As a doctor, you promise to do no harm. But with all the student loans you have to borrow for medical school, you might not know how to avoid harming your finances.

The average doctor leaves school more than $189,000 in debt, and it’s tough to manage that level of loan repayment, especially if your loans have been sitting in deferment for years.

Whether you’re a medical student or new physician, make sure you’re not making one of these six student loan mistakes that could hurt your finances and keep you in debt for longer than you need to be.

1. Taking on too much debt to pay for school

The cost of tuition is higher than ever, but that doesn’t mean you have to choose the most expensive program. By taking cost into account before you select a medical school, you could reduce the amount you need to borrow in student loans. It also helps to apply to scholarships and grants that will reduce costs.

“[One] mistake is not seeking outside sources to help reduce funding for medical school,” said Randi Nelson, a pediatrician, and financial wellness expert. “I knew many students who took advantage of scholarships programs [that] reduced the need to obtain large loans.”

Besides making the most of grant and scholarship opportunities, make sure you don’t take on debt to pay for nonessentials.

“Medical students should only take out what is necessary and do whatever possible to keep costs at a minimum,” Randi Nelson said. “For example, when finding a home to live in, they should share household expenses, including rent and utilities, with one or several roommates.”

If you’re borrowing money to pay for dining out or entertainment, remember that those expenses will cost even more in the long run because of interest. Keep expenses down — or even find a way to make money while in school  — so you can avoid the amount of debt you take on.

2. Pausing payments for longer than you need to

While you’re in medical school, you might pause payments on your student loans by putting them into deferment. While this move is likely necessary before you start making an income, it could result in a ballooning principal.

During deferment, interest won’t accrue on Direct Subsidized Loans, but it will continue to add up on Direct Unsubsidized Loans and PLUS Loans. So make sure to take your loans out of deferment as soon as you’re able.

According to Nelson, some new doctors put their loans into forbearance (another way to pause payments) after graduation to further push off repayment. But she said this can make your debt situation worse.

“Once a doctor graduates, they should try and make payments towards loans immediately,” Nelson said. “Many make the mistake of placing their loans in forbearance, which allows interest to accumulate or capitalize and increases the principle of the loan.”

Although those first loan payments might seem daunting, pushing them off for longer than you need to will only cost you more money in the end.

3. Not having a repayment plan

Once you graduate from medical school, it’s essential to come up with a plan for your student loans. Write down the details of each loan, including your student loan servicers, payment due dates and interest rates.

Without this step, you might not know how many loans you have, how much you owe or how much you need to budget for your monthly student loan bills. And although this task might be stressful, avoiding it would only make the situation more difficult.

One of the most common student loan mistakes is to ignore, or put off, dealing with correspondence regarding their student loans,” said Danette Grace Wells, director of financial aid at Bastyr University, an alternative medicine school. “While the actual process of paying off student loans is distasteful, it becomes more stressful, and much more expensive, when ignored.”

This step will also help you clear up any confusion about who you owe or how to make payments. If you have questions, call your loan servicer or school’s financial aid office for help.

4. Adopting a more expensive lifestyle after graduation

After years of living as a student, you might be tempted to upgrade your lifestyle when you start making a salary. But if you upgrade too quickly, you’ll be stuck in debt for longer than you need to be.

It can be especially tough to avoid overspending when you see your friends in new houses and shiny cars. But some of them started working right after college, whereas you committed to years of training.

“While others are purchasing nice homes, or upscaling their medical school cars, live below your means, pay off your loans and set yourself up for a better life ahead,” suggested Julie Gurner, a doctor of clinical psychology.  

Instead of trying to keep up with others, reconnect with the reason you chose to be a doctor in the first place. Those tempting purchases can wait a few more years while you shed your debt and get your finances in order.

5. Relying on an income-driven plan when you don’t need to

Income-driven repayment plans adjust your student loan bills along with your income. They also extend your repayment terms to 20 or 25 years.

These can be helpful if you’re not making enough to keep up with your student loan payments or are working toward Public Service Loan Forgiveness. But if your budget is strained because you’re overspending in other areas, it could be a mistake to get on income-driven repayment.

“I’ve seen many colleagues simply pay the minimum amount or delay payment,” Gurner said. “Compound interest on high amounts will escalate the principal quickly, and you want to clear this ASAP.”

Not only could switching to an income-driven plan keep you in debt for longer, but it’s also a capitalization event that increases the amount you pay in interest. During capitalization, unpaid interest that has accrued is added to the principal balance of the loan. So your principal balance gets bigger — and then it produces even more interest.

Unless you need to get on an income-driven repayment, avoid doing so in favor of saving money on interest and paying off your student loans faster.

6. Ignoring strategies that could help you pay off your debt sooner

While delaying repayment could be a mistake for doctors in debt, ignoring strategies for a faster repayment could be, too. Instead of sticking to the standard 10-year plan, for instance, you could make extra payments to get out of debt even faster.

To do this, create a budget and look for areas where you could cut back on spending. Or

find a way to make extra money if you have time, such as online consulting. If you get a windfall, such as a signing bonus when you get hired, you could use that “found money” to pay down your loan debt.

Another strategic move for doctors is refinancing your student loans. Depending on your creditworthiness, you could qualify for a low-interest rate, thereby saving money on your loans. Plus, you can choose new repayment terms and simplify repayment by combining multiple loans into one.

Of course, refinancing federal student loans means turning them private, so you would lose access to income-driven repayment plans, forbearance, and federal loan forgiveness programs. If you’re counting on any of these, it would probably be a mistake to refinance your federal student loans.

But if you’re confident you can keep up with bills, refinancing could be a savvy move that saves you money on interest.

Related Content:  Is Refinancing Medical School Loans A Good Idea?

Avoiding student loan mistakes will get you
out of debt faster.

As a doctor or medical student, you’re well on your way to a life of financial security. But, first, you must deal with the big, dark cloud of student loans hanging over your head.

As your income increases, you can aggressively pay down your student loans, especially if you reduce spending in other areas.

Even though dealing with debt might require some sacrifice at the beginning, your efforts will be well worth it when you can finally say goodbye to your student loans once and for all.