 months worth of living expenses in an easily accessible savings account or money market fund. After these two items are taken care of, create a written plan for how to allocate current and future income. Common options include paying down student loans, buying a home, and funding a retirement plan. "Weigh the amount of debt, the interest rates, and payment schedules," advises Potosky. "Pay down the highest interest loans first, even if they are longer term." He also notes that doctors should not accelerate student loan payments if it means sacrificing having health or disability insurance.


If paying down student loans is a priority for you, locum tenens offers two ways to help you accomplish that goal. Physicians right out of training who have planned ahead can have locum tenens engagements lined up and begin practicing immediately. When deciding which opportunities to consider, be sure to let your recruiter know if earning the highest possible income is more important than geography. Pay rates do not vary all that much from agency to agency, but they can be significantly higher in remote locations where the need for physicians is greatest.

In areas where demand is high and doctors are in short supply, it is not uncommon for locum tenens practitioners to earn attractive rates and pick up extra shifts and added call to boost income. Some locum tenens agencies also offer bonuses to physicians who are willing to practice in one location for an extended period of time. A hospital or practice that needs physician coverage for several months usually prefers to have one practitioner for the entire time rather than several who each stay for only a few weeks.

Physicians who take full-time jobs after residency may find locum tenens opportunities in their local or regional areas, which allow them to provide coverage for a couple of weekends a month. And if opportunities are enticing, some even use vacation time to travel to a 1- or 2-week contract.

However, everyone needs time for rest and renewal; therefore, it is not advisable to contract for locum tenens every time you have a day off. But extra income here and there might be just the ticket if your goal is to pay off your loans sooner rather than later. Keep in mind that when you take locum tenens opportunities, housing, travel, and malpractice premiums are all covered. Indeed, low overhead means more money to put toward loan repayment.

If you are one of the many young doctors looking to repay a large student loan, consider locum tenens as one option to help you achieve your financial goals. Most contract physicians find that their incomes compare favorably with what they would earn working in full-time practice. Plus, the benefit of seeing different parts of the country and experiencing a variety of practice settings is as valuable as that all-important paycheck.

Views and opinions expressed herein are those of NALTO and not necessarily those of Advanstar Communications Inc. or LocumLife.

About the Author

Karen Childress is a Colorado-based freelance healthcare writer currently crafting a series of articles on behalf of NALTO.

Share this post:

Comments on "From NALTO: Managing student loan debt"

Comments 0-5 of 0

Please login to comment