Before donning your own white doctor’s coat, you must devote a dozen or more years to training, which includes countless hours of studying, attending classes, taking exams and mandatory hospital experience. Also rigorous is the financial cost of medical school — the most expensive of all graduate schools. The average medical school debt for 2014 graduates is $176,348, according to the Association of American Medical Colleges.
Now’s the time to assess your financial situation. You’ll likely face another round of financial-aid applications, as you did for your undergrad education, but this time, your parents may not be contributing to your med-school costs. Even if you’ve been working since graduation, you’ll probably still need more money to cover the cost.
Where to Start Your Search for Medical School Financial Aid
Approximately 90 percent of all medical students receive financial aid. Here’s what you need to know as you begin addressing the cost of your medical education:
The Free Application for Federal Student Aid (FAFSA), the same application you submitted for your undergraduate student loans, also applies to med-school loans. The FAFSA determines your eligibility for federal, state and local government student loans, as well as other financial aid, such as medical school loans and scholarships. Through FAFSA, you can apply for Federal Stafford loans, the primary loans used to pay for medical school. You can find detailed application information at MoneyGeek.com’s FAFSA Guide.
In addition to the FAFSA, some medical schools require a supplemental application as part of the financial-aid process. In addition, schools will require a parental income statement. Some schools may waive this requirement — for example, if you are aged 30 or older — but if you are applying for a need-based loan or scholarship, they will not waive the requirement regardless of age, marital status or family status.
You can seek out private student loans without filling out the FAFSA, but be sure to carefully research the terms and restrictions of private lenders because these loans typically are less flexible or forgiving compared with federal loans. Students should consider private loans a last resort.
To make smart decisions about financing your med-school education, you must calculate the total cost of attending a specific school. The total cost includes what you’ll need to fork over for tuition, books, housing, food, transportation and other personal expenses. Each med school sets its own Cost of Attendance (COA), which is the maximum financial-aid amount you may receive from any source. The COA includes the school’s fixed cost of tuition and fees as well as allowances for living expenses.
Financial Aid Checklist
Taking some simple steps before you send out applications can greatly help your chances of success.
Complete your FAFSA.
Submit your medical-student scholarship application (optional).
Complete the work-study application (optional).
Watch for and respond to any correspondence from your candidate schools.
Accept, reduce or reject your financial-aid offer.
Medical School Loans at a Glance
The average tuition for a first-year student at a private medical school in the U.S. in the 2015-2016 school year was more than $49,000, highlighting the overwhelming need for financial aid. Medical school students have several student-loan options.
Unsubsidized Federal Stafford Loan
Most students find that the Unsubsidized Federal Stafford Loan is the most attractive medical school student loan because of its favorable terms. (See the MoneyGeek Paying For College page to learn the difference between a subsidized and unsubsidized student loan.) You don’t need to demonstrate financial need, and its fixed interest rate — 5.84 percent for graduate students — is lower than other student loans. Although interest begins to accumulate as soon as you take out the loan, you won’t need to start repaying until after you graduate. The repayment period typically is 10 years, and a 1.068 percent loan fee applies.
Although the government sets an annual loan limit of $40,500 — and a cumulative loan limit of $224,000 —the amount you are ultimately eligible for may be less than these amounts. This is because your medical school uses your FAFSA information, its COA and any other supplemental application materials it requires you to complete to determine your loan amount.
Graduate PLUS Loans
In many cases, medical students turn to Graduate PLUS loans when their Unsubsidized Stafford Loan amounts don’t adequately cover the full amounts they need. Graduate PLUS loans also are unsubsidized, so the government does not pay for any interest that accrues on the loan, even though interest begins accumulating as soon as you take out the loan.
The fixed interest rate — 6.84 percent — is higher than the Unsubsidized Federal Stafford Loan, and your maximum loan amount depends on your school’s COA less any other financial aid you receive. You can hold off on repaying the loan until after you leave school, but once you do begin, the repayment period lasts 10 years. A loan fee of 4.272 percent also applies, and you may need a co-signer, such as your parent, if you have poor credit.
Perkins Loan Program
The Perkins Loan program remains in operation through fiscal year 2016, but only graduate students who have already received the Perkins Loan are eligible to continue receiving it through September 30, 2016. New med-school students are not eligible.
Medical schools also provide student loans, and most of them are need-based. Medical schools consider your financial resources, including any spousal income, in determining whether to extend a loan.
You’ll need to contact your candidate medical school directly to determine available loan amounts and the school’s precise terms. For the most part, annual loan amounts are comparatively small, such as $4,000 or $5,000. These school-funded loans typically have relatively low fixed interest rates — hovering around 5 percent, for example. And you can also defer the start of your repayment period for two or three years or take advantage of a grace period lasting several months. In some cases, the school subsidizes interest on the loan until your repayment period begins.
Medical School Scholarships
Scholarships of all breeds and sizes are available to assist students with the financial costs of a medical education. The eligibility requirements for these scholarships vary. Organizations and institutions may award them based on the student’s financial need, merit, heritage, medical specialty, residence, community service and other criteria. Many scholarship foundations require students to be U.S. citizens or permanent residents.
Medical schools also offer their own scholarships, so you should check with your candidate schools to see whether you meet their eligibility requirements. Most medical schools use financial need as a selection criterion, and only a few — such as the University of Virginia and Washington University in St. Louis — offer merit-based scholarships. You’ll find a list of scholarships for medical school students below.
|Scholarship||Amount||Eligibility||Deadline||Where to Apply|
|Aetna Foundation and National Medical Fellowship Healthcare Leadership Program||$5,000||Fourteen need-based scholarships available for second- or third-year medical students from underrepresented minority groups who demonstrate leadership potential, outstanding academic achievement and commitment to serving medically underserved communities. Candidates must be U.S. citizens attending medical schools in CA (Los Angeles), CT, GA (Atlanta), IL (Chicago), NJ, NY (New York City) or PA (Philadelphia).||Contact scholarship foundation||View|
|Alpha Omega Alpha Honor Medical Society (AΩA) Carolyn L. Kuckein Student Research Fellowship||$5,000||For first-, second- or third-year student of medical school with active AΩA chapter or association. Scholarship amount supports the opportunity for recipient to conduct qualifying research. Dual M.D./Ph.D. candidates are not eligible.||31-Jan||View|
|American Indian College Fund (AICF) Sovereign Nations Scholarship (an AICF Full Circle Scholarship)||$2,000||For full-time graduate and professional student with a minimum 3.0 GPA. Must be U.S. citizen and registered as a member of a federally or state-recognized tribe or a descendant of a grandparent or parent who is an enrolled trial member.||31-May||View|
|American Medical Association (AMA) Foundation Arthur N. Wilson, MD Scholarship||$5,000||For medical student who graduated from high school in Southeast Alaska who has consistently earned academic honors in medical school. Must be U.S. citizen or permanent resident.||17-Jun||View|
|American Medical Association (AMA) Foundation and Association of Black Cardiologists (ABC) Minority Scholars Award: Dr. Richard Allen Williams & Genita Evangelista Johnson||$5,000||For first- or second-year medical student with interest in cardiology. As part of the AMA Foundation’s Minority Scholars Award Program, the student must meet other specific eligibility requirements of the program.||4-Mar||View|
|American Medical Association (AMA) Foundation Minority Scholars Award (general program)||Not specified||Numerous scholarships available for first- or second-year medical students from traditionally underrepresented group in the medical field such as African American, Alaska Native and American Indian. Must be U.S. citizen. In 2015, 21 scholarships were awarded.||4-Mar||View|
|American Medical Association (AMA) Foundation Physicians of Tomorrow Awards||$10,000||Numerous scholarships available for third-year medical students. In 2015, 27 scholarships were awarded. Six Physicians of Tomorrow scholarship categories exist (with each category having specific eligibility requirements): AMA Foundation (general category), AMA Alliance Grassroots, Dr. Lin and Minta Hill Alexander, AMA Foundation Chicago-Area, Medical Society of the State of New York/Dr. Duane and Joyce Cady, and Ohio.||Contact scholarship foundation||View|
|Association of American Medical Colleges (AAMC) Herbert W. Nickens Award||$10,000||For individual who has made outstanding contribution to promoting justice in medical education and health care equity in the U.S.||6-May||View|
|Association of American Medical Colleges (AAMC) Herbert W. Nickens Medical Student Scholarships||$5,000||Five scholarships available for third-year medical students in a U.S. allopathic medical school who demonstrates leadership efforts in addressing educational, societal and health care needs of racial and ethnic minorities in the U.S. Must be U.S. citizen or permanent resident.||6-May||View|
|Becas Univision Scholarship Program||$5,000 maximum||Merit-based award for student of Hispanic heritage residing in the U.S., with a minimum 2.5 GPA for graduate students, including medical school students. Must plan to enroll full time. Specific award amount will take into consideration financial need.||30-Mar||View|
|Buckfire & Buckfire PC Scholarship||$2,000||For medical school student who is a member of an ethnic or racial minority or who demonstrates commitment to issues of diversity. Must be U.S. citizen, have minimum 3.0 GPA and have completed at least one semester.||31-May||View|
|Chinese American Medical Society (CAMS) Scholarship||$5,000||Several scholarships available for enrolled first-, second- or third-year medical or dental students. Need-based scholarship is available. Scholarships fall within these categories: Educational Fund scholarship, Jeng Family Fund Scholarship, Ruth Liu Memorial Scholarship and the American Center for Chinese Medical Sciences Scholarship.||30-Apr||View|
|Chinese American Physicians Society (CAPS) Scholarship Program||$2,000-$5,000||At least five need-based scholarships available for medical school students, with special credit given to those willing to serve Chinese communities after graduation. In 2015, seven scholarships were awarded.||1-Apr||View|
|Greater Cincinnati Hispanic Scholarship Fund (HSF) Scholarship||$5,000 maximum||Merit-based award available to student of Hispanic heritage residing in OH, KY or IN. Must be U.S. citizen or permanent resident, of Deferred Action for Childhood Arrivals status or eligible noncitizen. For graduate students, including medical students, must have minimum 3.5 GPA and plan to enroll full time. Specific award amount will take into consideration financial need.||30-Mar||View|
|Hebrew Free Loan Society Scholarships||Approximately $5,000||Numerous need-based awards available for Jewish students residing in the New York metropolitan area. Eligibility requirements vary depending on specific scholarship but may include international-student status or permanent or temporary resident of the State of Israel. Scholarships available to medical students include the Jean and Albert Nerken Scholarship Fund, and Rachel and Selim Benin Scholarship Fund. Renewal is subject to reapplying each year.||Contact scholarship foundation||View|
|Hispanic Scholarship Fund General College Scholarships||$5,000 maximum||Merit-based awards for students of Hispanic heritage obtaining degrees, including in graduate programs. Candidates must be U.S. citizens or permanent residents, of Deferred Action for Childhood Arrivals status or eligible noncitizens. Must have minimum 2.5 GPA and plan to enroll full time. Specific award amount will take into consideration financial need.||30-Mar||View|
|International Order of the King’s Daughters and Sons (IOKDS) Health Careers Scholarships||Not specified||Numerous awards available for students in health care fields, including medical students who have completed their first year in accredited U.S. or Canadian schools. IOKDS is an interdenominational Christian service organization. Must be U.S. or Canadian citizen.||1-Mar||View|
|Japanese American Citizens League (JACL) Chiyo M. Hattori Scholarship||$2,500||For current or entering medical school student in accredited U.S. school who has resided in southern California for the previous five years. Must have at least 50 percent Japanese-American ancestry and be an active JACL member.||1-May||View|
|Jewish Vocational Service (JVS) Jewish Federation of Metropolitan Chicago Scholarships||$8,000 maximum||Need-based award to full-time Jewish undergraduate or graduate student born and raised in Chicago metropolitan area or who has one year continuous, full-time enrollment in the area. Student must intend to remain in the area after graduation. Must demonstrate career promise.||1-Feb||View|
|Kaiser Permanente Medical Student Scholarship||$5,000||Up to eight scholarships available to third-year or entering fourth-year students of accredited medical, osteopathic or podiatric schools who demonstrate commitment to underserved communities. Must be interested in seeking residency in Northern CA. Students will be encouraged to participate in one-month clerkships at Kaiser Permanent facilities during fourth years of medical school.||1-Mar||View|
|Leopold Schepp Foundation Scholarship||$9,000 maximum||Various awards available for students, including full-time graduate students under 40 years of age with minimum 3.3 GPAs. Must be U.S. citizens or permanent residents. Award decisions based on students’ character, ability and financial need. Recipients may apply for renewal.||Application period closes once sufficient number of applications received||View|
|Mark B. Holzman Scholarship Trust||$2,000||Delaware resident enrolled in full-time graduate program of medicine, law, dentistry or religion.||Contact scholarship foundation||View|
|Muhlenberg Foundation Howard G. Lapsley Memorial Scholarship||Varies||Need-based award for medical school student who was raised in Union, Somerset or Middlesex County in New Jersey. Annual reapplication is required and award is contingent on good standing.||1-May||View|
|Muhlenberg Foundation Medical Staff Scholarship||$10,000||Nonrenewable, need-based award for medical school student who is a permanent resident of Union, Somerset or Middlesex County in New Jersey. Based on academic achievement.||1-May||View|
|National Health Service Corps Scholarship Program (NHSC SP)||Equal to tuition, required fees and other reasonable educational costs, plus monthly stipend||For full-time entering or enrolled medical student pursuing primary health care profession. Must be U.S. citizen or national. Minimum obligation is two- to four-year commitment at NHSC-approved site in a high-need Health Professional Shortage Area.||Application cycle opens in Spring 2016||View|
|National Institutes of Health (NIH) Medical Scientist Training Program (MTSP)||Varies; depends on amount of tuition and fees or based on stipend.||Approximately 170 new recipients receive assistance annually through grants made to participating medical schools. Recipients may receive up to six years of support, subject to annual renewal based on recipients’ satisfactory performance. Must be U.S. citizens, noncitizen nationals or permanent residents. Selection depends on outstanding credentials and potential as well as motivation to enter careers in biomedical research and academic medicine.||Contact participating medical school||View|
|National Italian American Foundation (NIAF) Scholarships||$2,500 to $12,000||Up to 100 awards available, with small percentage of them need-based, for students in U.S. accredited schools, including medical schools, who are Italian Americans (each having an ancestor who emigrated from Italy). Applicant must be member of NIAF or have parent or guardian who is a member, and be a U.S. citizen or permanent resident. Most awards require minimum 3.5 overall or major GPA. Award is used for tuition payment only. Some specific scholarships for pre-med or medical students include: Frank J. Corsaro Scholarship, Giargiari Medical Scholarship and Vincent Zecchino Medical Scholarship.||1-Mar||View|
|National Medical Fellowships (NMF) Aura E. Severinghaus Award (Special Award)||Contact scholarship foundation||For fourth-year minority medical-school student. Recipient is nominated by Office of Diversity at Columbia University Medical Center College of Physicians and Surgeons. Student must demonstrate leadership in medical school.||Contact scholarship foundation||View|
|National Medical Fellowships (NMF) Emergency Scholarship Fund (Special scholarship)||$5,000 maximum||For third- and fourth-year medical school student who is from an underrepresented minority group and who requires immediate, emergency funding. Circumstances beyond the student’s control must create financial hardship, making it difficult to continue in school. Must be U.S. citizen.||Contact scholarship foundation||View|
|National Medical Fellowships (NMF) General Scholarships & Awards Program||Varies, generally $5,000 maximum||Eight need-based scholarships available in the NMF’s general scholarships program, primarily for first- and second-year medical students. Other eligibility requirements — heritage, academic achievement, school location, medical specialty, leadership and community recognition — are set by specific scholarship: Anarcha, Betsy and Lucy Memorial Scholarship Award; Gerber Scholarship in Pediatrics Program; Hugh J. Andersen Memorial Scholarship Program; Josiah Macy Jr. Foundation Scholarship; Manhattan Central Medical Society Scholarship; Mary Ball Carrera Scholarship; Victor Grifols Roura Scholarship; and Wayne Anthony Butts Scholarship. Must demonstrate commitment to serving medically underserved communities. Must be U.S. citizen.||Contact scholarship foundation||View|
|National Society of Daughters of the American Revolution (DAR) Alice W. Rooke Scholarship||$5,000||For student pursuing or accepted into course of study to become a medical doctor. Not automatically renewable; recipient may reapply for up to four years.||Contact scholarship foundation||View|
|National Society of Daughters of the American Revolution (DAR) American Indian Scholarship||$4,000||Need-based scholarship for undergrad or graduate student of American Indian heritage. Must have minimum 3.25 GPA. Preference given to undergraduate student.||Feb. 15||View|
|National Society of Daughters of the American Revolution (DAR) Dr. Francis Anthony Beneventi Medical Scholarship||$5,000||For student attending or planning to attend accredited medical school. Must have minimum 3.25 GPA.||Contact scholarship foundation||View|
|National Society of Daughters of the American Revolution (DAR) Irene and Daisy MacGregor Memorial Scholarship||$5,000 maximum||Two scholarships available for student accepted, or pursuing studies to become a medical doctor, at accredited medical school. Recipient may renew provided he or she maintains minimum 3.25 GPA. Preference given to females.||Contact scholarship foundation||View|
|National Society of Daughters of the American Revolution (DAR) Leslie Andree Hanna Medical Scholarship||$5,000||For female medical school student with minimum 3.25 GPA. Must be U.S. citizen.||Contact scholarship foundation||View|
|Pat Tillman Foundation Tillman Scholars Program||Contact scholarship foundation||Up to 60 awards available for active-duty service members, veterans and military spouses (including surviving spouses) pursuing degrees as a full-time students, including in graduate programs. In 2015, seven recipients were medical school students. Selection criteria include military service record, community impact and service, personal achievement record and leadership potential.||1-Mar||View|
|Paul and Daisy Soros Fellowships for New Americans||$90,000 maximum over two years to cover tuition and living expenses||Thirty merit-based awards for students who are new Americans and studying in any degree-granting programs, including medical schools, in any U.S. university. Must not be in last year of study, and age limit may apply. Selection criteria include creativity, originality, initiative and sustained accomplishment in annual national competitions.||Contact scholarship foundation||View|
|P.E.O. California State Chapter Ruth G. White Scholarship Fund||Varies||For female student who is CA resident and who has completed first year of graduate study in medical field. Based on need, integrity of character, scholastic ability and school or community activities.||1-Feb||View|
|The Pisacano Scholars Leadership Program||7000 (maximum $28,000 for 4 years)||Up to 5 available merit-based scholarships for full-time, third-year medical students with strong commitment to family medicine. Must demonstrate superior academic achievement, leadership and communication skills, character and integrity and community service.||1-Mar||View|
|Silicon Valley Community Foundation Dr. James L. Hutchinson and Evelyn Ribbs Hutchinson Medical School Scholarship||$2,000 maximum||For entering or enrolled full-time medical school student who demonstrates excellence in character and academic achievement. Considers personal integrity through leadership, community involvement and concern for others. Must be U.S. citizen and graduate of a San Mateo County or Santa Clara County high school, or must have permanently resided in the area during high school. Need may be a factor in award selection.||11-May||View|
|Southern Medical Association Alliance Society of 1924 Medical School Scholarship||$2,000||Need-based award for third-year medical student exhibiting academic and leadership qualities.||Contact scholarship foundation||View|
|Tylenol Future Care Scholarship||$10,000 maximum||Approximately 60 one-time awards available for undergrad and graduate students, including those in medical schools, with at least one more year of school remaining. Award based on GPA, academic excellence, community involvement, exemplary leadership and dedication to careers in caring for others.||30-Jun||View|
|U.S. Air Force Health Professions Scholarship Program||Equal to full school tuition and required fees (textbooks, small equipment and supplies) and monthly allowance for living expenses||For health care students, including students of three- and four-year programs for Medical Corps and Dental Corps. Minimum obligation is 45 days on active duty while in school and one year active duty for each year of scholarship — with minimum three years — after graduation.||Contact scholarship foundation||View|
|U.S. Air Force Residency Financial Assistance Program||$45,000+/year and $2,000+ monthly stipend||For medical and dental professionals in their residencies. Minimum obligation is one year service for each year of scholarship plus one extra year.||Contact scholarship foundation||View|
|U.S. Army F. Edward Hebert Armed Forces Health Professions Scholarship Program||Equal to full school tuition and monthly stipend, $2,000+. (Qualifying medical student is eligible to receive $20,000 sign-on bonus.)||For full-time student pursuing advanced degree in qualifying areas, including medicine. Must participate in training for health care team during school breaks and commit to post-graduation active duty service of one year for every year of scholarship received. Minimum obligation depends on health care field; additional obligation for residency and fellowship training. Must be U.S. citizen.||Contact scholarship foundation||View|
|Vietnamese America Medical Association (VAMA) Scholarship Program||$2,500 maximum||Seven scholarships for medical school students. Three categories of scholarships exist, with differing criteria. Awards may be based on students’ need, interest in serving the Vietnamese American community, scholastic achievement or as funding for projects in a developing countries. Scholarships include: VAMA Scholarship; Tran Nguon Phieu, M.D., Memorial Scholarship; and Tung Van Dinh Memorial Scholarship.||1-Jun||View|
|Waterbury Medical Association Wellsford and Mildred Clark Medical Memorial Scholarships||$20,000 maximum||Numerous need-based awards for third-year medical students of nonprofit schools accredited by the AMA or WHO. Must be residents of CT for a minimum five years. Selection based on academic excellence, extracurricular interest and community service. In 2015, 15 scholarships were awarded.||30-Apr||View|
Medical Loan Forgiveness and Cancellation
It may be worth your time to explore loan-repayment programs to determine whether you can receive assistance from an organization to help you cancel, forgive or repay your medical school loans. Repayment programs offer medical students with qualifying federal student loans the opportunity to have portions or entire balances of their loans forgiven after completing a certain number of payments or service commitments in qualifying areas.
Income-Based Repayment (IBR)
If your medical school loan is a federal student loan, you may choose to structure a more viable, long-term repayment strategy through the federal government’s Income-Based Repayment Plan (IBR). IBR caps your repayment amounts based on your income and family size. You qualify based upon a combination of low income and high debt amounts. Any remaining federal student loan balance is forgiven after 20 years of payments.
NHSC Loan Repayment
Repayment assistance is available to medical professionals or students who work in underserved locations or high-need areas through the National Health Service Corp. For example, the NHSC offers final-year medical students up to $120,000 each for a three-year/full-time or six-year/part-time commitment at approved sites in certain Health Professional Shortage Areas. You can find details about the Students to Service Loan Repayment Program, or S2S LRP, on NHSC’s website. Some states, through the NHSC, also offer repayment programs to those medical professionals who provide primary care in the state. You can find details about NHSC’s various programs on MoneyGeek.com’s loan-forgiveness summary page.
NIH Loan Repayment
The National Institutes of Health (NIH) also provides monetary incentives to medical professionals by providing $35,000 per year in loan repayment for an individual who commits to work at least two years in research. As a non-NIH employee, you would conduct qualifying research outside the NIH (extramural research). Your research must fall in one of these five areas:
|Clinical Research||Research on human subjects or diseases in human populations that involves interaction with human subjects|
|Pediatrics||Research of diseases and other conditions found in children|
|Health Disparities||Research on a minority health disparity population, such as Blacks/ African Americans, Hispanics/ Latinos and Asian Americans|
|Contraception and Infertility||Research on treating or providing new or improved conditions for couples wishing to conceive or bear young|
|Clinical Research for Individuals With Disadvantaged Backgrounds||Research conducted by an individual from a disadvantaged background (from a family with income below defined threshold or from an inhibited environment)|
You can read more about student loan forgiveness and related topics on MoneyGeek.com’s Student Loan Forgiveness & Cancellation Page.
Delaying Medical School Loans: Questions & Answers
Emergency physician James Dahle, M.D., educates medical professionals about personal finance and investing through his blog, The White Coat Investor. He is the author of The White Coat Investor: A Doctor’s Guide to Personal Finance and Investing,a manual that covers financial issues facing medical students, residents, physicians and other high-income professionals, including tips for graduating from medical school with minimal debt. Here he explains financing strategies for medical students.
What strategy should students take for financing their medical school educations?
Choose the cheapest school you can get into. Take out as few loans as possible, and do so as late [in medical school] as possible. The only difference between current students and students who are not yet enrolled is that the ones who are not yet enrolled may be able to choose cheaper schools in lower-cost-of-living areas where spouses may have higher incomes.
What are some ways medical students can reduce their student-loan amounts?
Again, go to a cheaper school. Also, live more inexpensively. Try to take out loans later. One way to do this it to initially put [school] costs on a zero-percent credit card for one year, and then pay the balance off with a student loan. Don’t take out student loans until they’re absolutely needed. Also, other options are to get a scholarship, commit to the National Health Service Corps or the military, and work while in medical school.
Are consolidation loans a viable option for medical school loans?
It makes no sense to consolidate loans with the government at the average interest rate unless the consolidation causes loans that don’t qualify for government programs to then qualify. If you are willing to come out of the government programs with their benefits, then refinancing is available with private companies. The rates you get as a medical resident, however, aren’t nearly as good as what you can get after you finish residency.
How can medical students improve their chances of receiving scholarships or increasing the amounts of their scholarships?
There aren’t a lot of scholarships for medical students. I wouldn’t expect one unless it comes with strings attached, like the NHSC or military scholarship. There are a few, and, obviously, applying to any you can find is worth your time.
When is an income-based repayment plan (IBR) a suitable strategy?
IBR is one of the four government programs that you can use to reduce student loan payments that are due and to possibly get Public Service Loan Forgiveness (PSLF). If used in conjunction with the PSLF, it’s a suitable strategy for someone in residency, as your income is relatively low compared to your monthly payment amounts. If you make 120 payments (10 years) while working for a 501(c)3 organization that qualifies you for PSLF, if you are a medical resident, the amount forgiven is about the difference between what your IBR payments would be during residency and what a regular 10-year payment term would be.
For example, if you were in residency for five years, started the residency with $200,000 in debt, and finished residency with $300,000 in debt, you would pay down the $300,000 to around $200,000 over the next five years, then receive tax-free PSLF forgiveness of that amount. Payments under IBR are limited to 15 percent of discretionary income — which is Adjusted Gross Income minus 150 percent of the poverty level — and have nothing to do with loan amount or interest rate. So it is much harder to qualify for IBR once you finish residency and take on a higher-paying position.
Choosing Your Med School Wisely: Questions & Answers
Alex Ding, M.D., a graduate of the former University of Medicine and Dentistry of New Jersey (which was dissolved in 2012 and merged into the Rutgers School of Biomedical and Health Sciences). In his non-traditional path to becoming a doctor, Dr. Ding earned a business degree from Indiana University (Bloomington) and worked for an accounting firm for several years. Through his website MedicalSchoolSuccess.com, he shares his experience about seeking admission to and succeeding in medical school. Here, Dr. Ding talks about minimizing debt burden as part of a successful career.
What suggestions would you give to students seeking financing for their medical school educations?
Your choice of school plays a big role. I would say, as a general rule, to pick schools based on their tuitions and affordability, which means you would most likely choose a state school. Also, consider picking schools based on your chance of getting into your preferred residency. For example, American medical schools are going to provide the better choice compared with Caribbean medical schools. Also, remember that you will be in medical school, so don’t live like a doctor when you are still a student.
What are some ways new doctors can reduce their student loan amounts?
Consider public service loan-forgiveness programs. Through these programs, everything is forgiven if you make payments for 10 years while working for the government or in a nonprofit organization, which may have a forgiveness cap in the future. Some jobs may offer to pay your loan balances, but this varies by employer. For example, you could receive $15,000 repayment assistance for every year worked with an employer. While you are paying down their loans, I would strongly encourage graduates to continue living like students and applying their incomes to debt.
Are there certain student loans that are more attractive for medical school students?
Consider any loan with a low interest rate and that can qualify for income-based repayment programs.
What are the most important things medical students should remember as they approach their medical school financing?
The most important is to maximize your chance of getting residency and becoming a licensed doctor in that specialty. You can do this by picking an American school whenever possible. Research and understand repayment programs, through which you can have some debt forgiven after a defined amount of time. Some programs will forgive all debt. After your residency, make sure you negotiate your salary. You can better leverage yourself by interviewing broadly and not taking your first job offer. Additionally, as a doctor with student debt, you should try to live below your means. For instance, consider holding off on buying houses and new cars.
Recommended Reader Resources
These additional resources provide useful information about paying for your medical school education.
Association made up of medical schools — including all accredited U.S. medical schools — teaching hospitals, health systems, VA medical centers and academic societies. AAMC offers a useful, searchable database of 67 state and federal repayment programs, loans and scholarships.
Largest nationwide organization of physicians and medical students. The AMA provides an extensive list of financial aid resources relating to medical education, including scholarships and grants.
Essential resource for foreign medical students or physicians seeking information about practicing medicine or furthering their medical educations in the United States. This private, nonprofit organization evaluates international medical graduates and physicians and certifies them as part of the process of allowing entrance to a medical education program — such as residency or fellowship programs — or obtaining licenses to practice medicine in the United States.
A list of countries whose medical school accreditation standards are comparable to the accreditation standards used in the United States. This resource is relevant for students interested in pursuing their medical educations at foreign medical schools and who wish to be eligible for federal student loans to finance their studies. The NCFMEA reviews other countries’ standards to accredit their medical schools and assesses whether those standards are comparable to those used in the United States.