How Did My Medical School Loan Debt Get So Big?


Dear Steve,

I took out loans for medical school. When I was graduated they totaled approximately $88k. I deferred during school then had forebearance during my 6.5 yr residency. By the time I started paying, my loans totaled $220k. I have been making my payments for 13 years and I still owe $160k. My solo private practice is failing (I haven’t been able to pay myself for 3 months) and I am pursuing other career options. In discussing these issues with a friend, she wondered how my totals became so astronomic and how my payments have barely made a dent. I contacted Navient and since I am already delinquent I don’t qualify for any deference or forbearance program.

How did my debt balloon and why aren’t my payments bringing it down more? Now that I can’t pay what are my options?



Dear Tracey,

Student loan debt is like a virus that starts in low numbers but explosively grows as it multiplies. The forbearances are what killed you as interest compounded on interest.

Yor payments are not based on what will pay the loans off the fastest but what the minimum payment the contract specified.

I’m taking guess these are federal student loans. If I’m correct and you are in default then rehabilitation is the best way to get your loans back in a current status before the servicer adds in up to 20 percent of the balance as a collection fee. You can learn more about the rehabilitation process here.

Rehabilitation will also help you avoid wage garnishment and tax refund intercept.

Additionally, you could rehabilitate the loans, which you only ever get to do once, and then consolidate the federal loans into a new Direct Loan. Since your income is plummeting you could then opt for an alternative documentation application into one of the income-driven repayment programs.

This will keep your payments as low as possible and out of default but will increase the balance as deferred interest is added again.

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I would suggest you talk to my friend Damon Day who specializes in these difficult and nuanced situations.

If these are private student loans then there may actually be some loans in there that can be discharged in bankruptcy if they were for medical school test prep classes. They were sold as Smart Option loans, MEDLOANS, and MD EXCEL Loans. See this article for more information. Private student loan lenders do not offer a rehabilitation option like federal loans have.


You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.

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Damon Day - Pro Debt Coach

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Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
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