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Illness and injury are an unfortunate (and scary!) fact of life, but once you’re patched up after surgery or a lengthy hospital stay, you want to focus on your recovery, not worrying about how on Earth you’re going to pay off any medical debt.

Medical debt can be overwhelming, and according to a 2018 study published by Health Affairs, it’s not just older Americans who are managing debt from medical bills.

It is actually Millennials who are racking up the most medical debt—11% of all people who had a medical bill go to collections in 2016 were just 27 years old. So how can you pay off medical bill debt and hopefully stay out of collections? There are several different options available that may help you manage your medical debt with minimal pain, so you can focus on feeling better.

Before we dive in, we should mention we realize the nature of medical debt is often very sensitive. These strategies are merely a collection of tips and commonplace ideas found through our research on the internet.

This article shouldn’t be considered advice in any sense; every person’s situation is unique, which means it’s always a good idea to check in with a professional before taking action yourself. With that said, let’s dive into what we found.

Medical Debt Payment Plans

Medical care can be expensive, especially if you’re facing a chronic condition with ongoing costs or a major surgery or hospital stay. One plan of action you might consider is contacting your medical provider to see if they offer payment plans.

Some providers offer payment plans that allow you to make payments on your medical bill over time, paying it off in installments. Talking to your healthcare provider or a hospital billing department can be a great first step to figuring out if there is a payment plan you can take advantage of when it comes to medical bill debt.

Of course, one major downside to payment plans is that not all medical providers or medical offices offer payment plans and may require full payment when services are rendered.

Likewise, some medical providers may only let you set up a payment plan in advance, which means that a payment plan might not be a solution for any medical debt you’ve already accrued. And of course, some payment plans may still be too prohibitively expensive to pay every month, even if you’re paying over time.

Using A Medical Credit Card

If you’re looking at a medical bill that you can’t pay out of pocket, you may be tempted to reach for a credit card. Before you hand over whatever card is in your wallet, you might want to consider looking into credit cards specifically designed to be used to pay for medical care.

Medical credit cards sometimes offer low or no interest for a predetermined period of time, which means that you may be able to pay your medical bill with the credit card and then pay off the card before it accrues interest.

But be careful—if you can’t pay off the credit card before the interest-free period is over, you might face high-interest charges, which could actually end up making your medical bills more expensive.

Consider pulling out the calculator and doing some math to see if you can afford to pay off your medical bills during the interest-free period before you decide to put the costs on a medical credit card. This can help you determine how useful a medical credit card might be in your specific situation.

Negotiating Directly With The Hospital

If you’re facing a big bill from the hospital, one thing to consider is reaching out directly to the hospital billing department to see if you can negotiate the total amount of your medical bill.

While it’s not precisely like haggling for a used car, most hospitals have a financial department that might be able to help you determine if you qualify for any cost deductions or discounts.

One other thing to keep in mind is that cash might just still be king. Some hospitals and medical providers might give you a discount just for paying in cash. This can be a good option if you can afford to make the payments in one lump sum and want to avoid any extra fees.

Taking Out A Personal Loan

Taking out a personal loan might also be a solution to managing medical debt. While personal loans are often overlooked, they may offer more benefits than credit cards, like lower interest rates and more flexibility.

In order to use a personal loan to pay off medical bill debt, you’d borrow money from a lender which you’d use to pay your medical debt, then you’d pay that money back to the lender over time in regular monthly payments. Like other types of loans and financing, lenders generally look at your personal financial history and ability to repay (among other factors) when deciding if you qualify for a personal loan and determining your interest rate.

Unlike other types of financing, however, a personal loan can be used for almost everything—from paying off a hospital bill to paying for your groceries while you’re out of work due to an injury or illness.

If you’re wondering how to clear medical debt from multiple sources, a personal loan might help. You may be able to use a personal loan to consolidate numerous medical debts into one monthly payment. This could work by taking out a medical loan and using it to consolidate different medical bills, which allows you to focus on paying off just one debt instead of managing multiple varying deadlines every month.

When searching for personal loans to pay for medical debt, be sure to read the fine print. Some providers may charge origination fees to process your loan, or prepayment fees if you pay off your loan early.

Also be wary if interest charges in your search, as high-interest charges could add more money paid over the life of the loan.

One other potential benefit of using personal loans is that the application process is relatively simple and you can usually find out your eligibility pretty quickly. With SoFi personal loans, it just takes a few minutes to check your rate. And with SoFi, there are no fees required.

There’s no way around it—medical bills can be hard to deal with. But making a plan for repayment you help you get on your way to financial and physical wellness.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SOPL19042

Asked to picture the typical person struggling with student debt, you’d probably imagine a new-ish college graduate or working professional—maybe someone who’s trying to buy a home or who plans to start a family.

But according to recent college debt statistics , that person might just as likely be a parent or grandparent who’s trying to pay off a home or plan for retirement.

Turns out, student debt isn’t just for kids anymore. Even baby boomers, who are now in their mid-50s to early-70s are pressing pause on their dreams because they’re burdened with loans they haven’t paid off, a loan amount that has reached $16,100 for the typical Parent PLUS borrower .

Yes, millennials had their work cut out for them between high tuition rates and lower wages than they might have expected when they graduate.

But their parents and grandparents could be in it with them—sharing at least part of the financial burden. Even those who never borrowed a dime for their own education may have taken out loans or agreed to co-sign for their kids. Now they’re facing some of the same repayment problems—but with less time to bounce back financially.

Student Debt by Generation

According to the Consumer Financial Protection Bureau (CFPB), the number of consumers age 60 and older with student loan debt quadrupled between 2005 and 2015—from about 700,000 to 2.8 million. And the average amount they owe also dramatically increased—from $12,100 to $23,500.

Although most student loan borrowers are still young adults between the ages of 18 and 39, the CFPB says, older consumers are the fastest-growing age segment of the student loan market. In that same 10-year period, 2005 to 2015, the share of borrowers 60 and older increased from 2.7% to 6.4%.

When surveyed, the vast majority of older borrowers (73%) said their student debt was for a child or grandchild’s education. Twenty-seven percent said their loans were for their own education or for their spouse. And the CFPB estimates that 57% of all co-signers are age 55 and older.

Gen Xers, who are now in their late-30s and early-50s, are in a similar situation—except they often have more of their own student debt as well.

In the mid 1970s, boomers started using a combination of grants and student loans, which boosted college attendance, but cracks began to show as student loan debt skyrocketed. In 1986 , more than one quarter of student borrowers owed over $10,000; adjusting for inflation, that’s equivalent to over $21,000 today.

Now, they’re paying for their kids’ education—by taking out loans or contributing less to their retirement savings. Or both. The CFPB found that borrowers nearing retirement (ages 50 to 59) had a lower median amount in their retirement accounts than consumers without student loan debt.

Though financial advisors repeatedly warn parents not to short themselves while helping their kids, a report by the Association of Young Americans (AYA) and the AARP found student loan debt was holding up retirement savings for around a third of Gen X and boomer respondents.

About a quarter of Gen X parents and a third of boomer parents said college debt prevented or delayed them from buying a home. And about a quarter of Gen Xers and boomers said their debt burden was an obstacle in getting the health care they need.

Some overwhelmed borrowers put at least part of the blame on federal parent PLUS loans, which they say are too easy to get. (Parents with a qualified dependent undergraduate student need only prove they don’t have an “adverse credit history”) On average, parents now borrow nearly $15,880 per year in parent PLUS loans.

In March 2018, Federal Reserve Chairman Jerome Powell said that though he generally supports the idea of a vibrant education loan climate, borrowers need to be informed of the risks they’re taking. “You do stand to see longer-term negative effects on people who can’t pay off their student loans,” he said. “It hurts their credit rating, it impacts the entire half of their economic life.”

In general, a college degree is, of course, a worthwhile investment. The unemployment rate for those age 25 and older with a bachelor’s degree or more education was 2.1% in April 2018.

For workers age 25 and older who graduated from high school but did not attend college, the unemployment rate was 4.3%. And those workers are earning more, on average. According to the Pew Research Center , those ages 25 to 39 with at least a bachelor’s degree have, on average, higher family incomes—the individual’s income plus that of his or her spouse or partner—than those in that age range lacking a bachelor’s degree.

Next Steps Toward Tackling Debt

While policymakers look for broader solutions, borrowers are finding their own. For many, that means getting their payments under control with student loan refinancing.

If you have a good job and have maintained a solid credit history, refinancing your student loans may help in a few ways.

If you can get a lower interest rate, you’ll lower the total amount you’ll pay over time—depending on the loan term you choose, of course. And it can make paying off your debt much easier if you have only one payment to make every month.

If you’re a borrower who proudly supported your child or grandchild through college but ended up with more debt than expected, refinancing may be the answer. And if you’re a new-ish borrower who can’t meet your financial goals because your student loans are eating your income, a different payment plan may help you achieve those milestones. Just keep in mind that if you refinance federal student loans with a private lender, you lose some potential federal benefits, such as income-based repayment plans and forbearance options.

Either way, you don’t have to be stuck. And you don’t have to be a college loan statistic.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SoFi Student Loan Refinance
SoFi Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org). SoFi Student Loan Refinance Loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Public Service Loan Forgiveness, Income-Based Repayment, Income-Contingent Repayment, PAYE or SAVE. Additional terms and conditions apply. Lowest rates reserved for the most creditworthy borrowers. For additional product-specific legal and licensing information, see SoFi.com/legal.

SOSL18219

The word “debt” is commonly defined as something—usually money—owed by one party to another. In the U.S., consumer debt is typically made up of mortgages , auto loans, credit cards, and student loans.

The overall balance of consumer debt in America has been on the rise since 2012, according to the New York Federal Reserve . But that’s not necessarily a terrible thing, because not all debt is bad. So what is the difference between good debt and bad debt? And how do you avoid the latter? Here are some tips to navigating the world of debt.

1. Debt can help build your credit score.

A credit score is a number determined by a consumer’s credit history . How many credit cards you have, how many loans you have, and the total amount of money you owe help determine your score, as does whether or not you pay your bills on time. Credit scores range from 300 to 850, and the scores are compiled
by credit bureaus such as Equifax, Experian, and TransUnion.

Companies and lenders use your score to calculate risk and what interest they will charge you on a debt. If your score is higher, you will likely be offered a lower interest rate. If your credit score is low, you will probably be presented with a higher interest rate.

To build your credit score, you must establish a positive credit history, and one way consumers can do that is by borrowing responsibly—i.e., having good debt.

2. Good debt pays for things you need, and/or things that might increase your net worth or future value.

Going into debt to pay for your education or a home are considered examples of good debt. That’s because attaining a college degree or buying a house are ways to invest in yourself. A college degree might lead to a better paying job, so it has future value. And purchasing a home not only gives you something you need—a place to live—it’s also an investment that is likely to increase in worth over time. In the past year (as of April 2019), U.S. home values have gone up 7.6% in value according to Zillow. And historically, American home values appreciate over time, barring an economic downturn or crisis.

3. Bad debt pays for things you don’t need, or things you can’t afford.

Using a credit card to purchase unnecessary or extravagant items can build up bad debt. Using a credit card to buy the latest tech gadget or to book a tropical vacation may satisfy you in the moment, but they are probably not things you need and they do not add to your net worth. If you must make such a purchase, it might be wiser to save money up over time and buy them outright, rather than pay with a credit card and risk struggling to pay the bill down.

4. Using a credit card can help establish good credit, but not if you can’t afford to pay your bill and in a timely matter.

An unpaid credit card balance at the end of the month can be considered bad debt, because chances are you’re paying significant interest on that balance. In early 2019, the average credit card interest rate (or annual percentage rate, APR) was above 17 percent .

That rate can lead to a decent amount of extra money being owed. And if you let a chunk of the balance roll over month after month, you’re paying interest on top of interest. It’s easy to imagine how your bill total can climb, making it more and more challenging to eliminate the debt.

Payday loans are another example of bad debt, as the interest rate for these short-term cash advances can be incredibly high. Each state sets its own regulations for these loans. For example, in California , a consumer borrowing the maximum amount of $300 could be charged a fee of up to 15% for the loan, immediately turning their $300 to $255.

5. If you have bad debt or debt that feels unmanageable, don’t ignore it. Lessen (or reorganize) it as best you can.

Different debt challenges call for different measures.

If you find your student loans too big to pay, for example, you could consider refinancing them. In order to lower monthly payments, you might redetermine the terms of your loan so that you can pay them off over a longer period of time. Refinancing also gives you the opportunity to lower your interest rate and therefore the total paid over the life of the loan.

If credit card debt has built up to great heights—and that can happen quickly, if you’ve missed a few payments—it’s time to prioritize in a way that fits you. That might mean the “snowball method”—paying your lowest-balance debt off first, then moving onto the next lowest, thus building momentum. Conversely, you could use the “avalanche method,” paying your highest interest debt off first, then moving onto the next lowest, thus paying your debt off based on the interest rate.

At SoFi, we used our experience serving people like you to develop a proprietary debt paydown strategy called “debt fireball.” It combines the best of the two methods described above. You would separate your debt into two categories—good debt and bad debt. Then you would attack your bad debt starting with the one with the lowest balance. Then you would continue to the next lowest balance and build momentum to quickly blaze through your bad debt.

For some, consolidating credit card debt into a personal loan is a good way to go—especially if you’re feeling overwhelmed by the number of credit card bills you are keeping track of. Consolidating all of your credit card debt into one loan means you make one payment to one lender.

The additional good news is that a personal loan is likely to come with a lower interest rate than your credit card debt. Though credit card payments you are behind on can hurt your credit score, consolidating them into a personal loan that you manage and pay monthly can help build your score back up.

If you think a personal loan is a good option for you, check out personal loans with SoFi. SoFi offers personal loans with low rates and no fees. With a low-interest rate and a fixed monthly payment, an unsecured personal loan to consolidate credit cards or other high-interest debt could help you start tackling your debt.