The path to becoming a physician is filled with years of rigorous study, tireless dedication, and unfortunately for many, a considerable amount of student loan debt. For students who are Black, indigenous, and people of color (BIPOC), the impact of this debt can be even more troublesome, due to systemic disparities that have roots extending far beyond medical school.
Systemic disparities and other financial challenges contribute to disproportionate borrowing rates, making it difficult for BIPOC students to pursue higher education, and harder still for them to succeed afterward.
Due to these factors, it is necessary for these students to take a unique approach, pursuing strategies and techniques that specifically target the challenges BIPOC doctors face when it comes to student loan debt.
Understanding the Impact of Student Loan Debt on BIPOC Doctors
Student loan debt is one of the unfortunate realities of the increasing costs of education. This burden can be especially impactful on BIPOC doctors due to the expense of medical school and additional contributing factors stemming from racial inequality.
In 2019, nearly 60% of Hispanic students and 75% of Black students had student loans with current balances greater than the initial borrowed amount. This illustrates the overwhelming burden of student debt, and how difficult it can be to overcome.
Research shows that, in addition to the difficulties they experience with finishing school, Black graduates are six times more likely to default on their student loans. This indicates that Black graduates may struggle to find jobs that pay an appropriate salary. According to the Education Data Initiative, as many as 37% of Hispanic and Latino graduates reported delaying life decisions like having children or getting married due to student loan debt. There are several reasons for this trend.
Employers’ Response to Racial Names
An experiment published in the National Bureau of Economic Research sought to illustrate this disparity. Researchers responded to job openings with multiple resumes featuring a mix of traditionally Black and traditionally white names and then recorded the number of callbacks they received.
They observed a 50% difference in callback rates, with the “white-sounding names” being more likely to receive a response. This demonstrated a potential trend among more than 1,300 employers, in which applicants are more likely to be rejected if the recruiter thinks they might be Black.
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Though the pay gap between genders among physicians has been narrowing, the racial pay gap remains unchanged, with Black physicians earning 13% less than white physicians.
These challenges call attention to the inequalities present among physicians and highlight the need to assess your own financial situation to be successful.
Assessing Your Student Loan Debt
After graduation, student loan debt likely stands as one of your most outstanding financial obligations. Outstanding student loans represent a financial burden that must be lifted, and you may have to dig into funds that could otherwise be used for other financial pursuits, such as buying a home.
Identify the Type of Student Loans You Have
The first step in understanding your overall student loan debt is knowing the type of loan you have. You could have federal student loans, private student loans, or a mix of both.
- Federal student loans: These loans are funded by the federal government. They come with certain protections, such as the potential for income-driven repayment options, deferral, and forbearance.
- Private student loans: A private loan comes from a private lender, such as a bank or credit union, and does not offer the same protections as a federal loan. A private loan also typically requires a credit check.
The Federal Student Aid website can help you identify the terms of federal student loans, however, to see details regarding your private loans, you may need to check your lending agreement or other documentation regarding the loan.
Understand the Terms of Each Loan
For each individual loan, it’s important to understand its specific terms. The primary components are the principal, which is the amount borrowed, and the term, which is the loan’s duration. However, just as important is the interest rate, and whether that interest is fixed or variable. This can have a big impact on how much you end up owing on the loan over time.
Calculate Your Total Loan Balance and Interest Rates
Figuring out your loan balance can be essential in developing long-term financial milestones. It can also be helpful information for targeting loans with higher interest rates that can be prioritized and paid off sooner.
To determine your total loan balance, simply add up the balances of all your loans. Determining the interest rate can be a little trickier. If you have multiple loans, it’s important to understand each loan’s interest rate and how it applies to that loan. A loan simulator such as this can help to visualize your total loan profile, and how different repayment options affect it.
A loan’s interest rate will be either fixed or variable. A fixed interest rate means that the rate will stay the same for the duration of the loan. A variable interest rate could rise or fall with changes in the interest rate environment.
Tailored Repayment Strategies for BIPOC Doctors
Different loans have different repayment options. The specifics of your loans and financial situation will dictate some of the best options for repaying loans. For example, federal student loans offer income-driven plans where monthly payments are based on your income and family size. Some common examples of income-driven plans include:
- REPAYE: Revised Pay As You Earn (REPAYE) is a repayment program that caps monthly payments at 10% of your discretionary income. After 20 to 25 years of consistent payments, the remaining balance is forgiven. If that 10% doesn’t cover the interest due, the government will pay part or all of the leftover interest.
- PAYE: Pay As You Earn (PAYE) is similar to REPAYE, but has a few differences. While payments are similarly capped at 10% of discretionary income, they will never be greater than what you would have paid under the 10-year Standard Repayment Plan. To qualify for PAYE, you must demonstrate financial hardship relative to your federal loan debt.
- PSLF: Typically available for employees of government or not-for-profit organizations, Public Service Loan Forgiveness (PSLF) is a program that forgives the remaining balance on loans after 120 monthly payments under a qualifying repayment plan while you’re working full-time.
- NHSC: The National Health Service Corps (NHSC) offers several repayment options that can help medical professionals. Qualification depends on things like specific discipline and service commitment.
These programs can be extremely beneficial to those with high student loan debt, especially those in public service positions. However, each has strict criteria and stipulations, so it’s important to gain a full understanding of the details.
Strategies for Minimizing the Long-Term Impact of Student Loan Debt
Managing student loan debt involves a mix of strategies. There are several ways to lessen the overwhelming expense and keep it from interfering with life goals and finances.
- Refinancing student loans: Refinancing a student loan can help to reduce interest rates, especially for those who have worked to improve their credit scores since taking out the original loan, or if market rates have lowered in that time. It can also be a way to choose new loan terms, which allows you to potentially shorten the term to pay off the debt faster, or extend it to decrease the monthly payment amount.
- Making extra payments: Making additional payments on a loan can significantly reduce the amount you pay over time since it reduces the principal balance faster. On one hand, this means faster debt freedom, but on the other hand, it means less money to invest, save, or spend toward other financial goals. Additionally, some private loans could have penalties for completing repayment early, so it is important to know your lender’s policies in that regard.
- Searching for employers who provide student loan assistance: Some employers offer loan repayment assistance as part of their benefits package. If you work for a non-profit or government employer, this could include PSLF eligibility.
- Investing: Over the long term, investing could potentially provide a higher return than the interest rate of your loans. However, investing always involves risk, and there is no guarantee of a return.
- Budgeting: Taking care to establish a well-structured budget helps to ensure you have money allocated toward paying student loans and other essential expenditures. Of course, sticking to a budget can mean sacrifices and lifestyle changes to be effective.
Many of these strategies require discipline and planning, and may not always be the best option for everyone all the time. Your specific situation will determine how best to handle your student loan debt.
Addressing Systemic Barriers and Inequities
Though barriers and inequalities exist and make the road to higher education more difficult for some, an understanding of the issues can help bring about potential solutions.
Getting to College
Many BIPOC students live in neighborhoods with underfunded school districts due to a long history of racial and economic segregation. Schools in these neighborhoods often lack the resources to adequately prepare their students for college. Less rigorous curricula, fewer extracurricular activities, and less access to guidance counseling can all make it harder for students to get into college.
Wealth disparities across racial lines also play a significant role in access to higher education. BIPOC families often have less familial wealth to help support their children’s education. This makes it more difficult to pursue higher education, particularly for longer and more expensive medical school, without taking out loans.
Mitigating Disparities Through Advocacy
Advocating for policy changes and reforms is a critical strategy to mitigate disparities for BIPOC physicians, particularly when it comes to student loan forgiveness and revising education funding.
- Student loan forgiveness: Since BIPOC students are disproportionately burdened with higher student loan debt, advocating for policies that forgive a portion or all of the student debts can significantly ease this burden.
- Revising education funding: Advocating for policies that increase funding to underfunded schools can help to ensure that BIPOC students have more opportunities to pursue careers in medicine.
Advocacy work can take many forms, including community engagement, research, and education. Advocating for systemic change is a long-term effort that requires persistence from a wide variety of individuals. There are organizations actively working toward these goals, but much work remains to be done. However, the potential impact of a more equitable system for students makes systemic change an effort worth pursuing.
Prioritizing Financial Wellness and Wealth-Building
It can be all too easy to focus on repaying debt while neglecting your own financial needs and future. However, it’s important to plan for your future and financial success with a comprehensive plan that includes debt repayment, saving, and investment strategies.
Opportunities for Increasing Income and Diversifying Revenue Streams
Increasing your avenues of income is another way to manage the burden of education debt. Medical professionals can seek some additional revenue through methods like:
- Medical surveys: Companies and research organizations often want professional physicians to participate in medical surveys, and will pay for their opinions. This may offer a quick and easy source of income you can typically complete the surveys entirely online.
- Locum tenens: Latin for “to hold a place,” locum tenens positions are temporary roles in the healthcare field. Medical facilities will often hire locum tenens workers until a full-time candidate can be found to fill the role. This may be a lucrative opportunity that helps you gain experience in different work environments and practices, with the potential for travel.
- Telemedicine: Telehealth physician roles may offer a flexible and convenient way to earn additional income without the need for travel.
- Passive income: A passive income stream can come from several different sources. Investing in real estate such as rental properties can help provide you with a steady passive income. Through real estate crowdfunding, the initial investment can be more accessible to individuals who can’t afford to buy property on their own. Stock market investments can also be a useful passive income stream, paying through dividends and asset appreciation.
- Backdoor Roth IRAs: Though Roth IRAs disallow individuals who earn too much money from investing, through backdoor investments, you can avoid that limitation.
Keep in mind that, while diversifying your income can increase your earning potential, each of these also comes with its own set of risks and challenges.
Additional Resources for Doctors of Color
Some useful resources exist to support BIPOC physicians in a number of ways. These include professional organizations, as well as scholarships, grants, and loan repayment programs.
The following organizations exist to assist doctors and medical professionals of color:
- National Medical Association: The NMA provides support focused on professional development, advocacy, and financial support for medical professionals, patients, and students of African descent.
- Black Healthcare & Medical Association: The BHMA helps with the advancement of Black medical professionals through education, workshops, networking, and recruiting opportunities.
- Association of Black Women Physicians: The ABWP provides support for Black women in medicine. The organization hosts events and provides resources, such as access to job listings.
- National Society of Black Physician Assistants: This organization seeks to provide mentorship, support, and knowledge sharing to Black physician assistants in a range of medical disciplines.
- DNPs of Color: This organization seeks to offer support for nurses of color pursuing their Doctor of Nursing Practice through online communities, speaking events, and conferences.
- Association of Black Cardiologists: This nonprofit provides fellowship for physicians and the pursuit of eliminating disparities regarding heart disease among people of color.
Scholarships, Grants, and Loan Repayment Programs
Through scholarships, grants, and loan repayment options, BIPOC students can receive more assistance with paying for their education.
- National Medical Fellowships – African American/Black scholarships list: This resource provides a list of scholarship opportunities for BIPOC students. You can browse options, or filter them by program type, gender, location, and other attributes.
- Association of American Medical Colleges – Loan repayment/forgiveness state and federal list: This list offers a searchable database of resources for loan repayment and forgiveness.