Medical training doesn’t just come with years of commitment; it also comes with a heavy cost.
By the time most physician’s complete residency, they’re carrying $200,000 to $300,000 in student debt, often borrowed through flexible but easy-to-use professional lines of credit. While this debt is often positioned as manageable — “you’ll be earning plenty soon” — the actual cost of paying it off is harder than many realize.
At Tall Oak Capital Advisors, we work closely with early-career physicians to help them understand their debts and the costs of paying them off.
From $150K to $350K: The Ballooning Line of Credit
Fifteen years ago, most residents graduated with access to about $150,000 in credit. Today, many banks offer as much as $350,000 in unsecured lines to medical residents — often with little guidance or structure.
What starts as a lifeline during training can quickly become a long-term financial burden. And the implications are far more complex than the surface numbers suggest.
The Tax Multiplier: Why Debt Costs More Than You Think
One of the biggest blind spots is the disconnect between debt and gross earnings.
If you owe $200,000 and you’re in a 50% marginal tax bracket (a typical situation for many practicing physicians), you’ll need to earn $400,000 to net $200,000 — and that’s before interest.
Factor in a few years of interest accumulation and additional financial goals (like saving for a home or retirement), and it’s easy to see how $200K in student debt can realistically cost $500K in gross billings to eliminate.
Debt in Billable Equivalents: A Better Way to Frame It
We often encourage our clients to think in terms of billable equivalents. Here’s what that looks like:
A $60,000 car purchase? That’s not just a $60K decision, it could mean $120,000 in billing required to pay it off after tax.
$300,000 in debt? You’re looking at $600,000+ in billings, especially if interest is added over a multi-year repayment period.
By reframing spending decisions this way, residents and early-career physicians can better prioritize their financial goals and avoid the lifestyle inflation trap before their foundation is set. A simple rule we recommend — “Live like a first-year resident,” even after your income jumps. It reduces pressure and helps build long-term financial and mental stability.
What You Can Do Now
With a clear plan in place, debt doesn’t have to be overwhelming.
At Tall Oak Capital Advisors, we help physicians build customized cash flow plans that include debt strategies, tax savings strategies, and timelines that reflect your earnings and lifestyle.
Want to see what your debt really costs?
Book a meeting with an advisor
For more information, refer to our other blogs from this series:
- A Hidden Cost to Physician Burnout: Lack of Financial Literacy
- New Physicians: Don’t Let These 5 Mistakes Derail Your Financial Future
The views expressed in this commentary are those of Tall Oak Capital Advisors as at the date of publication and are subject to change without notice. This commentary is presented only as a general source of information and is not intended as a solicitation to buy or sell specific investments, nor is it intended to provide tax or legal advice. Statistics, factual data and other information are from sources Tall Oak believes to be reliable but their accuracy cannot be guaranteed. This commentary is intended for distribution only in those jurisdictions where Tall Oak Capital Advisors are registered. Securities-related products and services are offered through Raymond James Correspondent Services Ltd., member Canadian Investor Protection Fund. Insurance products and services are offered through Gryphin Advantage Inc., which is not a member-Canadian Investor Protection Fund. This commentary may provide links to other Internet sites for the convenience of users. Tall Oak Capital Advisors is not responsible for the availability or content of these external sites, nor does Tall Oak Capital Advisors endorse, warrant or guarantee the products, services or information described or offered at these other Internet sites. Users cannot assume that the external sites will abide by the same Privacy Policy which Tall Oak Capital Advisors adheres to.
