If you dream of becoming a doctor, paying for medical school may be one of your biggest barriers. Median education debt for medical school graduates is a staggering $180,000, minus scholarships and grants they may receive. With accrued interest, borrowers can end up owing hundreds of thousands of dollars for school.
That’s not to say managing your medical school loans isn’t doable. If you choose the right med school loans ahead of time and sign up for repayment plans that work, you can make your debt manageable, keep up with your payments and still build your career.
Loans for medical school
The federal government offers several loan options to help you pay for your education. In general, federal loans have lower interest rates and more generous repayment terms than private loans. It usually makes sense to take out federal loans before turning to private loans to save money.
Med school students may be eligible for four types of federal loans:
Direct Unsubsidized Loans are available to graduate and professional studies students, and are distributed to individuals regardless of financial need. Unlike other types of loans, interest begins to accrue immediately, and you are responsible for paying off the interest added to the principal. The current interest rate for a Direct Unsubsidized Loan is 5.31 percent.
To be eligible for a Direct PLUS Loan, you need to enroll in an accepted school program at least half-time. A Direct PLUS Loan does require a credit check, so if you have a poor credit history, you may need an endorser or cosigner to guarantee the loan if you cannot pay it. The government has set the current interest rate at 6.31 percent.
HRSA Primary Care
If you have a financial need and are struggling with how to pay for medical school, another option to consider is a Primary Care Loan. Separate from the Department of Education, the government-run Health Resources & Services Administration offers low-interest loans to low-income students.
For students who agree to train and practice in primary care, HRSA offers an interest rate of 5 percent. If students fail to fulfill the requirement, they increase the interest rate to 7 percent.
Private med school loans
Unfortunately, some students cannot solely rely on federal loans to pay for medical school. Either they exhaust federal loan limits due to their school’s cost, or they need more time to complete their education. Private loans can fill an important gap and let you finish med school.
Private loans through lenders like Citizen’s Bank or College Ave offer competitive interest rates and can help you get through school. Depending on your credit score, you may be eligible for a rate that’s lower than federal options, helping you save money over time.
An advantage of federal loans is access to income-driven repayment (IDR) plans. Under an IDR, the government caps your student loan payment at a percentage of your income, and they extend your repayment term. Your monthly payment can be greatly reduced, freeing up more money in your budget each month.
If you are carrying six figures of debt, opting for an IDR plan will mean years of making student loan payments, but if you’re just starting out, an IDR can give you the breathing room you need to build your career. As you become more established, you can opt to accelerate your payments and pay off your debt faster.
There are four IDR plans to choose from based on your needs:
- Income-based repayment plan
- Income-contingent repayment plan
- Pay As You Earn (PAYE)
- Revised Pay As You Earn (REPAYE)
If you have private loans or high-interest federal loans, refinancing may make your medical school loans more manageable. Through refinancing, you take out a new loan from a private lender and use it pay off your other debts. With the new loan, you may qualify for a lower interest rate, better repayment term, or smaller monthly payment.
If you have federal loans, refinancing will cost you the ability to apply for an income-driven repayment plan or forbearance. If you are in a strong financial situation, refinancing can help you save money over the length of your repayment term.
Paying for medical school is possible
Choosing to go to med school is a huge (and expensive) commitment. But if you’re worried that you can’t pay for medical school, know that you do have many options available to you to make it doable. Federal loans, private loans, and income-driven repayment plans can make your debt payments easier to manage after you graduate.
For information on how to handle student loans after medical school, check out this repayment guide for doctors.
Interested in refinancing student loans?Here are the top 6 lenders of 2019!
|Lender||Variable APR||Eligible Degrees|
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1 Important Disclosures for SoFi.
2 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 7.89% APR (with Auto Pay). Variable rate loan rates range from 2.54% APR (with Auto Pay) to 7.27% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of March 18, 2019, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 0318/2019. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at firstname.lastname@example.org, or call 888-601-2801 for more information on ourstudent loan refinance product.
© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
3 Important Disclosures for Laurel Road.
Laurel Road Disclosures
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the fixed rate will decrease by 0.25%, and will increase back up to the regular fixed interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the variable rate will decrease by 0.25%, and will increase back up to the regular variable interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
4 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
5 Important Disclosures for CommonBond.
Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown.
All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 2.5% effective February 10, 2019.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.54% – 7.12%3||Undergrad & Graduate|
|2.54% – 7.27%1||Undergrad & Graduate|
|2.67% – 8.96%4||Undergrad & Graduate|
|3.23% – 6.65%2||Undergrad & Graduate|
|2.69% – 7.43%5||Undergrad & Graduate|
|2.98% – 9.72%6||Undergrad & Graduate|