With flexible repayment options and a longer grace period, medical school loans may be a better option in the long run. Depending on the lender, here are some of the common features of medical student loans:
Before moving forward and filling out a Medical Student Loan application with one of our lenders, you may want to make sure you have completed all of these free options. A few programs that you should look into would be:
If you have exhausted all of the above options, you can select one of the lenders above to work with or head over to our student loans page.
Grad students (including medical school students) are eligible to take out up to $20,500 in Federal Direct unsubsidized loans each year. These loans have lower interest rates than Federal Direct PLUS loans (also known as a Grad Plus Loan) or private loans. Federal Direct PLUS loans and private student loans do not have a cap.
Anyone who has considered a career in healthcare knows that medical education can be expensive. It’s common for medical students to apply for other types of loans, such as the Federal Direct PLUS loans and private student loans. These types of loans do not have a cap on how much you can borrow.
Before starting the application process for medical school loans, it’s best to look at other sources of financial aid first. Federal student aid offers several options based on financial need. It’s recommended that you use a 4-step approach to get the funds you need:
To learn more about federal student loan programs, visit the U.S. Department of Education. You can also fill out a free application for federal student aid or FAFSA® here.
The best private student loans should give you a low-interest rate that will complement your federal financial aid. Keep in mind that you will accumulate interest on both federal student loans and private student loans over time.
Federal Direct PLUS loans are offered by the government, while private loans are offered by private lenders. Federal PLUS loans are available through the FAFSA and doesn’t require you to have a good credit history or credit score. You can learn more about the FAFSA application process at: https://studentaid.gov/h/apply-for-aid/fafsa.
However, Federal PLUS loans do have a mandatory loan origination fee and a flat interest rate. Private student loans typically have no loan fees, and your interest rate depends on your credit profile or that of your cosigner, if applicable.
Federal student loans are a good way to cover medical school costs because it comes with certain protections. Federal programs offer borrowers certain protections that private student loans may not, such as income-based repayment programs and public service loan forgiveness on student loan debt. Private student loans offer different loan terms and may offer a lower interest rate. Income-based repayment or loan forgiveness programs for medical school debt are benefits of federal student loans, but a private lender may also offer you other perks, such as flexible payment terms or a lower interest rate.
Federal student loans have borrowing limits (similar to limits on credit cards). If the cost of attendance exceeds the federal loan amount, that means you will need to cover the leftover cost. Graduate students may apply for no-cap Direct loans from the government, but undergraduate students do not have this option.
Cost of attendance
Many students choose to apply for a loan with a private lender to cover their leftover costs. Earnest private student loans, in addition to covering the entire cost of attendance, also have rates that are based on the credit profile of you and/or any cosigner you have. This may mean higher or lower rates than those offered by federal loans, depending on the credit profile.
Grace periods, origination fees, and disbursement
A private student loan may offer a longer deferment period or grace period than a federal student loan. Some private loans, such as Earnest private student loans, don’t have an origination fee while some federal student loans do. If you are approved, your Earnest Private Student Loan will be disbursed (sent) directly to your school and not to your bank account.
With an Earnest private student loan, you get a 0.25% APR reduction when you agree to make monthly principal and interest payments by automatic electronic payment.
Before looking for loans with private financial institutions, such as online lenders, credit unions, or banks, explore all of your student loan options with the federal government to cover your medical school costs.
Yes, medical residents may defer payments on their student loans until their residency is complete.
Arguably federal student loans’ biggest advantage for medical students is the loan forgiveness programs. That could be especially relevant to you since the average medical school debt for 2017 grads was $189,000.
To qualify for the Public Service Loan Forgiveness (PSLF) Program, you would need to work full-time at a government agency or nonprofit organization for 10 years — all while consistently making your monthly student loan payments. If you successfully complete the PSLF Program, then whatever federal student debt you have remaining, after those 10 years, is forgiven and doesn’t need to be repaid.
However, qualifying for the PSLF Program could limit your pay and employment options for those 10 years. That could be a non-starter for some; for others, the prospect of releasing a chunk of their student debt is worth some sacrifice in income and employment opportunities.
Looking for a middle ground? You could always take out a federal loan and a private loan to cover medical school expenses. That way, if you’re a creditworthy applicant, you could capitalize on the lower interest rate of a private lender, while leaving the door open for some loan forgiveness if you successfully complete the PSLF requirements.
You’ll likely find it’s easy to meet the basic financial aid eligibility criteria to receive federal financial aid: US citizenship, no existing loan defaults, and so on. It’s also important to know that some medical school loans are credit-based. You’ll want to pull a credit report to make sure you’re not delinquent on any payments.
“That would affect your ability to borrow,” Beltrani explains. “In these cases, students may need to secure a cosigner for their loans.”
Parental income doesn’t necessarily affect you, either, because students pursuing a master’s or doctoral program are considered independents on the FAFSA, according to the graduate school financial aid information from the US Department of Education’s Office of Federal Student Aid. That said, Beltrani says some medical schools ask for this information if the institution has endowed money or need-based scholarships to offer.